Loading...
1982-09-23 adjSeptember 23, 1982 (Adjourned from September 16, 1982) 4 2 An adjourned meeting of the Board of Supervisors of Albemarle County, Virginia, was held on September 23, 1982, beginning at 7:30 P.M. in Meeting Room #5, County Office Building, Charlottesville, Virginia; said meeting being adjourned from September 16, 1982. Present: V. Nash. Mr. James R. Butler, Mrs. Patricia H. Cooke, Mr. Gerald E. Fisher and Miss Ellen Absent: Mr. J. T. Henley, Jr. and Mr. C. Timothy Lindstrom. Officers present: Mr. George R. St. John, County Attorney and Mr. Ray B. Jones, Director of Finance. Charlottesville City Council members present: Mr. Frank Buck, Mr. John Conover, Mrs. Elizabeth Gleason, Mrs. Mary Alice Gunter, and City Manager, Mr. Cole Hendrix. Mr. L. A. Lacy, Chairman of the Albemarle County Service Authority Board of Directors, Mr. Robert Humphris, member of the ACSA Board, and Mr. Bill Brent, Executive Director, were also present. Agenda Item No. 1. Mr. Fisher. The meeting was called to order at 7:38 P.M. by the Chairman, Agenda Item No. 2. Project. Discussion with City. Council: re - Financing Buck Mountain Reservoir Mr. Fisher said that Mr. Agnor was out of town on business for the Rivanna Authority. He asked Mr. Hendrix to explain materials given to those present dealing with alternative financing methods'which could be used for the Buck Mountain project without making any changes in the Four-Party Agreement. Mr. Hendrix said that a committee composed of Mr. Agnor, the director of finance of the city, the director of finance of the county, Mr.. St. John, a representative of the Albemarle County Service Authority, a representative of the Rivanna Water and Sewer Authority, and the Rivanna's financial counsel have met several times to discuss the materials to be presented. He asked Mr. Bill Sessoms, who does the'financial work for the,Rivanna Authority, to explain the debt service alternatives and the impact such would have on the wholesale water rate. Mr. Sessoms explained that he had prepared two debt schedules, either of which would be payable under the Four-Party Agreement. He had obtained projected population estimates for the City and County for each year from 1983 until 2012 from the County's Planning Department. He had used net interest figures provided by Walter Craige, Inc. Schedule A shows the cost of a conventional, revenue bond issue. Schedule B is contemplated on a fairly new alternative, that of a zero coupon bond, which in this case is structured so that most of the principal is paid off during the first nine years of the bond issue and the interest is then paid in the remaining years. Mr. Fisher noted that the figures given show a total bond issue of $15 million; four and one-half million dollars for the Buck Mountain project, and the remainder for other borrowings which the Rivanna Authority would have to do anyway. Mr. Sessoms said that was correct. The Rivanna Authority is about to borrow $10 million for capital projects and it is logical to add the Buck Mountain project to that amount to save on the cost of issuing bonds. Mr. Sessoms said the impact on the wholesale rate structure is calculated to be 47.85 for Schedule A and 46.75 for Schedule B, with the payments averaged out over the life of the bonds to be 63.7%/City and 36.3%/County. Mr. Sessoms also noted that only $7 1/2 million of the amount to be borrowed is attributable to urban water capital projects and only that amount would be charged to the urban water rate; most of the remainder of the $10 million in principal is paid during the first nine years, with the other $5 million in principal being paid during the last 21 years. (Mr. Conover arrived at 7:59 P.M.) Mr. Fisher asked if it is not true that the purchase of facilities by the Rivanna Authorit is part of the original Four-Party Agreement so the Rivanna will have to sell the bonds no matter what the interest rate might be in order to carry out that part of the Agreement. Mr. Fisher then asked if Mr. Sessoms had looked at any other alternatives. Mr. Sessoms said he felt the two alternatives presented were the most logical ones. Mr. Fisher said last week it was mentioned that the Buck Mountain project would add about ll$/M gallons to the water rate. Mr. Sessoms said the figure of 11.85 was based on $3.1 million in capital costs, an estimate prepared several months ago, but the Buck Mountain project is now estimated to cost $5 million. Mr. Sessoms said there is a third option which Mr. Robert Sheets, City Finance Director, studied. Mr. Sheets said there is also the option of having the City issue bonds in the name of the City with a pledge from the Rivanna Authority to pay the debt service out of Rivanna rates. The rationale behind such a proposal is that the City has a better bond rating on general obligation bonds and these bonds would sell at a slightly lower rate than revenue bonds. Mr. Hendrix said this proposal would be the cheapest way to finance the project. Mr. Sessoms agreed that the City has a better bond rating on general obligation bonds and such bonds are normally cheaper than revenue bonds. Mr. Sessoms said there is one difference between Schedule A and Schedule B which he had not mentioned. The Rivanna's financial advisor has said that putting a very short term call feature on these bonds (between five and seven years) would probably add no cost to the issuance. Usually there is a premium for this type of feature. The Board continued discussing the proposals put forth this night. Mr. Bill Brent, Albemarle County Service Authority Executive Director, noted that he had handed out information tonight which showed the impact of the borrowing on a typical County iresidential customer, basically 145/M gallons, or a nine percent increase on a residential iwater bill. This pass through on the wholesale water rate would be to all Albemarle Service Authority customers, and not just those called "urban water" users. Mr. Hendrix noted that that concluded a presentation of the work conducted by the staff duirng the past week. He noted that Mr. George Pugh, from Walter Craige in Richmond, was present to answer any questions. 403 September 23, 1982 (Adjourned from September 16, 1982) Mr. Fisher asked if anyone from the Albemarle Service Authority Board had a statement. Mr. Lacy said no; he was just present trying to learn something. Mr. Fisher said when Mr. Conover had asked a question several weeks ago about deferring the cost of this project to future users he did not think it was a viable possibility, but he was amazed to see that, based on the interest rates in effect the day the study was made, that the borrowing might cost less using such an idea, even though it would not be a sub- stantial amount. Mr. Ray Jones advised that the call feature/penalty clause on Schedule B should be looked at. Mr. Sessoms said that without the call feature, a great deal of money could be lost if interest rates drop. Mr. Fisher said that he was surprised to find out about the $10 million that is to be borrowed, but was glad that it has been presented as a part of the overall borrowing proposal. It appears at this time that the question of choosing between Schedule A and Schedule B should be deferred to the Rivanna Authority and bond counsel for a decision. Mr. Buck said there is still a fundamental issue which is unresolved, and it is not just an issue between Schedule A and Schedule B. Miss Nash asked what the issue is. Mr. Buck said it is the issue that the Board and Council spent about two hours debating last week. Mr. Buck said he thinks that the different financing techniques offer some advantage to the consumers, but he did not think that these techniques do anything to relieve the difference in principles that the two governing bodies stated last week. Under either of the financing plans put forth tonight, City consumers still pick up 63% of the cost and County consumers pick up only 37% of the cost over the life of the bonds. He asked if the Board had any change in position on the fundamental issue discussed last week. Mr. Fisher said no. Mr. Buck said City Council has a regular meeting scheduled for October 4. He would suggest that Council take what has been presented tonight and discuss it again at that time. With no further comments on the subject at hand, the Board recessed at 8:45 P.M. Agenda Item No. 3. Other Matters Not on the Agenda. The Board reconvened in Meeting Room #7 at 8:49 P.M. Mr. Fisher reported that the Consolidation Study Committee unanimously recommends that the Police Executive Research Forum of Washington, D. C. be employed to perform the evaluation of a consolidated law enforcement agency for the County and City. Mr. Fisher recommended two actions be taken by the Board: 1) authorize the County Executive to work with the City Manager to negotiate a contract with the Police Executive Research Forum; and 2) set a public hearing on October 6 for an appropriation to cover the County's share of the study in the amount of $16,800. He noted that these recommendations are made unanimously by the Cou.nty's members of the Committee. Mr. Fisher said Mr. Henley had called him tonight and when he explained what the cost of the study would be, Mr. Henley was shocked. Motion was then offered by Miss Nash to approve the recommendation of the Committee with reference to hiring the Police Executive Research Forum to do an evaluation of consoli- dating the law enforcement agencies of the City and the County; and to set October 6 for a public hearing on a budget amendment to cover the County's share of the cost of the study. The motion was seconded by Mr. Butler and carried by the following recorded vote: AYES: NAYS: ABSENT: Mr. Butler, Mrs. Cooke, Mr. Fisher and Miss Nash. None. Mr. Henley and Mr. Lindstrom. Mr. St. John said he felt the Board members should be updated on the sequence of events on the Buck Mountain project since a question has arisen as to why the Albemarle County Service Authority has just been brought into the discussions. There isa particular sequence which had to be followed. 1) Under Virginia State Code, no other political subdivision can build a reservoir in Albemarle County without the approval of the governing body; the Rivanna Authority is a different political subdivision, as is the Albemarle Service Authority, and the City. If such a request were made to the Board, and the Board did not approve the request, there is now a procedure whereby the parties would go before a three judge court, but the City could not do as it did in 1965 and just go out and condemn land and build a reservoir in Albemarle County. 2) A reservoir cannot be built unless it is shown in the County's Comprehensive Plan; the County has shown the Buck Mountain project in the Comprehensi~ Plan. The Board also had to approve having another political subdivision build the reservoir, and the Board has done that. 3) Also, protective measures through land use controls, zoning, runoff control, erosion control, can only be enacted and enforced by the county government. Now, when it gets down to the point of financing the project, the Board is no longer controlled by State statutes, but is. under the Four-Party Agreement. Actually, the County could fund the project, but if bonds were sold, the sale of same would have to be approved in a referendum. If the Board follows the Four-Party Agreement, once this body and the City agree to have the project, the Rivanna Authority puts together a financing package. The debt service is passed to the two user entities (the City, and the Albemarle Service Authority), but, before the debt can be passed to either of these two entities they have to agree to the debt. That is: before the Rivanna Authority could sell bonds and pass that cost to the City, the City would have to agree to it, in fact "request" is the word used in the Four-Party Agreement. By the same token, before that additional debt service could be passed to the Albemarle Service Authority, the Albemarle Service Authority has to agree, to it. Theoretically, the Board of Supervisors does not have much to do with the financing of the project. It is up to the Albemarle Service Authority on the one side and the City on the other. That is one reason why the Albemarle Service Authority has not been brought in until this point. What the Board of SuperviSors has been doing is going through the initial steps, but the matter is now at a point where the Albemarle Service Authority has to either accept or reject the financing methods proposed and the City has to do the same. Miss Nash asked how this affects the decision the Board has to make by October 6. Mr. St. John said the Board has decided that the County government is not going to voluntarily participate in funding this project outside of the Four-Party Agreement. Mr. Fisher said no official vote has been taken on the question, but he believes there would be an affirmative vote. Mr. St. John said that was an important step and that step being completed, the Board is giving its good offices to the Albemarle Service Authority in helping the Rivanna Authority put together a financing package. Mr. Fisher asked if the Board should go on recordstating September~~ourned from Se~temberl~6~l~982~ 404'" its position that this Board feels it is a decision of the Rivanna Water and Sewer Authority Board of Directors to choose the financing mechanism most appropriate for the borrowing that is necessary, and request the Albemarle County Service Authority Board of Directors to take the necessary steps to trigger the purchase of the land. Mr. St. John suggested that the wording be "ask the Albemarle County Service Authority Board of Directors to review the suggested financing methods" and express hope that they will arrive at some affirmative decision to acquire the land. Mr. St. John noted that on the documents presented tonight, where the word "County" appears, it means "Albemarle County Service Authority". There is no obligation on the County to pay anything out of the County treasury for this project. Mr. Fisher said he felt a motion was in order. Miss Nash then offered motion to ask the Albemarle County Service Authority Board of Directors to review the figures presented at this meeting, and request that the Albemarle County Service Authority Board make an affirmative decision to accept the financing method suggested by the Rivanna Water and Sewer Authority Board, whatever that method may ultimately be. The motion was seconded by Mrs. Cooke and carried by the following recorded vote: AYES: NAYS: ABSENT: Mr. Butler, Mrs. Cooke, Mr. Fisher and Miss Nash. None. Mr. Henley and Mr. Lindstrom. Miss Nash asked what will happen if the Albemarle Service Authority does not go along with this at all. Mr~ St. John said it is their function to work with the Rivanna Authority to arrive at a financing method they can accept if they do not like what has been recommended to them. Miss Nash asked why the Board had held all these meetings Just to decide on the land area to be purchased if it is all up to the Service Authority. Mr. St. John said the Buck Mountain area is outside of the Service Authority's service boundaries and the meetings had to do with formulating something and amending the Comprehensive Plan. Agenda Item No. 4. meeting was adjourned. Adjourn. At 9:00 P.M., with no further business to conduct, the