Gloucester, VA New School Bonds Issue - August, 2013
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Transcript of Gloucester, VA New School Bonds Issue - August, 2013
County of Gloucester Finance Department
6467 Main Street Gloucester, Virginia 23061 (804)693-6927
Interoffice Memorandum To: Gloucester County Board of Supervisors From: Nickie C. Champion, Director of Financial Services CC: Howard B. Kiser, Ed.D., Superintendent of Schools Brenda G. Garton, County Administrator Edwin N. Wilmot, County Attorney Joanne C. Wright, Director of Budget and Finance, GCPS Date: July 22, 2013 Re: Resolutions for School Bonds and Other Materials At the July 2, 2013 Board meeting, the Board agreed to hear public comment on August 6, 2013 on a possible school bond issue for the Page Middle School project ($12.0 million) and various school HVAC and roof repairs/upgrades ($5.0 million). McGuireWoods, bond counsel, has prepared the attached documents for the Board’s consideration:
• Option 1: This resolution authorizes the issuance of $12.0 million in school bonds for Page Middle School.
• Option 2: This resolution authorizes the issuance of $17.0 million in school bonds with $12.0 million for Page Middle School and approximately $5.0 million for school HVAC/roof needs.
Please note that these resolutions were drafted with the goal of setting a limit on the amount (par value) of bonds that will be issued. This means we will issue some face amount of bonds, but will not know the actual bond proceeds (cash to be received) until the bond sale later in the year. This is a function of the bond market where a bond will sell either above or below its par value (face amount). For example, if a bond with a par value of $1,000 is selling at a premium, we will receive more than $1,000; but if the bond is selling at a discount, we will receive less than $1,000. Bonds are sold for more and less than their par values because of changing interest rates. When interest rates go up, a bond’s market price will fall and vice versa. Additionally, a question was recently raised about structuring debt payments in such a way as to minimize the potential impact on real estate tax rates in the short term. This type of payment structure enables us to mitigate the impact on tax rate increases until FY 2019, which is when the
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communications system is paid in full. An example (Case 3) has been included in the discussion materials from Davenport & Company, which structures the payments in such a way that the possible tax rate increase in FY 2015 is reduced from 2.5 cents to 2.0 cents. Please note that this structure comes at a cost of approximately $303,750 (using the assumptions provided in the materials) over the life (20 years) of the debt. This debt repayment structure allows us is reduce the payments on the front end with larger payments into the term of the debt. As noted above, this option does come at a price, and extensive use of this type of repayment scheduling is not seen favorably by credit agencies. Please do not hesitate to let me know if you have any questions or need further information.
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OPTION 1 AT A MEETING OF THE GLOUCESTER COUNTY BOARD OF SUPERVISORS, HELD ON TUESDAY, AUGUST 6, 2013, AT 7:00 P.M., IN THE COLONIAL COURTHOUSE, 6504 MAIN STREET GLOUCESTER, VIRGINIA: ON A MOTION MADE BY ______________________ AND SECONDED BY ____________________ THE FOLLOWING RESOLUTION WAS ADOPTED BY THE FOLLOWING VOTE:
Carter M. Borden, ____; Ashley C. Chriscoe, ____; Christopher A. Hutson, ____; Andrew James, Jr., ____; John H. Northstein, ____; Robert J. Orth, ____; Louise D. Theberge, ____;
RESOLUTION AUTHORIZING THE ISSUANCE AND SALE OF GENERAL OBLIGATION SCHOOL BONDS OF THE COUNTY OF GLOUCESTER,
VIRGINIA TO BE SOLD TO THE VIRGINIA PUBLIC SCHOOL AUTHORITY AND PROVIDING FOR THE FORM AND DETAILS THEREOF
WHEREAS, the Board of Supervisors (the "Board") of the County of Gloucester, Virginia (the "County") has determined that it is necessary and expedient to borrow an amount not to exceed the amount set forth in paragraph 1 below and to issue its general obligation school bonds to finance certain capital projects for public school purposes;
WHEREAS, the Board held a public hearing on August 6, 2013, on the issuance of the Bonds (as defined below) in accordance with the requirements of Section 15.2-2606, Code of Virginia of 1950, as amended (the "Virginia Code");
WHEREAS, the School Board of the County has requested by resolution the Board to authorize the issuance of the Bonds (as hereinafter defined) and has consented to the issuance of the Bonds;
WHEREAS, the County proposes to enter into a Bond Sale Agreement (the "Bond Sale Agreement") with the Virginia Public School Authority ("VPSA") which will indicate that the amount set forth below in paragraph 1 is the amount of proceeds requested (the "Proceeds Requested") from the VPSA in connection with the sale of the Bonds;
WHEREAS, VPSA's objective is to pay the County a purchase price for the Bonds which, in VPSA's judgment, reflects the Bonds' market value (the
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"VPSA Purchase Price Objective"), taking into consideration such factors as the amortization schedule the County has requested for the Bonds relative to the amortization schedules requested by other localities, the purchase price to be received by VPSA for its bonds, and other market conditions relating to the sale of VPSA's bonds; and
WHEREAS, such factors may result in requiring the County to accept a discount, given the VPSA Purchase Price Objective and market conditions, under which circumstance the proceeds from the sale of the Bonds received by the County will be less than the Proceeds Requested.
NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF SUPERVISORS OF THE COUNTY OF GLOUCESTER, VIRGINIA:
1. Authorization of Bonds and Use of Proceeds
2.
. The Board hereby determines that it is advisable to contract a debt and to issue and sell general obligation school bonds of the County in the aggregate principal amount not to exceed $12,000,000 (the “Bonds”) for the purpose of financing certain capital projects for public school purposes, consisting primarily of a portion of the cost of construction and equipping of a new middle school (the “Project”). The Board hereby authorizes the issuance and sale of the Bonds in the form and upon the terms established pursuant to this Resolution.
Sale of the Bonds
3.
. It is determined to be in the best interest of the County to accept the offer of VPSA to purchase from the County, and to sell to VPSA, the Bonds at a price determined by VPSA and accepted by the Chairman of the Board or the County Administrator and upon the terms established pursuant to this Resolution. The County Administrator and the Chairman of the Board, or either of them, and such officer or officers of the County as either of them may designate, are hereby authorized and directed to enter the Bond Sale Agreement with the VPSA providing for the sale of the Bonds to VPSA in such form as may be approved by the Chairman of the Board and the County Administrator, or either of them.
Details of the Bonds. The Bonds shall be issuable in fully registered form in denominations of $5,000 and whole multiples thereof; shall be dated the date of issuance and delivery of the Bonds; shall be designated "General Obligation School Bonds, Series 2013" (or such other designation as the County Administrator may approve) shall bear interest from the date of delivery thereof payable semi-annually on each January 15 and July 15 (each an "Interest Payment Date"), at the rates established in accordance with paragraph 4 of this Resolution; and shall mature on July 15 in the years (each a "Principal Payment Date") and in the amounts established in accordance with paragraph 4 of this Resolution. The Interest Payment Dates and the Principal Payment Dates are subject to change at the request of VPSA.
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4. Interest Rates and Principal installments
5.
. The County Administrator is hereby authorized and directed to accept the interest rates on the Bonds established by VPSA, provided that the true interest cost of the Bonds does not exceed six and one-half percent (6.5%) per annum. The County Administrator is further authorized and directed to accept the aggregate principal amount of the Bonds and the amounts of principal of the Bonds coming due on each Principal Payment Date ("Principal Installments") established by VPSA, including any changes in the Interest Payment Dates, the Principal Payment Dates and the Principal Installments which may be requested by VPSA provided that such aggregate principal amount shall not exceed the maximum amount set forth in paragraph 1 above and the final maturity of the Bonds shall not be later than 26 years from their date. The execution and delivery of the Bonds as described in paragraph 8 hereof shall conclusively evidence such Interest Payment Dates, Principal Payment Dates, interest rates, principal amount and Principal Installments as having been so accepted as authorized by this Resolution.
Form of the Bonds. The Bonds shall be initially in the form of a single, temporary typewritten bond substantially in the form attached hereto as Exhibit A
6.
.
Payment; Paying Agent and Bond Registrar
(a) For as long as VPSA is the registered owner of the Bonds, all payments of principal, premium, if any, and interest on the Bonds shall be made in immediately available funds to VPSA at or before 11:00 a.m. on the applicable Interest Payment Date, Principal Payment Date or date fixed for prepayment or redemption, or if such date is not a business day for Virginia banks or for the Commonwealth of Virginia, then at or before 11:00 a.m. on the business day next succeeding such Interest Payment Date, Principal Payment Date or date fixed for prepayment or redemption.
. The following provisions shall apply to the Bonds:
(b) All overdue payments of principal and, to the extent permitted by law, interest shall bear interest at the applicable interest rate or rates on the Bonds.
(c) The County Administrator is authorized and directed to designate a bank or trust company as Bond Registrar and Paying Agent for the Bonds.
7. Prepayment or Redemption. The Principal Installments of the Bonds held by the VPSA coming due on or before July 15, 2023, and the definitive Bonds for which the Bonds held by the VPSA may be exchanged that mature on or before July 15, 2023, are not subject to prepayment or redemption prior to their stated maturities. The Principal Installments of the
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Bonds held by the VPSA coming due on or after July 15, 2024, and the definitive bonds for which the Bonds held by the VPSA may be exchanged that mature on or after July 15, 2024, are subject to prepayment or redemption at the option of the County prior to their stated maturities in whole or in part, on any date on or after July 15, 2023, upon payment of the prepayment or redemption prices (expressed as percentages of Principal Installments to be prepaid or the principal amount of the Bonds to be redeemed) set forth below plus accrued interest to the date set for prepayment or redemption:
Dates Prices
July 15, 2023 through July 14, 2024 ........................ 101% July 15, 2024 through July 14, 2025 ......................... 100.5 July 15, 2025 and thereafter ...................................... 100;
Provided, however
8.
, that the Bonds shall not be subject to prepayment or redemption prior to their stated maturities as described above without first obtaining the written consent of VPSA or the registered owner of the Bonds. Notice of any such prepayment or redemption shall be given by the Bond Registrar to the registered owner by registered mail not more than ninety (90) and not less than sixty (60) days before the date fixed for prepayment or redemption. The County Administrator is authorized to approve such other redemption provisions, including changes to the redemption dates set forth above, as may be requested by VPSA.
Execution of the Bonds
9.
. The Chairman or Vice Chairman and the Clerk or any Deputy Clerk of the Board are authorized and directed to execute and deliver the Bonds and to affix the seal of the County thereto. The manner of such execution may be by facsimile, provided that if both signatures are by facsimile, the Bonds shall not be valid until authenticated by the manual signature of the Paying Agent.
Pledge of Full Faith and Credit. For the prompt payment of the principal of, and the premium, if any, and the interest on the Bonds as the same shall become due, the full faith and credit of the County are hereby irrevocably pledged, and in each year while any of the Bonds shall be outstanding there shall be levied and collected in accordance with law an annual ad valorem tax upon all taxable property in the County subject to local taxation sufficient in amount to provide for the payment of the principal of, and the premium, if any, and the interest on the Bonds as such principal, premium, if any, and interest shall become due, which tax shall be without limitation as to rate or amount and in addition to all other taxes authorized to be levied in the County to the extent other funds of the County are not lawfully available and appropriated for such purpose.
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10. Use of Proceeds Certificate; Non-Arbitrage Certificate
11.
. The Chairman of the Board and the County Administrator, or either of them and such other officer or officers of the County as either may designate are hereby authorized and directed to execute a Non-Arbitrage Certificate, if required by bond counsel, and a Use of Proceeds Certificate setting forth the expected use and investment of the proceeds of the Bonds and containing such covenants as may be necessary in order to show compliance with the provisions of the Internal Revenue Code of 1986, as amended (the "Code"), and applicable regulations relating to the exclusion from gross income of interest on the Bonds and on the bonds to be issued by the VPSA (the "VPSA Bonds"), a portion of the proceeds of which will be used to purchase the Bonds. The Board covenants on behalf of the County that (i) the proceeds from the issuance and sale of the Bonds will be invested and expended as set forth in such Use of Proceeds Certificate and the County shall comply with the covenants and representations contained therein and (ii) the County shall comply with the provisions of the Code so that interest on the Bonds and on the VPSA Bonds will remain excludable from gross income for federal income tax purposes.
State Non-Arbitrage Program; Proceeds Agreement
12.
. The Board hereby determines that it is in the best interests of the County to authorize and direct the County Treasurer to participate in the State Non-Arbitrage Program in connection with the Bonds. The County Administrator and the Chairman of the Board, or either of them and such officer or officers of the County as either of them may designate, are hereby authorized and directed to execute and deliver a Proceeds Agreement with respect to the deposit and investment of proceeds of the Bonds by and among the County, the other participants in the sale of the VPSA Bonds, VPSA, the investment manager, and the depository in such form as may be approved by the County Administrator, whose approval will be conclusively evidenced by the execution and delivery of the Proceeds Agreement.
Continuing Disclosure Agreement
13.
. The Chairman of the Board and the County Administrator, or either of them, and such other officer or officers of the County as either of them may designate are hereby authorized and directed (i) to execute a Continuing Disclosure Agreement, setting forth the reports and notices to be filed by the County and containing such covenants as may be necessary in order to show compliance with the provisions of the Securities and Exchange Commission Rule 15c2-12, under the Securities Exchange Act of 1934, as amended, and directed, and (ii) to make all filings required by the Bond Sale Agreement should the County be determined by the VPSA to be a Material Obligated Person (as defined in the Bond Sale Agreement and the Continuing Disclosure Agreement).
Filing of Resolution. The appropriate officers or agents of the County are hereby authorized and directed to cause a certified copy of this Resolution to be filed with the Circuit Court of the County.
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14. Further Actions
15.
. The County Administrator, the Chairman of the Board, and all such other officers, employees and agents of the County as either of them may designate are hereby authorized to take such action as the County Administrator or the Chairman of the Board may consider necessary or desirable in connection with the issuance and sale of the Bonds and any such action previously taken is hereby ratified and confirmed.
Effective Date
The undersigned Clerk of the Board of Supervisors of the County of Gloucester, Virginia, hereby certifies that the foregoing constitutes a true and correct extract from the minutes of a meeting of the Board of Supervisors held on ______________ 2013, and of the whole thereof so far as applicable to the matters referred to in such extract. I hereby further certify that such meeting was a regularly scheduled meeting and that, during the consideration of the foregoing resolution, a quorum was present.
. This Resolution shall take effect immediately.
________________________________ Clerk, Board of Supervisors of the County of Gloucester, Virginia
(SEAL)
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EXHIBIT A
(FORM OF TEMPORARY BOND)
NO. TR-1 $____________ UNITED STATES OF AMERICA
COMMONWEALTH OF VIRGINIA
COUNTY OF GLOUCESTER
General Obligation School Bond
Series 2013
The COUNTY OF GLOUCESTER, VIRGINIA (the "County"), for value received,
hereby acknowledges itself indebted and promises to pay to the VIRGINIA PUBLIC SCHOOL
AUTHORITY the principal amount of ______________________ Dollars ($___________), in
annual installments in the amounts set forth on Schedule I attached hereto payable on July 15,
20___ and annually on July 15 thereafter to and including July 15, 20__ (each a "Principal
Payment Date"), together with interest from the date of this Bond on the unpaid installments,
payable semi-annually on January 15 and July 15 of each year commencing on _______ 15,
2014 (each an "Interest Payment Date;" together with any Principal Payment Date, a "Payment
Date"), at the rates per annum set forth on Schedule I
For as long as the Virginia Public School Authority is the registered owner of this Bond,
_______________, Richmond, Virginia, as bond registrar (the "Bond Registrar") shall make all
payments of principal, premium, if any, and interest on this Bond, without presentation or
surrender hereof, to the Virginia Public School Authority, in immediately available funds at or
attached hereto, subject to prepayment or
redemption as hereinafter provided. Both principal of and interest on this Bond are payable in
lawful money of the United States of America.
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before 11:00 a.m. on the applicable Payment Date or date fixed for prepayment or redemption.
If a Payment Date or date fixed for prepayment or redemption is not a business day for banks in
the Commonwealth of Virginia or for the Commonwealth of Virginia, then the payment of
principal, premium, if any, or interest on this Bond shall be made in immediately available funds
at or before 11:00 a.m. on the business day next succeeding the scheduled Payment Date or date
fixed for prepayment or redemption. Upon receipt by the registered owner of this Bond of said
payments of principal, premium, if any, and interest, written acknowledgment of the receipt
thereof shall be given promptly to the Bond Registrar, and the County shall be fully discharged
of its obligation on this Bond to the extent of the payment so made. Upon final payment, this
Bond shall be surrendered to the Bond Registrar for cancellation.
The full faith and credit of the County are irrevocably pledged for the payment of the
principal of and the premium, if any, and interest on this Bond. The resolution adopted by the
Board of Supervisors authorizing the issuance of the Bonds provides, and Section 15.2-2624 of
the Code of Virginia of 1950, as amended, requires, that there shall be levied and collected an
annual tax upon all taxable property in the County subject to local taxation sufficient to provide
for the payment of the principal, premium, if any, and interest on this Bond as the same shall
become due which tax shall be without limitation as to rate or amount and shall be in addition to
all other taxes authorized to be levied in the County to the extent other funds of the County are
not lawfully available and appropriated for such purpose.
This Bond is duly authorized and issued in compliance with and pursuant to the
Constitution and laws of the Commonwealth of Virginia, including the Public Finance Act of
1991, Chapter 26, Title 15.2, Code of Virginia of 1950, as amended, and resolutions duly
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adopted by the Board of Supervisors of the County and the School Board of the County to
provide funds for capital projects for school purposes.
This Bond may be exchanged without cost, on twenty (20) days written notice from the
Virginia Public School Authority at the office of the Bond Registrar on one or more occasions
for one or more temporary bonds or definitive bonds in marketable form and, in any case, in
fully registered form, in denominations of $5,000 and whole multiples thereof, having an equal
aggregate principal amount, having principal installments or maturities and bearing interest at
rates corresponding to the maturities of and the interest rates on the installments of principal of
this Bond then unpaid. This Bond is registered in the name of the Virginia Public School
Authority on the books of the County kept by the Bond Registrar, and the transfer of this Bond
may be effected by the registered owner of this Bond only upon due execution of an assignment
by such registered owner. Upon receipt of such assignment and the surrender of this Bond, the
Bond Registrar shall exchange this Bond for definitive Bonds as hereinabove provided, such
definitive Bonds to be registered on such registration books in the name of the assignee or
assignees named in such assignment.
The principal installments of this Bond coming due on or before July 15, 2023 and the
definitive Bonds for which this Bond may be exchanged that mature on or before July 15, 2023
are not subject to prepayment or redemption prior to their stated maturities. The principal
installments of this Bond coming due on or after July 15, 2024, and the definitive Bonds for
which this Bond may be exchanged that mature on or after July 15, 2024 are subject to
prepayment or redemption at the option of the County prior to their stated maturities in whole or
in part, on any date on or after July 15, 2023, upon payment of the prepayment or redemption
prices (expressed as percentages of principal installments to be prepaid or the principal amount
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of the Bonds to be redeemed) set forth below plus accrued interest to the date set for prepayment
or redemption:
Dates Prices
July 15, 2023 through July 14, 2024 .................................................. 101% July 15, 2024 through July 14, 2025 ................................................... 100.5 July 15, 2025 and thereafter ................................................................ 100;
Provided, however
All acts, conditions and things required by the Constitution and laws of the
Commonwealth of Virginia to happen, exist or be performed precedent to and in the issuance of
this Bond have happened, exist and have been performed in due time, form and manner as so
required, and this Bond, together with all other indebtedness of the County, is within every debt
and other limit prescribed by the Constitution and laws of the Commonwealth of Virginia.
, that the Bonds shall not be subject to prepayment or redemption prior
to their stated maturities as described above without the prior written consent of the registered
owner of the Bonds. Notice of any such prepayment or redemption shall be given by the Bond
Registrar to the registered owner by registered mail not more than ninety (90) and not less than
sixty (60) days before the date fixed for prepayment or redemption.
THE REMAINDER OF THIS PAGE IS LEFT INTENTIONALLY BLANK
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IN WITNESS WHEREOF, the Board of Supervisors of the County of Gloucester,
Virginia, has caused this Bond to be issued in the name of the County of Gloucester, Virginia, to
be signed by its Chairman or Vice-Chairman, its seal to be affixed hereto and attested by the
signature of its Clerk or any of its Deputy Clerks, and this Bond to be dated ____________,
2013.
COUNTY OF GLOUCESTER, VIRGINIA
[SEAL]
ATTEST:
By: ________________________________ Clerk, Board of Supervisors of the County of Gloucester, Virginia
By: __________________________________ Chairman, Board of Supervisors of the County of Gloucester, Virginia
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ASSIGNMENT
FOR VALUE RECEIVED, the undersigned sells, assigns and transfers unto
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE: ________________________________________
the within Bond and irrevocably constitutes and appoints
__________________________________________________ attorney to exchange said Bond for definitive bonds in lieu of which this Bond is issued and to register the transfer of such definitive bonds on the books kept for registration thereof, with full power of substitution in the premises.
Dated: ______________________ Signature Guaranteed: ___________________________________ (NOTICE: Signature(s) must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Bond Registrar which requirements will include membership or participation in STAMP or such other "signature guarantee program" as may be determined by the Bond Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.)
______________________________ Registered Owner
(NOTICE: The signature above must correspond with the name of the Registered Owner as it appears on the front of this Bond in every particular, without alteration or change.)
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OPTION 2 AT A MEETING OF THE GLOUCESTER COUNTY BOARD OF SUPERVISORS, HELD ON TUESDAY, AUGUST 6, 2013, AT 7:00 P.M., IN THE COLONIAL COURTHOUSE, 6504 MAIN STREET GLOUCESTER, VIRGINIA: ON A MOTION MADE BY ______________________ AND SECONDED BY ____________________ THE FOLLOWING RESOLUTION WAS ADOPTED BY THE FOLLOWING VOTE:
Carter M. Borden, ____; Ashley C. Chriscoe, ____; Christopher A. Hutson, ____; Andrew James, Jr., ____; John H. Northstein, ____; Robert J. Orth, ____; Louise D. Theberge, ____;
RESOLUTION AUTHORIZING THE ISSUANCE AND SALE OF GENERAL OBLIGATION SCHOOL BONDS OF THE COUNTY OF GLOUCESTER,
VIRGINIA TO BE SOLD TO THE VIRGINIA PUBLIC SCHOOL AUTHORITY AND PROVIDING FOR THE FORM AND DETAILS THEREOF
WHEREAS, the Board of Supervisors (the "Board") of the County of Gloucester, Virginia (the "County") has determined that it is necessary and expedient to borrow an amount not to exceed the amount set forth in paragraph 1 below and to issue its general obligation school bonds to finance certain capital projects for public school purposes;
WHEREAS, the Board held a public hearing on August 6, 2013, on the issuance of the Bonds (as defined below) in accordance with the requirements of Section 15.2-2606, Code of Virginia of 1950, as amended (the "Virginia Code");
WHEREAS, the School Board of the County has requested by resolution the Board to authorize the issuance of the Bonds (as hereinafter defined) and has consented to the issuance of the Bonds;
WHEREAS, the County proposes to enter into a Bond Sale Agreement (the "Bond Sale Agreement") with the Virginia Public School Authority ("VPSA") which will indicate that the amount set forth below in paragraph 1 is the amount of proceeds requested (the "Proceeds Requested") from the VPSA in connection with the sale of the Bonds;
WHEREAS, VPSA's objective is to pay the County a purchase price for the Bonds which, in VPSA's judgment, reflects the Bonds' market value (the
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"VPSA Purchase Price Objective"), taking into consideration such factors as the amortization schedule the County has requested for the Bonds relative to the amortization schedules requested by other localities, the purchase price to be received by VPSA for its bonds, and other market conditions relating to the sale of VPSA's bonds; and
WHEREAS, such factors may result in requiring the County to accept a discount, given the VPSA Purchase Price Objective and market conditions, under which circumstance the proceeds from the sale of the Bonds received by the County will be less than the Proceeds Requested.
NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF SUPERVISORS OF THE COUNTY OF GLOUCESTER, VIRGINIA:
1. Authorization of Bonds and Use of Proceeds
2.
. The Board hereby determines that it is advisable to contract a debt and to issue and sell general obligation school bonds of the County in the aggregate principal amount not to exceed $17,000,000 (the "Bonds") for the purpose of financing certain capital projects for public school purposes, consisting primarily of $12,000,000 to finance a portion of the costs of the construction and equipping of a new middle school and approximately $5,000,000 to finance the costs of HVAC improvements and roof repairs or replacements for various County schools (the "Project"). The Board hereby authorizes the issuance and sale of the Bonds in the form and upon the terms established pursuant to this Resolution.
Sale of the Bonds
3.
. It is determined to be in the best interest of the County to accept the offer of VPSA to purchase from the County, and to sell to VPSA, the Bonds at a price determined by VPSA and accepted by the Chairman of the Board or the County Administrator and upon the terms established pursuant to this Resolution. The County Administrator and the Chairman of the Board, or either of them, and such officer or officers of the County as either of them may designate, are hereby authorized and directed to enter the Bond Sale Agreement with the VPSA providing for the sale of the Bonds to VPSA in such form as may be approved by the Chairman of the Board and the County Administrator, or either of them.
Details of the Bonds. The Bonds shall be issuable in fully registered form in denominations of $5,000 and whole multiples thereof; shall be dated the date of issuance and delivery of the Bonds; shall be designated "General Obligation School Bonds, Series 2013" (or such other designation as the County Administrator may approve) shall bear interest from the date of delivery thereof payable semi-annually on each January 15 and July 15 (each an "Interest Payment Date"), at the rates established in accordance with paragraph 4 of this Resolution; and shall mature on July 15 in the years (each a "Principal Payment Date") and in the amounts established in accordance with
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paragraph 4 of this Resolution. The Interest Payment Dates and the Principal Payment Dates are subject to change at the request of VPSA.
4. Interest Rates and Principal installments
5.
. The County Administrator is hereby authorized and directed to accept the interest rates on the Bonds established by VPSA, provided that the true interest cost of the Bonds does not exceed six and one-half percent (6.5%) per annum. The County Administrator is further authorized and directed to accept the aggregate principal amount of the Bonds and the amounts of principal of the Bonds coming due on each Principal Payment Date ("Principal Installments") established by VPSA, including any changes in the Interest Payment Dates, the Principal Payment Dates and the Principal Installments which may be requested by VPSA provided that such aggregate principal amount shall not exceed the maximum amount set forth in paragraph 1 above and the final maturity of the Bonds shall not be later than 26 years from their date. The execution and delivery of the Bonds as described in paragraph 8 hereof shall conclusively evidence such Interest Payment Dates, Principal Payment Dates, interest rates, principal amount and Principal Installments as having been so accepted as authorized by this Resolution.
Form of the Bonds. The Bonds shall be initially in the form of a single, temporary typewritten bond substantially in the form attached hereto as Exhibit A
6.
.
Payment; Paying Agent and Bond Registrar
(a) For as long as VPSA is the registered owner of the Bonds, all payments of principal, premium, if any, and interest on the Bonds shall be made in immediately available funds to VPSA at or before 11:00 a.m. on the applicable Interest Payment Date, Principal Payment Date or date fixed for prepayment or redemption, or if such date is not a business day for Virginia banks or for the Commonwealth of Virginia, then at or before 11:00 a.m. on the business day next succeeding such Interest Payment Date, Principal Payment Date or date fixed for prepayment or redemption.
. The following provisions shall apply to the Bonds:
(b) All overdue payments of principal and, to the extent permitted by law, interest shall bear interest at the applicable interest rate or rates on the Bonds.
(c) The County Administrator is authorized and directed to designate a bank or trust company as Bond Registrar and Paying Agent for the Bonds.
7. Prepayment or Redemption. The Principal Installments of the Bonds held by the VPSA coming due on or before July 15, 2023, and the definitive Bonds for which the Bonds held by the VPSA may be exchanged that
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mature on or before July 15, 2023, are not subject to prepayment or redemption prior to their stated maturities. The Principal Installments of the Bonds held by the VPSA coming due on or after July 15, 2024, and the definitive bonds for which the Bonds held by the VPSA may be exchanged that mature on or after July 15, 2024, are subject to prepayment or redemption at the option of the County prior to their stated maturities in whole or in part, on any date on or after July 15, 2023, upon payment of the prepayment or redemption prices (expressed as percentages of Principal Installments to be prepaid or the principal amount of the Bonds to be redeemed) set forth below plus accrued interest to the date set for prepayment or redemption:
Dates Prices
July 15, 2023 through July 14, 2024 ........................ 101% July 15, 2024 through July 14, 2025 ......................... 100.5 July 15, 2025 and thereafter ...................................... 100;
Provided, however
8.
, that the Bonds shall not be subject to prepayment or redemption prior to their stated maturities as described above without first obtaining the written consent of VPSA or the registered owner of the Bonds. Notice of any such prepayment or redemption shall be given by the Bond Registrar to the registered owner by registered mail not more than ninety (90) and not less than sixty (60) days before the date fixed for prepayment or redemption. The County Administrator is authorized to approve such other redemption provisions, including changes to the redemption dates set forth above, as may be requested by VPSA.
Execution of the Bonds
9.
. The Chairman or Vice Chairman and the Clerk or any Deputy Clerk of the Board are authorized and directed to execute and deliver the Bonds and to affix the seal of the County thereto. The manner of such execution may be by facsimile, provided that if both signatures are by facsimile, the Bonds shall not be valid until authenticated by the manual signature of the Paying Agent.
Pledge of Full Faith and Credit. For the prompt payment of the principal of, and the premium, if any, and the interest on the Bonds as the same shall become due, the full faith and credit of the County are hereby irrevocably pledged, and in each year while any of the Bonds shall be outstanding there shall be levied and collected in accordance with law an annual ad valorem tax upon all taxable property in the County subject to local taxation sufficient in amount to provide for the payment of the principal of, and the premium, if any, and the interest on the Bonds as such principal, premium, if any, and interest shall become due, which tax shall be without limitation as to rate or amount and in addition to all other taxes authorized to be levied in the County to the extent other funds of the County are not lawfully available and appropriated for such purpose.
Page 199
10. Use of Proceeds Certificate; Non-Arbitrage Certificate
11.
. The Chairman of the Board and the County Administrator, or either of them and such other officer or officers of the County as either may designate are hereby authorized and directed to execute a Non-Arbitrage Certificate, if required by bond counsel, and a Use of Proceeds Certificate setting forth the expected use and investment of the proceeds of the Bonds and containing such covenants as may be necessary in order to show compliance with the provisions of the Internal Revenue Code of 1986, as amended (the "Code"), and applicable regulations relating to the exclusion from gross income of interest on the Bonds and on the bonds to be issued by the VPSA (the "VPSA Bonds"), a portion of the proceeds of which will be used to purchase the Bonds. The Board covenants on behalf of the County that (i) the proceeds from the issuance and sale of the Bonds will be invested and expended as set forth in such Use of Proceeds Certificate and the County shall comply with the covenants and representations contained therein and (ii) the County shall comply with the provisions of the Code so that interest on the Bonds and on the VPSA Bonds will remain excludable from gross income for federal income tax purposes.
State Non-Arbitrage Program; Proceeds Agreement
12.
. The Board hereby determines that it is in the best interests of the County to authorize and direct the County Treasurer to participate in the State Non-Arbitrage Program in connection with the Bonds. The County Administrator and the Chairman of the Board, or either of them and such officer or officers of the County as either of them may designate, are hereby authorized and directed to execute and deliver a Proceeds Agreement with respect to the deposit and investment of proceeds of the Bonds by and among the County, the other participants in the sale of the VPSA Bonds, VPSA, the investment manager, and the depository in such form as may be approved by the County Administrator, whose approval will be conclusively evidenced by the execution and delivery of the Proceeds Agreement.
Continuing Disclosure Agreement
13.
. The Chairman of the Board and the County Administrator, or either of them, and such other officer or officers of the County as either of them may designate are hereby authorized and directed (i) to execute a Continuing Disclosure Agreement, setting forth the reports and notices to be filed by the County and containing such covenants as may be necessary in order to show compliance with the provisions of the Securities and Exchange Commission Rule 15c2-12, under the Securities Exchange Act of 1934, as amended, and directed, and (ii) to make all filings required by the Bond Sale Agreement should the County be determined by the VPSA to be a Material Obligated Person (as defined in the Bond Sale Agreement and the Continuing Disclosure Agreement).
Filing of Resolution. The appropriate officers or agents of the County are hereby authorized and directed to cause a certified copy of this Resolution to be filed with the Circuit Court of the County.
Page 200
14. Further Actions
15.
. The County Administrator, the Chairman of the Board, and all such other officers, employees and agents of the County as either of them may designate are hereby authorized to take such action as the County Administrator or the Chairman of the Board may consider necessary or desirable in connection with the issuance and sale of the Bonds and any such action previously taken is hereby ratified and confirmed.
Effective Date
The undersigned Clerk of the Board of Supervisors of the County of Gloucester, Virginia, hereby certifies that the foregoing constitutes a true and correct extract from the minutes of a meeting of the Board of Supervisors held on ______________ 2013, and of the whole thereof so far as applicable to the matters referred to in such extract. I hereby further certify that such meeting was a regularly scheduled meeting and that, during the consideration of the foregoing resolution, a quorum was present.
. This Resolution shall take effect immediately.
________________________________ Clerk, Board of Supervisors of the County of Gloucester, Virginia
(SEAL)
Page 201
EXHIBIT A
(FORM OF TEMPORARY BOND)
NO. TR-1 $____________ UNITED STATES OF AMERICA
COMMONWEALTH OF VIRGINIA
COUNTY OF GLOUCESTER
General Obligation School Bond
Series 2013
The COUNTY OF GLOUCESTER, VIRGINIA (the "County"), for value received,
hereby acknowledges itself indebted and promises to pay to the VIRGINIA PUBLIC SCHOOL
AUTHORITY the principal amount of ______________________ Dollars ($___________), in
annual installments in the amounts set forth on Schedule I attached hereto payable on July 15,
20___ and annually on July 15 thereafter to and including July 15, 20__ (each a "Principal
Payment Date"), together with interest from the date of this Bond on the unpaid installments,
payable semi-annually on January 15 and July 15 of each year commencing on _______ 15,
2014 (each an "Interest Payment Date;" together with any Principal Payment Date, a "Payment
Date"), at the rates per annum set forth on Schedule I
For as long as the Virginia Public School Authority is the registered owner of this Bond,
_______________, Richmond, Virginia, as bond registrar (the "Bond Registrar") shall make all
payments of principal, premium, if any, and interest on this Bond, without presentation or
surrender hereof, to the Virginia Public School Authority, in immediately available funds at or
attached hereto, subject to prepayment or
redemption as hereinafter provided. Both principal of and interest on this Bond are payable in
lawful money of the United States of America.
Page 202
before 11:00 a.m. on the applicable Payment Date or date fixed for prepayment or redemption.
If a Payment Date or date fixed for prepayment or redemption is not a business day for banks in
the Commonwealth of Virginia or for the Commonwealth of Virginia, then the payment of
principal, premium, if any, or interest on this Bond shall be made in immediately available funds
at or before 11:00 a.m. on the business day next succeeding the scheduled Payment Date or date
fixed for prepayment or redemption. Upon receipt by the registered owner of this Bond of said
payments of principal, premium, if any, and interest, written acknowledgment of the receipt
thereof shall be given promptly to the Bond Registrar, and the County shall be fully discharged
of its obligation on this Bond to the extent of the payment so made. Upon final payment, this
Bond shall be surrendered to the Bond Registrar for cancellation.
The full faith and credit of the County are irrevocably pledged for the payment of the
principal of and the premium, if any, and interest on this Bond. The resolution adopted by the
Board of Supervisors authorizing the issuance of the Bonds provides, and Section 15.2-2624 of
the Code of Virginia of 1950, as amended, requires, that there shall be levied and collected an
annual tax upon all taxable property in the County subject to local taxation sufficient to provide
for the payment of the principal, premium, if any, and interest on this Bond as the same shall
become due which tax shall be without limitation as to rate or amount and shall be in addition to
all other taxes authorized to be levied in the County to the extent other funds of the County are
not lawfully available and appropriated for such purpose.
This Bond is duly authorized and issued in compliance with and pursuant to the
Constitution and laws of the Commonwealth of Virginia, including the Public Finance Act of
1991, Chapter 26, Title 15.2, Code of Virginia of 1950, as amended, and resolutions duly
Page 203
adopted by the Board of Supervisors of the County and the School Board of the County to
provide funds for capital projects for school purposes.
This Bond may be exchanged without cost, on twenty (20) days written notice from the
Virginia Public School Authority at the office of the Bond Registrar on one or more occasions
for one or more temporary bonds or definitive bonds in marketable form and, in any case, in
fully registered form, in denominations of $5,000 and whole multiples thereof, having an equal
aggregate principal amount, having principal installments or maturities and bearing interest at
rates corresponding to the maturities of and the interest rates on the installments of principal of
this Bond then unpaid. This Bond is registered in the name of the Virginia Public School
Authority on the books of the County kept by the Bond Registrar, and the transfer of this Bond
may be effected by the registered owner of this Bond only upon due execution of an assignment
by such registered owner. Upon receipt of such assignment and the surrender of this Bond, the
Bond Registrar shall exchange this Bond for definitive Bonds as hereinabove provided, such
definitive Bonds to be registered on such registration books in the name of the assignee or
assignees named in such assignment.
The principal installments of this Bond coming due on or before July 15, 2023 and the
definitive Bonds for which this Bond may be exchanged that mature on or before July 15, 2023
are not subject to prepayment or redemption prior to their stated maturities. The principal
installments of this Bond coming due on or after July 15, 2024, and the definitive Bonds for
which this Bond may be exchanged that mature on or after July 15, 2024 are subject to
prepayment or redemption at the option of the County prior to their stated maturities in whole or
in part, on any date on or after July 15, 2023, upon payment of the prepayment or redemption
prices (expressed as percentages of principal installments to be prepaid or the principal amount
Page 204
of the Bonds to be redeemed) set forth below plus accrued interest to the date set for prepayment
or redemption:
Dates Prices
July 15, 2023 through July 14, 2024 .................................................. 101% July 15, 2024 through July 14, 2025 ................................................... 100.5 July 15, 2025 and thereafter ................................................................ 100;
Provided, however
All acts, conditions and things required by the Constitution and laws of the
Commonwealth of Virginia to happen, exist or be performed precedent to and in the issuance of
this Bond have happened, exist and have been performed in due time, form and manner as so
required, and this Bond, together with all other indebtedness of the County, is within every debt
and other limit prescribed by the Constitution and laws of the Commonwealth of Virginia.
, that the Bonds shall not be subject to prepayment or redemption prior
to their stated maturities as described above without the prior written consent of the registered
owner of the Bonds. Notice of any such prepayment or redemption shall be given by the Bond
Registrar to the registered owner by registered mail not more than ninety (90) and not less than
sixty (60) days before the date fixed for prepayment or redemption.
THE REMAINDER OF THIS PAGE IS LEFT INTENTIONALLY BLANK
Page 205
IN WITNESS WHEREOF, the Board of Supervisors of the County of Gloucester,
Virginia, has caused this Bond to be issued in the name of the County of Gloucester, Virginia, to
be signed by its Chairman or Vice-Chairman, its seal to be affixed hereto and attested by the
signature of its Clerk or any of its Deputy Clerks, and this Bond to be dated ____________,
2013.
COUNTY OF GLOUCESTER, VIRGINIA
[SEAL]
ATTEST:
By: ________________________________ Clerk, Board of Supervisors of the County of Gloucester, Virginia
By: __________________________________ Chairman, Board of Supervisors of the County of Gloucester, Virginia
Page 206
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned sells, assigns and transfers unto
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE: ________________________________________
the within Bond and irrevocably constitutes and appoints
__________________________________________________ attorney to exchange said Bond for definitive bonds in lieu of which this Bond is issued and to register the transfer of such definitive bonds on the books kept for registration thereof, with full power of substitution in the premises.
Dated: ______________________ Signature Guaranteed: ___________________________________ (NOTICE: Signature(s) must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Bond Registrar which requirements will include membership or participation in STAMP or such other "signature guarantee program" as may be determined by the Bond Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.)
______________________________ Registered Owner
(NOTICE: The signature above must correspond with the name of the Registered Owner as it appears on the front of this Bond in every particular, without alteration or change.)
Page 207
Discussion Materials
County of Gloucester, VA
Prepared By
Davenport & Company LLC Member NYSE - FINRA - SIPC
August 6, 2013
1
Page 208
DAVENPORT & COMPANY LLC
County of Gloucester, VA
2
Background
Gloucester County (the “County”) is currently in the process of planning for and financing the Construction of Page Middle School.
The Construction is estimated to cost $26 million and the construction bids are expected to be received this month (i.e. July 2013).
The Construction is expected to be financed as follows:
Insurance Payout: $8,000,000 (To be Received)
Qualified School Construction Bonds: 6,000,000 (Already Received)
Remaining Required Financing: 12,000,000 (To be Received)
Total: $26,000,000
The County also expects a VDOT Revenue Sharing Grant of approximately $1,000,000.
Additionally, the County has a $5,000,000 need for School Capital in its Adopted Fiscal Year 2014 Budget related to HVAC and Roof Projects.
Page 209
DAVENPORT & COMPANY LLC
County of Gloucester, VA
3
New Money Financings
Following discussions with County Staff, Davenport & Company LLC (“Davenport”) has developed three models examining Debt Affordability, which can be found on the following pages and are comprised of the following:
Case 1: $12 Million New Money Financing (Page Middle School Only)
Case 2: $17 Million New Money Financing (Page Middle School and HVAC/Roof Projects)
Case 3: $12 Million New Money Financing (Page Middle School Only) with alternative principal repayment structure
All cases assume that the borrowing occurs as part of the Fall 2013 Virginia Public School Authority Pooled Bond Issuance.
A 20 Year Level Debt Service structure has been assumed for Cases 1 and 2; Case 3 assumes a structured principal amortization.
All Cases assume that 1¢ is equal to $400,000, and is not expected to grow in value.
While the VPSA Schedule is not yet available, VPSA has typically closed its Fall Pool Bond Issuance in the November timeframe (i.e. the County can likely expect to receive funds around this time).
Page 210
DAVENPORT & COMPANY LLC
County of Gloucester, VA
4
Debt Affordability Analysis – Case 1
A B C D E F G H I J K L
FY Existing DS(1)
FY 2014
Remaining
Required
Financing(2)
Total
FY 2014 Net
Budget
Appropriation(1,3)
FY 2015 Tax
Increase(4)
Total Revenues
Available
Surplus/
(Deficit)
Capital Reserve
Utilized
Adjusted Surplus/
(Deficit)
Estimated
Incremental Tax
Equivalent
Capital Reserve
Fund Balance
2014 4,397,219 - 4,397,219 4,397,219 - 4,397,219 - - - -- -
2015 4,371,318 919,375 5,290,693 4,397,219 1,000,000 5,397,219 106,527 - 106,527 2.50 106,527
2016 4,260,521 919,750 5,180,271 4,397,219 1,000,000 5,397,219 216,948 - 216,948 -- 323,475
2017 4,234,812 921,300 5,156,112 4,397,219 1,000,000 5,397,219 241,108 - 241,108 -- 564,583
2018 4,101,627 921,950 5,023,577 4,397,219 1,000,000 5,397,219 373,642 - 373,642 -- 938,225
2019 2,884,809 921,700 3,806,509 4,397,219 1,000,000 5,397,219 1,590,711 - 1,590,711 -- 2,528,936
2020 2,644,223 920,550 3,564,773 4,397,219 1,000,000 5,397,219 1,832,446 - 1,832,446 -- 4,361,382
2021 2,633,104 918,500 3,551,604 4,397,219 1,000,000 5,397,219 1,845,616 - 1,845,616 -- 6,206,998
2022 2,627,046 920,438 3,547,483 4,397,219 1,000,000 5,397,219 1,849,736 - 1,849,736 -- 8,056,734
2023 2,595,417 921,250 3,516,667 4,397,219 1,000,000 5,397,219 1,880,552 - 1,880,552 -- 9,937,286
2024 2,583,412 920,938 3,504,349 4,397,219 1,000,000 5,397,219 1,892,870 - 1,892,870 -- 11,830,156
2025 1,851,370 919,500 2,770,870 4,397,219 1,000,000 5,397,219 2,626,349 - 2,626,349 -- 14,456,506
2026 1,839,343 916,938 2,756,281 4,397,219 1,000,000 5,397,219 2,640,939 - 2,640,939 -- 17,097,445
2027 1,824,937 918,138 2,743,075 4,397,219 1,000,000 5,397,219 2,654,145 - 2,654,145 -- 19,751,590
2028 1,319,919 917,988 2,237,907 4,397,219 1,000,000 5,397,219 3,159,313 - 3,159,313 -- 22,910,902
2029 935,670 921,375 1,857,045 4,397,219 1,000,000 5,397,219 3,540,175 - 3,540,175 -- 26,451,077
2030 936,032 918,300 1,854,332 4,397,219 1,000,000 5,397,219 3,542,887 - 3,542,887 -- 29,993,964
2031 939,233 918,763 1,857,995 4,397,219 1,000,000 5,397,219 3,539,224 - 3,539,224 -- 33,533,188
2032 307,256 917,650 1,224,906 4,397,219 1,000,000 5,397,219 4,172,314 - 4,172,314 -- 37,705,502
2033 307,257 919,850 1,227,107 4,397,219 1,000,000 5,397,219 4,170,113 - 4,170,113 -- 41,875,614
2034 307,257 920,250 1,227,507 4,397,219 1,000,000 5,397,219 4,169,713 - 4,169,713 -- 46,045,327
2035 297,235 - 297,235 4,397,219 1,000,000 5,397,219 5,099,985 - 5,099,985 -- 51,145,312
Total 48,199,016 18,394,500 66,593,516 Total - Total Tax Effect 2.50¢
(1)Assumes the Federal Subsidies on the QSCBs are equal to 91.3% of the interest payments on the QSCBs, per the County's Budget; also includes the VRS Refunding Note.
(2)Assumes the $12,000,000 FY 2014 Remaining Required Financing is borrowed at 4.5% over 20 years with debt service payments beginning in FY 2015.
(3)Assumes the County budgets its FY 2014 Debt Service going forward.
(4)Assumes the value of 1 penny is equal to $400,000 and does not grow over time.
Revenues Available for Debt ServiceDebt Service Requirements Debt Service Cash Flow Surplus (Deficit)
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DAVENPORT & COMPANY LLC
County of Gloucester, VA
0%
2%
4%
6%
8%
10%
20
13
20
14
20
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20
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20
17
20
18
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20
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Page Middle
Budgeted/Projected Utility Transfer
Existing
Policy
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
20
13
20
14
20
15
20
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20
17
20
18
20
19
20
20
20
21
20
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20
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27
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29
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30
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32
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34
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35
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Existing
Policy
$-
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
20
13
20
14
20
15
20
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Existing
Policy
5
Key Debt Ratios – Case 1
10-Year Payout Ratio
Debt per Capita
Debt to Assessed Value
Debt Service vs. Expenditures
Fiscal Payout
Year Ratio
2014 60.1%
2015 63.5%
2016 65.7%
2017 68.2%
2018 71.4%
2019 73.9%
2020 76.9%
2021 80.7%
2022 85.4%
2023 88.5%
2024 92.7%
2025 98.4%
2026 100.0%
2027 100.0%
2028 100.0%
2029 100.0%
2030 100.0%
2031 100.0%
2032 100.0%
2033 100.0%
2034 100.0%
2035 100.0%
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DAVENPORT & COMPANY LLC
County of Gloucester, VA
6
Debt Affordability Analysis – Case 2
A B C D E F G H I J K L M
FY Existing DS(1)
FY 2014
Remaining
Required
Financing(2)
FY 2014
HVAC/Roof
Repair
Financing(3)
Total
FY 2014 Net
Budget
Appropriation(1,4)
FY 2015 Tax
Increase(5)
Total Revenues
Available
Surplus/
(Deficit)
Capital Reserve
Utilized
Adjusted Surplus/
(Deficit)
Estimated
Incremental Tax
Equivalent
Capital Reserve
Fund Balance
2014 4,397,219 - - 4,397,219 4,397,219 - 4,397,219 - - - -- -
2015 4,371,318 919,375 383,073 5,673,766 4,397,219 1,400,000 5,797,219 123,454 - 123,454 3.50 123,454
2016 4,260,521 919,750 383,229 5,563,500 4,397,219 1,400,000 5,797,219 233,719 - 233,719 -- 357,173
2017 4,234,812 921,300 383,875 5,539,987 4,397,219 1,400,000 5,797,219 257,233 - 257,233 -- 614,406
2018 4,101,627 921,950 384,146 5,407,723 4,397,219 1,400,000 5,797,219 389,496 - 389,496 -- 1,003,902
2019 2,884,809 921,700 384,042 4,190,550 4,397,219 1,400,000 5,797,219 1,606,669 - 1,606,669 -- 2,610,571
2020 2,644,223 920,550 383,563 3,948,336 4,397,219 1,400,000 5,797,219 1,848,884 - 1,848,884 -- 4,459,455
2021 2,633,104 918,500 382,708 3,934,312 4,397,219 1,400,000 5,797,219 1,862,908 - 1,862,908 -- 6,322,362
2022 2,627,046 920,438 383,516 3,930,999 4,397,219 1,400,000 5,797,219 1,866,221 - 1,866,221 -- 8,188,583
2023 2,595,417 921,250 383,854 3,900,521 4,397,219 1,400,000 5,797,219 1,896,698 - 1,896,698 -- 10,085,281
2024 2,583,412 920,938 383,724 3,888,073 4,397,219 1,400,000 5,797,219 1,909,146 - 1,909,146 -- 11,994,427
2025 1,851,370 919,500 383,125 3,153,995 4,397,219 1,400,000 5,797,219 2,643,224 - 2,643,224 -- 14,637,652
2026 1,839,343 916,938 382,057 3,138,338 4,397,219 1,400,000 5,797,219 2,658,882 - 2,658,882 -- 17,296,533
2027 1,824,937 918,138 382,557 3,125,632 4,397,219 1,400,000 5,797,219 2,671,588 - 2,671,588 -- 19,968,121
2028 1,319,919 917,988 382,495 2,620,402 4,397,219 1,400,000 5,797,219 3,176,818 - 3,176,818 -- 23,144,939
2029 935,670 921,375 383,906 2,240,951 4,397,219 1,400,000 5,797,219 3,556,268 - 3,556,268 -- 26,701,207
2030 936,032 918,300 382,625 2,236,957 4,397,219 1,400,000 5,797,219 3,560,262 - 3,560,262 -- 30,261,469
2031 939,233 918,763 382,818 2,240,813 4,397,219 1,400,000 5,797,219 3,556,406 - 3,556,406 -- 33,817,876
2032 307,256 917,650 382,354 1,607,260 4,397,219 1,400,000 5,797,219 4,189,960 - 4,189,960 -- 38,007,835
2033 307,257 919,850 383,271 1,610,378 4,397,219 1,400,000 5,797,219 4,186,842 - 4,186,842 -- 42,194,677
2034 307,257 920,250 383,438 1,610,944 4,397,219 1,400,000 5,797,219 4,186,275 - 4,186,275 -- 46,380,952
2035 297,235 - - 297,235 4,397,219 1,400,000 5,797,219 5,499,985 - 5,499,985 -- 51,880,937
Total 48,199,016 18,394,500 7,664,375 74,257,891 Total - Total Tax Effect 3.50¢
(1)Assumes the Federal Subsidies on the QSCBs are equal to 91.3% of the interest payments on the QSCBs, per the County's Budget; also includes the VRS Refunding Note.
(2)Assumes the $12,000,000 FY 2014 Remaining Required Financing is borrowed at 4.5% over 20 years with debt service payments beginning in FY 2015.
(3)Assumes the $5,000,000 FY 2014 HVAC/Roof Financing is borrowed at 4.5% over 20 years with debt service payments beginning in FY 2015.
(4)Assumes the County budgets its FY 2014 Debt Service going forward.
(5)Assumes the value of 1 penny is equal to $400,000 and does not grow over time.
Revenues Available for Debt ServiceDebt Service Requirements Debt Service Cash Flow Surplus (Deficit)
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DAVENPORT & COMPANY LLC
County of Gloucester, VA
0%
2%
4%
6%
8%
10%
20
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HVAC/Roof
Page Middle
Budgeted/Projected Utility Transfer
Existing
Policy
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
20
13
20
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20
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20
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20
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20
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$-
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$400
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$800
$1,000
$1,200
$1,400
$1,600
$1,800
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Policy
7
Key Debt Ratios – Case 2
10-Year Payout Ratio
Debt per Capita
Debt to Assessed Value
Debt Service vs. Expenditures
Fiscal Payout
Year Ratio
2014 57.7%
2015 61.1%
2016 63.3%
2017 65.8%
2018 69.0%
2019 71.6%
2020 74.7%
2021 78.7%
2022 83.6%
2023 87.3%
2024 92.1%
2025 98.6%
2026 100.0%
2027 100.0%
2028 100.0%
2029 100.0%
2030 100.0%
2031 100.0%
2032 100.0%
2033 100.0%
2034 100.0%
2035 100.0%
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DAVENPORT & COMPANY LLC
County of Gloucester, VA
8
Debt Affordability Analysis – Case 3
A B C D E F G H I J K L
FY Existing DS(1)
FY 2014
Remaining
Required
Financing(2)
Total
FY 2014 Net
Budget
Appropriation(1,3)
FY 2015 Tax
Increase(4)
Total Revenues
Available
Surplus/
(Deficit)
Capital Reserve
Utilized
Adjusted Surplus/
(Deficit)
Estimated
Incremental Tax
Equivalent
Capital Reserve
Fund Balance
2014 4,397,219 - 4,397,219 4,397,219 - 4,397,219 - - - -- -
2015 4,371,318 825,000 5,196,318 4,397,219 800,000 5,197,219 902 - 902 2.00 902
2016 4,260,521 933,250 5,193,771 4,397,219 800,000 5,197,219 3,448 - 3,448 -- 4,350
2017 4,234,812 935,250 5,170,062 4,397,219 800,000 5,197,219 27,158 - 27,158 -- 31,508
2018 4,101,627 941,350 5,042,977 4,397,219 800,000 5,197,219 154,242 - 154,242 -- 185,750
2019 2,884,809 941,325 3,826,134 4,397,219 800,000 5,197,219 1,371,086 - 1,371,086 -- 1,556,836
2020 2,644,223 940,400 3,584,623 4,397,219 800,000 5,197,219 1,612,596 - 1,612,596 -- 3,169,432
2021 2,633,104 938,575 3,571,679 4,397,219 800,000 5,197,219 1,625,541 - 1,625,541 -- 4,794,973
2022 2,627,046 940,850 3,567,896 4,397,219 800,000 5,197,219 1,629,324 - 1,629,324 -- 6,424,297
2023 2,595,417 942,000 3,537,417 4,397,219 800,000 5,197,219 1,659,802 - 1,659,802 -- 8,084,099
2024 2,583,412 942,025 3,525,437 4,397,219 800,000 5,197,219 1,671,782 - 1,671,782 -- 9,755,881
2025 1,851,370 940,925 2,792,295 4,397,219 800,000 5,197,219 2,404,924 - 2,404,924 -- 12,160,806
2026 1,839,343 938,700 2,778,043 4,397,219 800,000 5,197,219 2,419,176 - 2,419,176 -- 14,579,982
2027 1,824,937 940,350 2,765,287 4,397,219 800,000 5,197,219 2,431,932 - 2,431,932 -- 17,011,915
2028 1,319,919 940,650 2,260,569 4,397,219 800,000 5,197,219 2,936,650 - 2,936,650 -- 19,948,565
2029 935,670 944,600 1,880,270 4,397,219 800,000 5,197,219 3,316,950 - 3,316,950 -- 23,265,514
2030 936,032 941,975 1,878,007 4,397,219 800,000 5,197,219 3,319,212 - 3,319,212 -- 26,584,727
2031 939,233 943,000 1,882,233 4,397,219 800,000 5,197,219 3,314,987 - 3,314,987 -- 29,899,713
2032 307,256 947,450 1,254,706 4,397,219 800,000 5,197,219 3,942,514 - 3,942,514 -- 33,842,227
2033 307,257 950,100 1,257,357 4,397,219 800,000 5,197,219 3,939,863 - 3,939,863 -- 37,782,089
2034 307,257 930,475 1,237,732 4,397,219 800,000 5,197,219 3,959,488 - 3,959,488 -- 41,741,577
2035 297,235 - 297,235 4,397,219 800,000 5,197,219 4,899,985 - 4,899,985 -- 46,641,562
Total 48,199,016 18,698,250 66,897,266 Total - Total Tax Effect 2.00¢
(1)Assumes the Federal Subsidies on the QSCBs are equal to 91.3% of the interest payments on the QSCBs, per the County's Budget; also includes the VRS Refunding Note.
(2)Assumes the $12,000,000 FY 2014 Remaining Required Financing is borrowed at 4.5% over 20 years with structured debt service payments beginning in FY 2015.
(3)Assumes the County budgets its FY 2014 Debt Service going forward.
(4)Assumes the value of 1 penny is equal to $400,000 and does not grow over time.
Revenues Available for Debt ServiceDebt Service Requirements Debt Service Cash Flow Surplus (Deficit)
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DAVENPORT & COMPANY LLC
County of Gloucester, VA
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
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0%
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2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034
0%
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Budgeted/Projected Utility Transfer
Existing
Policy
$-
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
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Existing
Policy
9
Key Debt Ratios – Case 3
10-Year Payout Ratio
Debt per Capita
Debt to Assessed Value
Debt Service vs. Expenditures
Fiscal Payout
Year Ratio
2014 60.0%
2015 63.4%
2016 65.6%
2017 68.2%
2018 71.3%
2019 73.9%
2020 76.8%
2021 80.6%
2022 85.3%
2023 88.5%
2024 92.7%
2025 98.4%
2026 100.0%
2027 100.0%
2028 100.0%
2029 100.0%
2030 100.0%
2031 100.0%
2032 100.0%
2033 100.0%
2034 100.0%
2035 100.0%
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DAVENPORT & COMPANY LLC
County of Gloucester, VA
Observations
Overall, this presentation has discussed capital, rather than focusing on operating costs. Any additional/unfunded operating costs would be additive to the proposed tax impact model;
Debt Service on the $12 million Page Middle School Financing is estimated to have an impact that is roughly equivalent to 2.0¢ - 2.5¢ pennies (assuming each penny is worth $400,000);
Debt Service attributable to the $5 million HVAC and Roof Projects is estimated to have an additional 1¢ equivalent impact, or 3.0 ¢ - 3.5¢ when combined with the Page Financing; and,
The County has historically managed its debt in a conservative fashion. Having policies in place is seen as a positive from a credit rating and “Best Practice” perspective, and the County should strive to follow these policies in its operating and capital planning efforts.
10
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DAVENPORT & COMPANY LLC
County of Gloucester, VA
Next Steps
11
Date Action
July 2, 2013 County Board considers approval of Preliminary Authorizing Resolution.
July 9, 2013 School Board considers approval of VPSA application.
August 6, 2013 County Board conducts Public Hearing.
August Timeframe VPSA application submitted.
September 3, 2013 County Board considers final approval of the financing.
Oct./Nov. Timeframe VPSA Bonds are sold.
Nov./Dec. Timeframe VPSA Bonds are closed and funds are available for the Project.
Page 218
DAVENPORT & COMPANY LLC
County of Gloucester, VA
Disclaimer
Unless the enclosed material specifically addresses Davenport & Company LLC (“Davenport”) provision of financial advisory services or investment advisory services, or Davenport has an agreement with
the recipient to provide such services, the recipient should assume that Davenport is acting in the capacity of an underwriter or placement agent.
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disclose that the underwriter’s primary role is to purchase securities with a view to distribution in an arm’s length commercial transaction with the issuer and the underwriter has financial and other interests
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Version 07/24/13 CH TC Page 219
County of Gloucester Finance Department
6467 Main Street Gloucester, Virginia 23061 (804)693-6927
Interoffice Memorandum To: Gloucester County Board of Supervisors From: Nickie C. Champion, Director of Financial Services CC: Howard B. Kiser, Ed.D., Superintendent of Schools Brenda G. Garton, County Administrator Joanne C. Wright, Director of Budget and Finance, GCPS Date: July 8, 2013 Re: School HVAC and Roof Replacement Capital Program It came to my attention at the July 2nd Board meeting that I had not provided sufficient materials for you to make an informed decision on the possible $5.0 million school borrowing request for HVAC and school roof needs. In order to rectify that issue, I would like to provide the following summary of events and supporting documents:
• One very important financial planning tool for local governments is a Capital Improvements Program. Investments in capital infrastructure, facilities, and equipment are quite often large and very expensive. Special planning, financing, and management procedures are called for to ensure that the projects and acquisitions are needed, well designed, and efficiently implemented (meaning the money we invest in capital is well spent). In Gloucester County, we define a capital project for planning purposes as a tangible asset that has a useful life of at least 5 years or costs at least $50,000.
• The annual capital planning process begins each fall with all County departments, County
agencies, and the School Division being asked to submit any project they would like to see considered for inclusion in the final adopted Capital Improvements Plan.
• The School Board approved their FY 2014-2018 Capital Improvements Plan on September
11, 2012. This plan was then forwarded to the County for inclusion in the capital planning process and funding consideration. Please see attachment A, which includes a summary of all submitted school projects as well as itemized details for roof replacement and HVAC needs. The total five-year request for roof replacements was $1,689,000 and HVAC was $21,155,308. For additional planning purposes, the School Division also included amounts out beyond FY 2018.
• The County Administrator’s Capital Improvements Advisory Committee met to consider all requests (School Board as well as County departments and agencies) late in 2012.
Page 220
Individual departments and agencies including the School Division made presentations to the Committee. Attachment B includes a portion of the School Division’s presentation on their HVAC and roof replacement program. The pictures show conditions of the three most pressing School needs (Petsworth, Botetourt, and Achilles).
• The Committee made their final report to the Board of Supervisors at the January 15, 2013 meeting. Please see attachment C, which includes a two-page summary of all County and School projects considered with the Committee’s recommended funding schedule. The CIP Advisory Committee attempted to balance the considerable amount of money required for projects, within the current debt policies of the County, with the needs of competing demands for capital investment. The Committee’s final product included projects funded from a mix of dedicated revenue, excess fund balance (cash funding), possible grants, and issuing new debt. Attachment D is the actual memorandum from the Capital Improvements Advisory Committee to the Board of Supervisors. Included in the memorandum are many of the reasons for making their recommendation. Please note in particular the area shaded in yellow, which was the recommendation addressing the most critical school roofs and HVAC issues (borrowing $5.0 million) and deferring the remainder of the project to a future year.
• Also included on attachment C are the many projects the Committee did not recommend for immediate funding, but as you review the list many would be good candidates for pay-as-you-go (cash funded) projects sometime in the future.
• Finally, the Board adopted the Capital Improvements Plan for FY 2014-2018 on April 16,
2013, and the plan has been posted to the County’s web site at http://www.gloucesterva.info/Finance/BudgetsandFinancialReports/tabid/493/Default.aspx. On that same date, the Board also adopted the FY 2014 budget, which included appropriations for the first year of the Plan.
So, the request for $5.0 million in borrowing for the School HVAC needs and roof replacements is the result of a bigger process (long term capital planning) and a bigger project (many dollars over many years). Use and Adequacy of Fund Balance Another topic discussed at the July 2, 2013 Board meeting concerned the use of excess fund balance in the General Fund for capital projects. I have attached a very conservative and very preliminary estimate of our unrestricted/uncommitted fund balance at June 30, 2013 (Attachment E). I expect us to do better than this estimate, but I hesitate to be very optimistic at this time. As you review Attachment E, you will note that the FY 2014 budget includes the use of $1,408,551 in fund balance (meaning cash in this case) for capital projects, and this amount is reflected in the estimated fund balance. Additionally, please note that I have included the recommendation of the Capital Improvements Advisory Committee to use $750,000 in fund balance in FY 2015 to address software needs of the Treasurer and Commissioner of the Revenue. While we have not publicly discussed the project, the Committee felt it was very important to begin replacing the revenue generating software in these offices. Our current software was installed in 1999 and is being serviced by a vendor with questionable business viability. The Board has had many discussions on what is an adequate level of unrestricted/uncommitted fund balance. While we use fund balance and cash interchangeably, they are not the same. Fund balance is the cumulative difference of all revenues and expenditures from the government’s
Page 221
creation. So, if you look at our governmental funds balance sheet, you will see that Fund Assets minus Fund Liabilities equals Fund Balance. Because cash is a fund asset, it enters into the equation and has an effect upon fund balance. Cash, however, is only one of a number of fund assets and fund liabilities; therefore, it is possible for fund balance to remain unchanged while cash balances decline or increase during a period of time. Having said this, generally sufficient fund balances will ensure sufficient cash balances. Some will question why fund balance is even necessary. Two important goals of local government are the maintenance of a stable tax and revenue structure and the orderly delivery of services to residents. Determining how well our local economy will perform and its subsequent impact on our finances if one of the most difficult tasks we face. As we recently experienced, changes in economic activity affect both the revenue structure and government spending. Of critical importance to governments attempting to maintain fiscal stability is that the amount of revenue continues to match or exceed the expenditures. Although there is some maneuvering room in our budgets, particularly if we defer purchases of goods, services, capital, etc, we should accept the fact that uncertainty exists and hedge against it through the development and use of adequate levels of fund balance. One contingency that deserves consideration deals with surprises – particularly negative ones. Forward thinking and planning against unforeseen events, including potential revenue shortfalls despite reasonable economic forecasts, are viewed positively. Sometimes, future challenges are not completely unforeseen. In our case, when the state continues to contemplate initiatives that limit or reduce revenue, we should have meaningful contingency plans against the possibility of state ordered tax cuts. Likewise, since we are located in a zone subject to hurricanes, we should have a reasonable contingency plan for dealing with financial, economic, and social challenges posed by storm destruction. We have a healthy agenda of large capital projects (Page Middle School, Thomas Calhoun Walker Education Center, build-out of the Emergency Operations Center, and perhaps a school roof/HVAC project). It would be reasonable to consider potential construction unknowns as a contingency and good use of excess fund balance. The adequacy of our unrestricted/uncommitted fund balance should include an examination of past experiences, including an analysis of cash flows that look at revenue collection and spending patterns. One financial challenge that we face twice each year deals with our cash flow (tax collection practices vs. spending patterns). For instance, since we rely on a large percentage of taxes collected late in the fiscal year, we rely on sufficient fund balance for cash flow purposes. As long as we can meet our seasonal cash needs from working cash on hand, we can avoid issuing cash flow notes (such as tax anticipation notes) and all the potential problems that come with issuing notes in financial shortfalls. Our County budgets in a conservative manner that benefits our community. We not only try to come in under expenditures, we also try to reduce expenditures during those times we expect to see revenue shortfalls. While governmental budgeting is always challenging in that requests for funds will always exceed our limited resources, this philosophy has helped us prevent financial distress during tough economic times. Additionally, looking back to FY 2005 this fiscal conservatism has helped us accumulate and use over $10.0 million for cash capital projects. This is no small feat, but as you review Attachment F, you will see that we have been able to make substantial cash investments in several major projects. These are examples of debt avoidance by funding capital projects with cash. Please do not hesitate to contact me if you need further information or have any questions.
Page 222
Project Title New Middle School Grades 6-8 * Renovation of "A" Hall at GHS Bus Compound Relocation/Garage Consolidation
Roofing Replacement at Various Schools
HVAC Replacement at Various Schools
Flooring Replacement at Peasley Middle and GHS
Casework Replacement at Achilles, Botetourt and Petsworth
Bathroom Renovations at Achilles, Botetourt, Petsworth and GHS Sports Track at GHS
Tennis Courts at GHS
School Bus Replacement Program
New Achilles Bus Loop
Locker Replacement at Peasley Middle School
Playground Equipment Replacement at Botetourt and Petsworth
Gloucester County Public Schools Long Range Capital Plan
FY 2014-2018
2014 2015 2016 15,467,397 11,978,266
300000 2,350,000 500,000 600,000 5,400,000
196,000 840,000 653,000
1,385,044 3,103,024 3,077,922
200,000
95,000
160000 200,000 200,000
233,820
400,250
1,663,450 450,885 185.764
70,000
360,000
GHS Automotive Shop· Apron Paving and Installation of Water/Oil Separator 130,000 Subtotals: 20,700,961 24,812,175 4,686,686
2017 2018
-
- -5.010,500 8,578,818
861,012 492690
630,000
200,000
6,701,512 9,071,508
Note: The repurposlng of TC Walker Is not Included as It Is anticipated to be completed In 2012-2013 If funding Is approved by the Board of Supervisors •
• This project reflects estimated expenditures beyond 2013-2014 and Includes an additional $2 million for furniture and fixtures.
2014-2018 Costs Total: Beyond 2018
27,445,663 3,150,000 6,000,000
1,689,000 9,966,149
21 ,155,308 18,566,934
200,000
95,000
560,000
233,820
400,250
3,653,801
700,000
200,000
360,000
130,000 65,972,842 28,533,083
Page 223
Long Range Roof Replacement Capital Plan
Project Scope 2014 2015 2016 2017 2018 Total Costs Beyond 2018
Reroof Bethel Entire Building 2,334,409
Reroof Botetourt Gym - 200,000
Reroof Petsworth Entire Building 35,000 840,000 875,000
ReroofGHS A-Hall, B-Hall 2,728,957
ReroofGHS C-Hall 1,808,345 Guidance, A-Hall, Foreign
Recoat Roofs GHS Language, 213 Gym, Senior Cafe 161,000 161,000 2515,243
Recoat Roofs GHS 1994 Addition 653,000 653,000
ReroofGHS Field House Addition - 139737
ReroofGHS Ori~inal Field House - 49,318
Reroof Transportation Entire Building - 190,140
Totals: ------- --~-
_19~()00 840,000 653,000 . - 1,689,000 9,966,149
Page 224
Costs Beyond Project Scooe 2014 2016 2016 2017 2018 Total 2018
Achilles Replace 21 Original Area incremental units 749614 749,614
Botetourt 69 Replace (7) rooftop AddHion package units 576582 576,582
Botetourt 73 Replace 6 increment Addition units 338740 338,740
Replace 2 roof Botetourt 73 mounted AlA heat AddHion ~um~s 174,026 174,026
Botetourt 1 Roof top OX/Gas CommEO ilSckage unit 7.5 ton 23,153 23153
2 Rooftop 12 ton Gas Botetourt fired Ox Cooling roof Gymnasium top ~ackaJltl unHs 63,206 63,206
Bus Garage Replace (2) hanging Admin area 'gas heaters 9,337 9,337
Bus Garage 4 Ton Trane Gas/OX Admin area lpackage unit 60,505 60,505
Facilities fT echnology Replace 3 Package Offices OX/Gas package units 53,604 53,604
Gloucestar H&V units and High School Incremental coaches Field house unit 77,922 77,922
Gloucester Complete renovation High School of school 3,000,000 5,000000 2578,877 10,578,877
Gloucester "A","C",Cafe,lComm, High School Audit. 5,885,832 5,885,832
GHSMini Mini splits 1 each c+ splits commons and 2 0 hall - 33,770 Peasley Replace 2 Trane AlA Middle heat pumps admin School area 35873 35,873 Peasley Replace bell and Middle gossett heat School exchanger 63,530 Peasley Middle Replace approx 66 air School to water heat pumps - 18,469,634
Petsworth Office and Classroom Replace 5 incremental Areas AlA heat pumps 200000 2,054,478 2,254,478 Petsworth Cooling Only Replace 4 cooling only Units units 180356 180,356
Petsworth Mechanical Replace chiller 82703 82703
Petsworth Petsworth labs Rms Mini Splits 11 and 12 10,500 10,500
Totats 1386044 3103024 3077922 6010600 8678818 21166308 18666934
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4 - F
Y 20
18 C
IP
Page 247
Not Critical
Requesting Department Project Name Total Cost FY 13-14 FY 14-15 FY 15-16 FY 16-17 FY 17-18 Recommended Not Funded Deferred
Recommended FY 2014 - FY 2018 CIP
Schools Flooring Replacement - Various Schools 200,000$ 200,000$
Schools Casework Replacement - Various Schools 95,000$ 95,000$
Schools Bathroom Renovations - Various Schools 560,000$ 560,000$
Schools Refurbish Sports Track at Gloucester High School 233,820$ 233,820$
Schools Refurbish Tennis Courts at Gloucester High 400,250$ 400,250$
Schools Locker Replacement at Peasley Middle 200,000$ 200,000$
Schools School Bus Replacement Program 3,653,801$ 3,653,801$
Schools Achilles Bus Loop 700,000$ 700,000$
Schools Voice Over IP (VOIP) 130,000$ 130,000$
Schools Replace Playground Equipment - Various Schools 360,000$ 360,000$
Schools Paving at GHS Auto Shop Apron and Water/Oil 130,000$ 130,000$
Total Requests 54,502,439$ 6,795,218$ 959,563$ -$ -$ -$ 3,653,801$ 4,766,950$ 38,326,907$
Funding FY 13-14 FY 14-15 FY 15-16 FY 16-17 FY 17-18
Fund Balance Transfer from General Fund 1,010,218$ 750,000$
Capital Fund Balance 85,000$
Debt 5,000,000$
Grants 300,000$
Revenue 200,000$ 209,563$
Operating Savings 200,000$
Total Funding 6,795,218$ 959,563$ -$ -$ -$
Page 248
County of Gloucester County Administrator
6467 Main Street P. O. Box 329
Gloucester, Virginia 23061 (804)693-4042 Date: January 9, 2013 To: Gloucester County Board of Supervisors Gloucester County Planning Commission From: Christopher A Hutson, Board of Supervisors Representative to CIP Committee Louise D. Theberge, Board of Supervisors Representative to CIP Committee Ann F. Burruss, School Board Representative to CIP Committee Natalie Q. Johnson, Planning Commission Representative to CIP Committee Thomas J. Danaher, Citizen Representative to CIP Committee Thomas W. Sawyer, Citizen Representative to CIP Committee, Chairman Cc: Brenda G. Garton, County Administrator Anne Ducey-Ortiz, Director of Planning Nickie C. Champion, Director of Financial Services Re: Capital Improvement Plan Recommendation The Gloucester County Capital Improvements Plan Advisory Committee was formed at the direction of Ms. Brenda G. Garton, County Administrator. Ms. Garton appointed two members of the Board of Supervisors, one member of the Gloucester School Board, one member of the Planning Commission, and two citizen representatives. A capital improvement plan is a multiyear plan, and the Capital Improvements Plan Advisory Committee was conceived with the hope they would recommend and revisit the plan on an annual basis. We began our work on October 25, 2012, and this report contains our recommendations to the Board of Supervisors for a Fiscal Year 2014-18 Capital Improvements Plan. County departments and agencies, as well as Gloucester County Public Schools, submitted over $76.9 million in capital projects to be considered by the Committee. This amount included $54.4 million in projects generally funded through the General Fund and $22.5 million in projects for the Utility Fund. Over the course of several months, the Committee heard presentations from the requestors of proposed projects, worked with the County’s financial advisors to gain an understanding on the County’s current debt capacity and future financial position, and developed this recommendation for future consideration by the Board of Supervisors.
Page 249
The CIP Committee recognizes that local governments devote a large portion of their budgets to capital projects. This large financial investment is required to maintain and expand public facilities and infrastructure. Ongoing service delivery can only be assured if adequate consideration is given to capital needs. If we fail to maintain our capital stock, our facilities and infrastructure will deteriorate until costly, constant maintenance is required, services are threatened, and community growth stagnates or even declines. Whether our community is growing, stable, or losing population, it needs to plan and budget for capital assets carefully to maintain existing infrastructure and to meet future demands. The CIP Committee is cognizant of the major capital projects being discussed at monthly Board meetings (Page Middle School, Thomas Calhoun Walker Education Center, and completion of the Emergency Communication Center basement); therefore, the Committee has not assigned funding from the $3.1 million Capital Fund Committed for Future Capital Projects. Additionally, the Committee is making a conservative recommendation for assignment of the excess fund balance in the General Fund ($1.8 million over a two year period from the $3.4 million available). It is hoped that this conservatism will assist the Board of Supervisors as they proceed with the many unknowns relating to Page Middle School, Thomas Calhoun Walker Education Center, and the completion of the Emergency Communications Center basement. Additionally, the CIP Committee felt that while some projects were not included in their recommendation, several are very desirable for our community’s economic development and quality of life. In particular, projects that improve facilities for older adults and the continued development of Woodville Park should be considered in future plans. It is the Committee’s hope that future plans can begin to address these very important projects. The CIP Committee attempted to balance the considerable amounts of money required for projects, within the current debt policies of the County, with the needs of competing demands for capital investment. Early in the process the Committee recognized that if all General Fund projects were funded, it would result in an increase in the real estate tax rate of $.11, which doesn’t include the effects of Page Middle School funding. The Committee not only reviewed specific projects for the recommendation, but also discussed at length the issues and factors impacting the development of a capital plan. In particular, the Committee reviewed the County’s capacity for issuing new debt, discussed project alternatives to those presented, and discussed funding alternatives. The CIP Committee recognizes that funding of a viable, on-going capital plan is a necessary starting point for this process. To that end, the Committee recommends the Board of Supervisors:
• Invite Davenport and Company, the County’s financial advisors, to the Tuesday, January 15th meeting of the Board of Supervisors to review the County’s current financial condition as well as other information beneficial to adopting a formal capital plan.
• Use excess fund balance in the General Fund of $1.8 million for the most immediate, urgent capital needs (as recommended by the Committee).
• Endorse a grant application through the Land and Water Conservation Fund, which can be used to offset some of the costs associated with Woodville Park improvements.
• Use $85,000 of the Capital Fund Assigned by County Administrator for Park Projects to offset some of the costs associated with Woodville Park improvements.
• Issue additional debt of $5.0 million to address the most critical school roofs and HVAC issues, which is expected to require a $.01 increase in the real estate tax rate in calendar year 2014
Page 250
or 2015. At this time, the CIP Committee would stress the debt be used for the most critical school needs with the expectation that no additional borrowings are possible until at least FY 2019, when annual debt service requirements will drop by approximately $1.6 million per year and free new debt capacity.
• Continue to fund a vehicle/equipment replacement fund with $.30 of the personal property tax rate. It is estimated this will generate approximately $990,000 in FY 2014, which can be divided 50-50 between the School Division and County. These funds can be used for replacing school buses, County and School Division vehicles, police cars, and other large equipment needs.
• Dedicate the amount of revenue that $.12 on the real estate rate will generate to funding the Debt Fund with any excess to be used for capital needs or accumulated for smoothing future debt payments. The Committee considers $.12 to be reasonable as this was the approximate amount needed in fiscal year 2013 to cover the debt service requirements of the County.
Attached to this memorandum is a spreadsheet summarizing the initial projects presented to the committee, alternatives initiated by the committee, as well as the final project rankings. After much deliberation, the CIP Committee recommends the following projects (see attachments for additional information on these individual projects) for inclusion in a five-year capital plan:
• $750,000 for tax assessment and receipting software. Funding for this project will be provided from excess fund balance in the General Fund.
• $270,000 for voice over Internet protocol (VoIP) to replace the County’s phone system. Funding for this project will be provided from operational savings and excess fund balance in the General Fund.
• $409,563 for the improvement of the Cable Services Program, which is used by both the County and the school division. Funding for this project will be provided by a portion of the Cable TV Franchise Tax as well as Cox Cable capital payments.
• $77,000 for County HVAC automation system upgrades. Funding for this project will be provided from excess fund balance in the General Fund.
• $34,398 for site design and engineering for Woodville Park to prepare for installing infrastructure. The funding for this project will be provided from excess fund balance in the General Fund.
• $600,000 for electrical infrastructure and athletic lights at Woodville Park. Funding for the project will be provided from $85,000 from the County Administrator’s Assigned Fund Balance for Park Projects, $300,000 from a state grant, and $215,000 from excess fund balance in the General Fund.
• $250,000 for new computer aided dispatch software, which will make Gloucester totally interoperable with other radio system partners in the regional communications system. The funding for this project will be provided from excess fund balance in the General Fund.
• $5.0 million for the School Division’s HVAC and roof replacement program. The School Division has identified the most critical need as Petsworth Elementary School with a projected cost of $3.4 million. Additionally, some urgency exists at Botetourt and Achilles Elementary Schools. The funding for this project will be provided from general obligation debt ($5.0 million) of the County.
Page 251
• $233,820 to refurbish the running track and associated competitive areas at Gloucester High School. The funding for this project will be provided from excess fund balance in the General Fund.
• $130,000 for voice over Internet protocol (VoIP) to replace various school phone systems. Funding for this project will be provided from operational savings and excess fund balance in the General Fund.
The Department of Public Utilities operates as an Enterprise Fund. In order to make the fund more financially viable, the General Fund supported a $3.8 million borrowing completed late in 2011 to address various issues with the system. At the time of this report, approximately $3.1 million remains from this borrowing. An unknown amount will be needed to continue work for a DEQ Consent Order; but, the CIP Committee recommends (after concurrence from the Utility Advisory Committee) that $2.3 million of the remaining borrowing be used for the following projects:
• $1.5 million for a Utility Yard. • $430,000 for Water Treatment Plant rehabilitation. • $300,000 for HVAC and dust collection remediation at the Water Treatment Plant. • $80,000 for an excavator.
While the proposed projects included in this recommendation are the results of the deliberations of this Committee, the Committee wishes to emphasize the need for continued discussion of capital project funding, maintenance of facilities, cost estimated of future projects, and other capital related issues. Capital planning and budgeting is an essential element of financial management for our County.
Page 252
Attachment E
General Fund Fund Balance
Projected to June 30, 2013*
Unassigned/Unrestricted Fund Balance at June 30, 2012 15,173,575$
Estimated Revenues Thru June 30, 2013 56,896,225$
Estimated Expenditures Thru June 30, 2013 (56,626,235)$
Estimated Fund Balance at June 30, 2013 15,443,565$
Used in FY 2014 County budget (1,408,551)$ Expected to be Used in FY 2015 for Capital (750,000)$
Estimated Unassigned Fund Balance at June 30, 2013 13,285,014$
FY 2014 Governmental Funds Budget 102,923,286$
Unassigned Fund Balance necessary for 12% 12,350,794$
Fund Balance Over 12% 934,220$
*This estimate is very preliminary and conservative.
Page 253
Attachment F
Worksheet for Capital Fund Designated for Future Projects
May 2005 Transfer 3,740,000 October 2006 Transfer 3,400,000
FY 2007 Expenditures Communications System Project 22,242 Hutchinson Land Purchase 436,918 TC Walker Land Purchase 207,313 Office Space Project 1,770 Less FY 2007 Expenditures 668,243
Fund Balance At June 30, 2007 6,471,757
Transfer for TC Walker Land 207,313
FY 2008 Expenditures Communications System 52,184 Public Schools 1,000,000 Office Space Project 146,306 Less FY 2008 Expenditures 1,198,490
Fund Balance at June 30, 2008 5,480,580
CR 442 PSAP Grant 150,000
FY 2009 Expenditures Communications System 1,164,588 Public Schools 500,000 Office Space Project 317,143 Page Athletic Field Lights 140,628 Less FY 2009 Expenditures 2,122,359
Fund Balance at June 30, 2009 3,508,221
CR 178 Glou Youth Football 5,000 CR 252 PSAP Grant 150,000
FY 2010 Expenditures Communications System 973,698 Less FY 2010 Expenditures 973,698
Fund Balance at June 30, 2010 2,689,523
CR 224 PSAP Grant 150,000 CR 122 Glou Youth Football 5,000
FY 2011 Expenditures Communications System 447,416 Less FY 2011 Expenditures 447,416
Fund Balance at June 30, 2011 2,397,106
Page 254
June 2012 Transfer 3,000,000
FY 2012 Expenditures Communications System 1,767,542 Less FY 2012 Expenditures 1,767,542
Fund Balance at June 30, 2012 3,629,564
FY 2013 Communications System 571,141 FY 2013 Land Sale/Purchase (Net) 57,947 TC Walker 2,343,000 EOC Buildout Estimate (not appropriated) 635,000
Fund Balance Uncommitted 138,370
Page 255
County of Gloucester Finance Department
6467 Main Street Gloucester, Virginia 23061 (804)693-6927
Interoffice Memorandum
To: Gloucester County Board of Supervisors From: Nickie C. Champion, Director of Financial Services CC: Howard B. Kiser, Ed.D., Superintendent of Schools Brenda G. Garton, County Administrator Edwin N. Wilmot, County Attorney Joanne C. Wright, Director of Budget and Finance, GCPS Date: June 20, 2013 Re: Request for Public Hearing on School Construction Bonds As you know, the Board of Supervisors agreed in principal to borrow an additional $12.0 million for the Page Middle School Project. In addition, included in the fiscal year 2014 budget was a $5.0 million borrowing for school HVAC and roof repairs/upgrades. Due to the costs associated with selling school bonds, it makes fiscal sense to consolidate these needs into one bond issue if it is the desire of the Board to move forward with both projects. In that each bond sale could result in issuance costs of approximately $75,000 to $100,000, consolidating the needs could result in a sizable savings to the County. Ted Cole of Davenport and Company, the County’s financial advisors, will be at the July 2, 2013 meeting to discuss possible borrowing options (Case 1 = $12.0 million and Case 2 = $17.0 million) and the effects of those options on future County finances. A draft copy of his presentation has been included in these materials for your review. Copies of the final presentation will be distributed at the meeting. Additionally, the Board will be respectfully asked to authorize a public hearing for August 6, 2013 in order to receive public comment on the matter. Bonnie France, bond counsel with McGuire Woods, has helped prepare the attached resolution and public hearing notice. The documents were prepared to delineate the amount to be used for the Page Middle School project and the amount to be used for school HVAC and roof needs. While the total amount of actual bond receipts are unknown at this time, the resolution is written in such a way that $12.0 million will be assigned to the Page Middle School project and any remaining receipts (expected to be approximately $5.0 million) will be assigned to school HVAC and roof needs. Finally, while the resolution and public hearing notice included with this memorandum have been prepared in anticipation of the Board agreeing to hear comments on a combined borrowing of $17.0 million, the documents can be easily modified to reduce or increase the scope of the project. Please do not hesitate to contact me if you have any questions.
Page 256