FRONT ROYAL — Local government leaders have bought into a plan attempting to refinance the bonds used to build the Rappahannock-Shenandoah-Warren Regional Jail.
The jail authority board voted unanimously Friday to approve attempting to advance refund the eligible bonds, requiring a minimum 9% net present value savings. Action also requires each of the county governments to approve the move as well.
In 2012, Rappahannock, Shenandoah and Warren counties collaborated to build a $45 million facility to house inmates. The counties sold bonds to raise the funds, incurring debt for their constituents. With almost eight years eaten out of the loan, leaders now have a chance to advance refund some of them, re-configuring the debt and potentially saving roughly $8 million in the process.
Ted Cole, senior vice president at Davenport and Company, told jail authority members that the Virginia Resources Authority is offering an advanced refund for some of the bonds on Oct. 31, 2019. The numbers Cole presented to the authority on Thursday were based on interest rates from Sept. 24, 2019, so the actual figures could change by Oct. 31, Cole said.
The jail authority and local governments pursued a similar deal in 2017 but because Shenandoah County didn’t approve the refinancing, the authority couldn’t move forward.
Conrad Helsley, chairman of the Shenandoah County Board of Supervisors, said he was supportive of the idea in 2017 but has cooled on the plan now.
“I think it’s a lot shakier now than it was back then,” Helsley said. “Back two years ago, everyone was talking that interest rates were going to go up. And they did. The economy was getting good and it got better. Now everybody is talking about interest rates coming down.”
If interest rates continue to fall and the authority does an advance refund later, the potential savings will increase.
Another factor the authority members considered was whether they wanted to move from holding non-taxable debt to taxable debt. The 2018 tax bill changed the rules and if the authority advance refunds their bonds before the 10-year mark, their debt on them is taxable.
Cole said the new restructured debt would be taxable but the savings, based on Sept. 24 numbers, would outweigh the increased cost on the localities.
Dan Murray, chairman of the Warren County Board of Supervisors, said he thought taking advantage of the advance refund opportunity would be only fair to taxpayers.
“If we don’t do anything we’re dead in the water,” Murray said. “If we do something, we offset taxes one way or the other by a quarter of a percent,and that’s a lot ... to be fair to constituents, if we can save, we should save.”
All authority members were present for the meeting, including Murray, Helsley, Doug Stanley, Evan Vass, Garrey Curry, Chris Parrish, Timothy Carter and Mike Arnold.