Bond counsel: Jail, counties miss out on savings
The counties operating the regional jail near Front Royal have missed out on saving a total of roughly $176,618 a year because Shenandoah County opted out of refinancing the loan on the facility, the jail’s bond counsel says.
The Rappahannock-Shenandoah-Warren Regional Jail Authority Board sought to refinance the debt on the facility paid by the participating counties through a refunding procedure. Supporters claimed the counties would see their share of the loan payments reduced through the procedure. Opponents argued that the option would only increase the overall debt owed on the facility but did not acknowledge the potential for lower annual payments. Opponents also claimed that the counties can exercise the refunding option several times a year and could see greater savings with those opportunities.
All three county boards of supervisors needed to approve the authority’s proposal in order to participate in the Virginia Resource Authority bond sale that took place Wednesday. Additionally, the RSW board agreed that it would not actually pursue the refunding option unless it could secure a savings of at least 7 percent.
A hypothetical refunding summary provided by Davenport & Company, the bond counsel to the jail, showed that the RSW Jail Authority would have seen a net present value savings of 7.87 percent. Doug Stanley, county administrator for Warren County, provided a copy of the document that showed the hypothetical savings from a refunding. Warren County would have saved roughly $105,000 next year, Stanley noted.
“Hopefully the opportunity will be there in the future,” Stanley said in an email Friday. “I know that with the upcoming budget Warren County could have used the $105,300 annual savings.”
The hypothetical refunding summary shows that the member jurisdictions would have saved roughly $4.59 million over the life of the loan. The summary breaks down average annual savings as $10,756 for Rappahannock County, $60,562 for Shenandoah County and $105,300 for Warren County. Gross savings over the life of the loan are as follows: $279,657 for Rappahannock County; $1.57 million for Shenandoah County; and $2.73 million for Warren County.
Whether or not the jail authority could see greater savings with future refunding options remains uncertain. Stanley pointed out that nothing is guaranteed – a fact made clear when the authority board and supervisors considered the refunding option.
The Warren County Board of Supervisors voted unanimously in September to request that bond counsel participate in the bond sale. However, half the members of the Shenandoah County Board of Supervisors voted against moving forward with the refunding. Vice Chairman Richard Walker, District 4 Supervisor Cindy Bailey and District 5 Supervisor Marsha Shruntz voted against the refunding option. Bailey and Shruntz have been vocal critics of the regional jail before and after its construction.
RSW’s bond counsel Ted Cole, with Davenport & Company, spent roughly an hour at a special work session explaining the refunding process and the potential savings. The following week the 3-3 vote by the Shenandoah County supervisors killed the refunding option. The Rappahannock County Board of Supervisors had scheduled a vote on the refunding proposal. Whether or not Rappahannock County leaders would have supported the proposal remains uncertain.