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Officials: Referendum not an option for jail authority

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Doug Stanley


By Alex Bridges -- abridges@nvdaily.com

State law and other limitations kept the RSW Regional Jail Authority from pitching its recent borrowing venture to the voters.

A longtime vocal opponent of the regional jail recently filed a lawsuit in Shenandoah County asking the court to void the financing for the project on the grounds that, among other reasons, the locality did not put the bond issue up for a referendum.

Individual county governments wishing to borrow money, depending on the kind of debt and amount sought, must put the issue up for a vote in a referendum on a ballot, said Neal Menkes, director of fiscal policy for the Virginia Municipal League. Speaking in general terms and not specifically about the regional jail situation, Menkes noted this requirement does not apply in the same way to cities or towns.

"In order to issue a general obligation bond, which means it's secured by real estate taxes by and large, for a county, under the state constitution and state code, they have to put it to referendum," Menkes said.

The Rappahannock-Shenandoah-Warren Regional Jail Authority could not go into debt through the sale of general obligation bonds, according to Douglas Stanley, chairman of the agency's board and county administrator for Warren County. Instead the authority had to go into debt through the sale of moral obligation bonds by way of the Virginia Resources Authority, Stanley explained.

"So general obligation are where you'd typically have a vote, a referendum," Stanley said. "The authority itself ... does not have taxing authority. The authority cannot do general obligation bonds.

"That's how regional projects like this work and that's why the [Virginia Resources Authority] as a funding mechanism exists to be able to handle that," Stanley said.

The creation of a regional authority made up of more than one locality would eliminate the need to put a debt issue to a referendum.

"I can't see that it would require a general referendum," Menkes said. "It might require a vote by each of the three local governing bodies."

In fact, the boards of supervisors of each of the three counties involved in the project have approved resolutions of support for the authority to go into debt. The Shenandoah County Board of Supervisors in April voted unanimously to approve the authority entering into debt for the jail project.

"I don't think that any authority's going to want to get so far out ahead of its members that it's gonna cause a major conflict between them and their boards or their local governments rather," Menkes said.

Prince has argued in statements that general obligation bonds would come with better interest rates.

"The general obligation bond is backed by the full faith and credit of the locality," Menkes said. "I mean, it's always gonna be the highest ranking type of debt instrument as far as Wall Street is concerned."

General obligation bonds also come with the benefit of support from the voters, which Wall Street views as favorable, Menkes explained. General obligation bonds often work better for large-scale, costly and long-standing projects, such as school buildings, libraries or parks, than moral obligation bonds, according to Menkes.

"You want the support of your citizenry because there will be an increase in your operating costs when you construct a new school building or library or what have you, fire station," Menkes said. "That's a smart thing because you're going to get the lowest interest rate that you'll have to pay with general obligation bond and plus the citizens will have been educated as to that project and why it's important and in fact they're signing off on it and so they're pledging themselves to the success of the project."




8 Comments



Let me see if I have this right - not only does this maneuver to use 'moral obligation bonds' for funding the regional jail avoid asking the taxpayers for approval, it actually will cost us more in the long run.

And we think Greece has problems.

"The authority itself ... does not have taxing authority. The authority cannot do general obligation bonds.

This is not a maneuver, it is how the law is written when several counties get together to combine resources to build a project that benefits several counties as a whole. We voted the officials into office to make these decisions for us. And they did. These few citizens that are running around toting that the law has been broken and costing tax payers MORE money might want to understand politics and the law before they start with their tea party propaganda. There is enough of this going on in Washington and it benefits no one. The project is under way, it has been approved through the proper channels. Stopping it now is not going to save tax payers money. If you don't like who we have as elected officials...VOTE...or run for office. Don't file ridiculous law suits based on "ideas".

And why did it take the NVD so long to print this story? All they did was cover the hoopla and not what the true process was. Fox news does enough of that. Educate and inform the people with FACTS.

What's this animal, this "Moral Obligation Bonds"? Let's look at it.

Moral: They have the impertinence to call it "moral," when it hardly measures up to moral standards. They set up a multi-county entity to evade the voters and the taxpayer, pure and simple. Who among our elected officials ran on the platform of putting our county in deeper debt? Where is **their** morality?

Obligation: We're obligated, all right. Our "leaders" will be retired, fat, and happy when our children inherit this debt, which they may well be obligated to pay in the midst of a Depression. The choice will be stark: either to declare bankruptcy, raise taxes on the innocent to pay off the guilty, or to pay off the bonds in inflated currency -- and inflation in the midst of a depression injures the poor and the elderly most.

Bonds: Oh yes, the Richmond bond lawyers make out like bandits (see "moral," above). They have taken the money and run, having been in on the deal since the beginning while the voters and taxpayers (current and future -- the children) were cut out and left in the dark.

Immoral. But we're obligated. And in bondage.

Hekkuva Job, fellers!

So, can the counties, AT ANY TIME, create an 'authority' board for ANY project, thus BYPASSING the voters of THAT COUNTY?
It sounds like what they did here, instead of each county getting separate loans to cover their 'own' cost.

Yes John, that is exactly what they can do. The sad part of this is the same public they are financially abusing will vote the same idiots right back in again in the next election. Just because they are in the party of "no" better known as republicans.

QUESTIONS? QUESTIONS?
The following was asked at the May 31, 2012 RSW Regional Jail Authority meeting in Warren County.

WHY WERE THE NUMBERS DIFFERENT FOR EACH COUNTY WHEN THE BOARDS FROM ALL THREE COUNTIES VOTED TO FUND THE JAIL PROJECT?

Rappahannock - $65M long term and $32M short term loans; Shenandoah - $89M; Warren - $45M long term and 32.8 short term loans.

In an NVD Article titled “Regional Jail board moves forward, hears opponents’ concern, dated May 31,2012, Warren County Administrator Doug Stanly explained after the meeting, in response to the question about different bond amounts, that each locality’s elected bodies approved bond resolutions at different times and none knew the exact cost of the project.

DO YOU ALL GET THAT! THEY DIDN'T AND STILL DON'T KNOW THE TOTAL COST OF THIS PROJECT. THAT IS WHY WE "OPPONENTS" ARE SPEAKING OUT AGAIN AGAINST THIS PROJECT. WE REFUSE TO STOP QUESTIONING THEIR DECISION TO BUILD THIS JAIL WITHOUT KNOWING THE TOTAL COST, COMMUNITY IMPACT AND VOTING TO CONTINUE THE PROJECT NOW THAT WE KNOW THE STATE WILL NOT BE PICKING UP 50% OF THE BILL.

PLEASE ASK YOUR SUPERVISOR THESE QUESTIONS FOR YOURSELF.

Why are you yelling?

What's the total cost of welfare and DSS programs in Shenandoah County?

How much will gas cost next year?

Will my tuition go up or stay the same?

Should I buy a new car?

Will I get hurt and have hospital bills?

Steak or chicken?

I need these questions answered...........................

If your dog is howling at the back door and your wife is yelling at the front door, who do you let in first?

The dog, of course. He'll shut up once you let him in.

There is no right answer if the dog is a member of the Tea Party Tin Foil Hat Marching Band... pick your poison, howling or yelling.



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