The Board of Supervisors met in a Recessed meeting on Wednesday, September 16, 2009 at 5:00 p.m. in the Board of Supervisors meeting room located in the Wise County courthouse. The following were present:
Honorable Robert E. Robbins, Jr., Chairman
Honorable J. H. Rivers, Vice-Chairman
Honorable Steve Bates
Honorable Robert R. Adkins
Honorable Ronald L. Shortt
Honorable Virginia Meador
Honorable Dana Kilgore
Honorable Fred Luntsford, members of said Board and
Shannon C. Scott – County Administrator
David L. Cox – Financial Administrator
Karen T. Mullins – County Attorney
Annette Underwood – Executive Secretary
Chairman Robbins stated that since Dr. Perry is being allowed to speak on school consolidation, he would allow, as Chairman’s prerogative, public expression.
IN RE: SCHOOL CONSOLIDATION
Superintendent of Public Schools Dr. Jeff Perry provided the Board with a power point presentation regarding school consolidation costs. This would mean closing the six high schools and building three new high schools for an approximate cost of $90 - $100M.
The cost savings from positions that would be cut due to consolidation of which a large majority would be arrived at by those individuals retiring would be $3,242,100.
Analysis of construction savings on square footage calculations were reviewed with the current low cost per square foot being $125.00.
Dr. Perry explained that it would advantageous to know the amount of appropriation the Board can commit at this time, which would allow them to take advantage of the lower marketing conditions for construction, stimulus dollars, and low interest rates. The cost per square feet is at an all time low of $125.00. To take advantage of this price would save millions of dollars and would also give the opportunity to secure the low bond rates.
An analysis of debt service and total interest and principle over a 20 year period was discussed and reviewed.
The basic consolidation plan is as follows:
Consolidate six high schools into three high schools
Combine Powell Valley and Appalachia
Combine Pound and J. J. Kelly
Combine Coeburn and Saint Paul
May be some flexibility on building schedule
Commitment to finish all three schools
The Public/Private Education Act Schedule was reviewed and discussed.
The payment options were reviewed as follows:
Virginia Public School Authority Bonds
Rural Development Authority
Low interest Zero interest Bonds
Assuming 2010 Bond Issuance
Principal and Interest 2012
Dr. Perry reiterated the fact that there must be a commitment from the County before he can search for stimulus dollars which is available at this time and also the low construction cost due to the economy downturn. This window of opportunity will last for approximately six to eight more months. Some schools have already applied and received stimulus dollars. The window of opportunity for these cost savings is being offered for a short period of time.
Supervisor Rivers explained that this window of opportunity should be grasped by the Board before it is closed.
There were concerns regarding the economy and whether or not this commitment would require a tax increase.
The following individuals voiced their opposition to school consolidation and any increase in the tax base which would bring hardship to those on low income, and the future generation.
There being no further comments, the public expression period was closed.
IN RE: DEBT MANAGEMENT POLICY
Financial Administrator David Cox presented a power point presentation on the County’s Debt Management Policy.
The Debt Management Policy was adopted by the Board on May 9, 2002. The primary goals of the policy are as follows:
Net per capita debt should remain under $1,240
Net debt as a percentage of assessed value should not exceed 1.5%
Net per capita debt as a percentage of per capita income should not exceed 7.5%
Debt service expenditures as a percentage of governmental fund expenditures should not exceed 10%
The affordability index, consisting of a weighted average (20%, 45%, and 35%) of the first three ratios shall be updated annually
Tax rates remain unchanged
Population estimated at 41,703 (2008 Est. US Census) It was recommended that the prison population be deducted from this figure
Economic conditions for Wise County are stable
Fund balance policy remains unchanged
Financial Environment Concerns
State budget shortfalls (What does FY 2011 bring)
Includes Education, Law Enforcement, and other
Legislative changes affecting coal industry
Local economic conditions in Wise County
Analysis of Potential Changes—Debt Management Policy
Recommendations to the Board of Supervisors
Consider reasonable means to insulate the County from fiscal crisis (including state, federal, and local)
Consider short and long term financial credit ability by striving to achieve the highest credit and bond ratings possible
Continue to promote long term financial stability by establishing clear and consistent guidelines
Continue to direct attention to the total financial picture of the County
Virginia Counties/Cities Debt Management Policies
Wise County is one of few if not the only county west of Roanoke to have a debt management policy
Researched Virginia counties and cities with debt management policies
Developed a summary schedule to propose best practices for Wise County
Explanation for Suggested Changes
Addition of $1.88B Power Plant to tax base
Policy has not been updated since 2002
Focus on change in County’s affordability amounts
Financial Administrator recommendations to the BOS
Proposed Debt Management Policy
Net per capita debt should remain under $2,000
Net debt as a percentage of assessed value should not exceed 2.5%
Debt service expenditures as a percentage of governmental fund expenditures should not exceed 10%
The affordability index, consisting of a weighted average (50% each) of the two ratios (1 & 2) shall be updated annually
Estimated Maximum Debt with Proposed Policy
With current assessed values, this proposed debt management policy would allow $72.3M maximum debt as of September 2009
With the addition of the Dominion-Virginia City Power Plant assessed value, this proposed policy would allow $90.5M maximum debt in 2012
An estimate of the County’s current debt at June 30, 2009, is estimated at $20M (Subject to analysis and audit)
Calculations – Proposed Debt Management Policy
Population x $2,000
41,703 x $2,000 = $83,406,000
$2.446B x 2.5%= $61,150,863
Average (A+B) /2=$72,278,432
Projected Affordability 2012
41,703 x 2000 = $83,406,000
Average (A+B) /2 = $90,453,000
Financial Administrator Recommendations
Adopt revised debt management policy
Leave an amount of $15 -20M availability for future identified and estimated capital needs as well as a contingency
Suggestion to increase unreserved fund balance to 10% of general fund expenditures over the next two years (currently 8.5%)
Consider inflation factor for per capita amount of $2,000 – Tie to CPI?
Reminder: $90.5M is the projected debt capacity in 2012
Mr. Cox explained that the County, at present, has an approximate debt of $20M. In his final calculations, he believes the County could make payments on $90.5M by 2012. This figure is a combination for capital outlay projects and the schools. All these projections are conservative and in the best interest of the citizens.
Mr. Cox stated that he was told as of today that there is potential $250M available statewide next year for schools from stimulus money for renovations and construction.
Supervisor Rivers stated that these estimates are very conservative which did not include the proposed wind farm or future reassessments. He said that now is the time for the Board to take advantage of this window of opportunity.
Supervisor Shortt was concerned that Dominion may not be up and going in 2012 which would delay any proposed revenue. He asked that the Board be cautious in making any quick decisions.
Supervisor Rivers was optimistic in that delays may be a possibility but there was the $9M that has been set aside for the schools that would be available if needed.
Supervisor Bates said that the County cannot afford to keep six high schools open. If state funding is cut and no action is taking on the school consolidation, there will be a forced consolidation in the existing schools for lack of funding.
Supervisor Luntsford stated that he would not vote for giving money to the School Board for consolidation. He has asked for renovation scenarios without frills and that has not been made available to him. He has asked for a gymnasium at the Appalachia Elementary which has not been built yet. This is a project he wants done whether or not the high schools are consolidated.
Chairman Robbins was of the opinion that this should go to referendum for the voters to decide. Supervisor Kilgore agreed but believed that it is too late to get it on the ballot for November. This would further delay any action on school consolidation.
Attorney Mullins advised that the process for having a referendum is timely, costly and quite complicated. She quickly reviewed the steps to be taken and noted that more information will be made available to the Board prior to the next meeting.
There were concerns that consolidation would call for a tax increase which would not be in the best interest of the citizens due to the downturn in the economy.
A motion was made by J. H. Rivers, seconded by Dana Kilgore to recess this meeting for the specific purpose of dealing with the County’s Debt Management Policy and the appropriation amount to be given to the School Board on Thursday, September 24, 2009 at 5:00 p.m.
Robby Robbins made a substitute motion that this be taken up at the regular meeting on October 8, 2009. Ronnie Shortt seconded the motion.
Aye Robby Robbins Nay Dana Kilgore
Virginia Meador Steve Bates
Fred Luntsford Bob Adkins
Ronnie Shortt J. H. Rivers
After further discussion on the main motion, it was noted that Mr. Luntsford, Administrator Scott and several others would not be available on that day.
Supervisor Rivers withdrew his motion.
Supervisor Kilgore withdrew her second.
A motion was made by J. H. Rivers, seconded by Dana Kilgore, to recess this meeting until Wednesday, September 23, 2009 at 5:00 p.m. for the specific purpose of dealing with the County’s Debt Management Policy and the appropriation amount to be given to the School Board.
Aye J. H. Rivers Nay- Fred Luntsford
Dana Kilgore Ronnie Shortt
Virginia Meador Robby Robbins
A recess was taken at 7:50 p.m.
The meeting reconvened at 8:05 p.m.
IN RE: CLOSED SESSION
A motion was made by Bob Adkins, seconded by J. H. Rivers, to go into closed session per the following Sections as permitted by the Code of Virginia:
The motion was unanimously approved.
After a lengthy closed session, a motion was made by Ronnie Shortt, seconded by Virginia Meador, to reconvene the meeting. The motion was unanimously approved.
IN RE: RESOLUTION – CLOSED SESSION
Secretary Underwood read the certification for a closed meeting.
A motion was made by J. H. Rivers, seconded by Fred Luntsford, to approve the resolution verifying matters discussed while in closed session. The motion was unanimously approved by roll call vote.
RESOLUTION # 2009
(Said resolution is on file in the County Administrator’s Office)
IN RE: UNDISCLOSED PROPERTY NEGOTIATIONS
A motion was made by J. H. Rivers, seconded by Bob Adkins, to ask the IDA to pursue negotiations for the purchase of an undisclosed piece of property. The motion was unanimously approved.
A motion was made by J. H. Rivers, seconded by Bob Adkins, to recess the meeting until 5:00 p.m. on Wednesday, September 23, 2009 for the specific purpose of dealing with the Debt Management Policy and the amount of appropriation to be given to the School Board. The motion was unanimously approved.
ATTEST: WISE COUNTY BOARD OF SUPERVISORS
Shannon C. Scott, Clerk Robert E. Robbins, Jr., Chairman