COUNTY OF ALBEMARLE
Albemarle County Debt Financing - 2009
Provide financing for the reimbursement of costs for the (a) Hollymead Fire Station and related equipment and (b) replacement of certain fire and EMS vehicles.
Messrs. Tucker, Foley, Davis, Wiggans
LEGAL REVIEW: Yes
May 6, 2009
ACTION: X INFORMATION:
The Board of Supervisors, on April 8, 2009, adopted the County’s Operating Budget for FY 10 and Capital Improvements Program (CIP) for FY 10 – FY 14. The CIP assumes the borrowing of approximately $7.0 million to reimburse the County for expenses related to the design, construction, and equipping of the Hollymead Fire Station and the replacement of certain fire and EMS vehicles. This Executive Summary provides details on the financing process.
Goal Five: Fund the County’s future needs
Christopher Kulp of Hunton & Williams LLP, the County’s bond counsel, has prepared Attachment A detailing the County’s proposal to finance the costs of the (a) Hollymead fire station and related equipment and (b) replacement of certain fire and EMS vehicles. The financing is proposed through a lease financing with the Economic Development Authority of Albemarle County, Virginia (EDA), which has enabling authority to assist the County in financing local government facilities and equipment. The County paid for these capital costs using cash with the expectation that the costs would be reimbursed after a financing package was completed. The reimbursement of County funds previously expended is permissible if the Board of Supervisors has adopted a reimbursement resolution. Because the reimbursement was anticipated, a reimbursement Resolution was adopted when the funding for these capital projects was appropriated. The financing is structured based on the EDA issuing a lease revenue Note to a Bank and giving the proceeds to the County for the reimbursement of these costs.
Under the lease structure, the County will initially lease the Monticello Fire Station to the EDA pursuant to the terms of a ground lease. The Hollymead Fire Station cannot be used as the collateral for the financing because the property remains titled to the University of Virginia Foundation (“UVF”) and is being leased to the County until such time as sewer service is extended to the property. At that time, the property will be deeded to the County. (The ground lease will substitute the Hollymead Fire Station for the Monticello Fire Station once the County obtains fee simple title from the UVF.) The EDA will lease the Monticello Fire Station back to the County, with terms requiring the County to make sufficient lease payments to the EDA to enable it to pay the debt service on the Note.
The County Financial Advisor, Davenport & Company LLC (Davenport), has submitted a Request for Proposals to various banks for this financing. The bids will be returned to Davenport and reviewed with the Board at its meeting on May 6, 2009.
The County’s FY 10 Budget includes $856,284 in Principal and Interest cost for this financing, which assumed an interest rate of 5.0%.
Staff recommends that the Board adopt the attached Resolution (Attachment B) authorizing the proposed plan of lease financing with the Economic Development Authority of Albemarle County, Virginia for the acquisition, construction and equipping of the Hollymead Fire Station and the replacement of certain fire and EMS vehicles. Courtney Rogers from Davenport and County staff will be available at the Board’s meeting on May 6, 2009 to review the bids from the banks for the lease financing, distribute a completed Resolution with the winning bid, and answer Board questions.
A – Lease Finance Summary
B - Resolution
Return to regular agenda