Halifax County is entering into a refinancing agreement with Virginia Resources Authority on a 2014 lease with the Industrial Development Authority in hopes of saving a total of $226,477 by 2034.
The bond is set to expire May 1, 2034.
Supervisors signed off on a resolution when they met Tuesday related to the restructuring of a lease-leaseback financing of renovations to various county facilities after hearing from Mitch Brigulio of Davenport.
According to the resolution, “in financing the 2014 project, the board entered into a lease dated April 1, 2014 with the IDA giving the IDA a leasehold interest in the Mary Bethune Complex to provide collateral for the county’s $2,771,000 Public Faclitiies Lease Revenue Note, Series 2014 and its $677,000 Public Faclities Lease Revenue Refunding Note, Series 2014.”
As stated in this resolution, the VRA intends to issue its Infrastructure and State Moral Obligations Revenue Bonds and to provide a portion of the proceeds to the county.
By entering into the agreement with VRA, Brigulio told county officials they could have a possible reduced interest rate of 1.26%, and said the net present values savings was at 9.79%.
With that, he anticipates a savings of $17,946 in 2021. That annual savings would fluctuate between $13,473 and $18,199 over the next 13 years, he added.
This refinancing is for a 2014 lease approved by the county’s IDA in March of that year in the amounts of $680,000 and $2,775,000.
At that time, Carter Bank and Trust submitted the interest rate of 2.10% on an eight-year loan for $455,000, which is the refinanced amount of a $1 million loan initially made in 1992 to renovate the Mary Bethune Complex.
Since making the agreement, the authority has served as “a pass-through” agency for the county to borrow the money, and once the loans are paid off, the Mary Bethune Office Complex will be leased to the county.
The county has paid annual debt service payments on the bonds through the lease agreement with the authority.
In 2014, county officials agreed a 20-year term for the $2.7 million loan would provide the county with the lowest annual debt service payments and would allow the county the option to refinance in the future.
On Tuesday, Brigulio told county officials the 2014 note currently has an interest rate of 3.25% with a final maturity of May 1, 2033, and said Davenport & Company, LCC, as financial advisor to the county, had identified the note as a “potential refunding candidate.”
A non-binding VRA application was submitted on behalf of the county in early August.
County officials decided to move forward with the refinancing after a brief discussion with ED-7 supervisor Garland Ricketts making a motion to adopt the resolution as long as the net present value (NPV) savings does not reduce less than 7.5% saying that would “still be good savings” for tax payers.
ED-4 supervisor Ronnie Duffey seconded the motion that was unanimously passed.
VRA will only include the county as a refunding candidate in their fall pool if the NPV it at least 7.5%, according to Brigulio.
The county will owe Davenport a $35,000 fee for their services, but Brigulio said if this agreement closes for any reason, then they will not send a bill.