The Wise County Board of Supervisors met in a Recessed/Joint Meeting with the Wise County School Board on Monday, December 20, 2010 at 6:00 p.m. in the Wise County Schools Education Center. The following were present:
Honorable J. H. Rivers – Chairman
Honorable Dana Kilgore – Vice-Chair
Honorable Steve Bates
Honorable Ronald L. Shortt
Honorable Robert R. Adkins
Honorable Fred Luntsford
Honorable Robert E. Robbins, Jr. – members of said Board and
Shannon C. Scott – County Administrator
David L. Cox – Financial Administrator
Karen T. Mullins – County Attorney
Annette Underwood – Executive Secretary
Honorable Virginia Meador
All members of the Wise County School Board were present except Larry Greear (Mr. Greear entered the meeting at 8:00 p.m.)
CALL TO ORDER
The meeting was called to order at 6:00 p.m.
All present observed a moment of silence.
All led in the Pledge of Allegiance to the flag.
IN RE: AGENDA
A motion was made by Dana Kilgore, seconded by Bob Adkins, to approve the agenda as presented. The motion was unanimously approved.
A motion was made by Mike Mullins, seconded by Phillip Bates, to approve the agenda as presented. The motion was unanimously approved by roll call vote.
IN RE: PPEA PROCESS PRESENTATION
Dr. Perry explained the status of the PPEA, the need for restart, and the timeline for completion. He stated that the School Board has adopted a plan of consolidation that did not change. In 2009, when the school system advertised for proposals, it was for three (3) schools on separate sites. The restart would allow the school system to apply for literary loans, and allow better adherent to PPEA requirements. The timeline for completion included application for literary loans in late December, issuance of RFPs after literary loans were received, closing of proposals in mid-January, award of proposal in mid-January, and approval of comprehensive agreement in mid-March.
IN RE: COMPREHENSIVE AGREEMENT PRESENTATION
Dr. Perry reviewed the Comprehensive Agreement as follows:
Contract between the School Board and a Design/Build Firm
Outlines the scope of work
Provides a maximum price
Specifies the details of work
Timeline for Completion:
Requirements are as follows:
Must be posted for thirty days
Must conduct public hearing
Must be approved by the Board of Supervisors
IN RE: FINANCING OF THE NEW SCHOOLS
The funding sources are as follows:
Funding created by VPSA
General obligation bonds
Rates are determined by (Market and County bond rating)
Term is 1-20 years
Requires no referendum
Two issuances –Spring and Fall
Authorized by ARRA
Federally subsidized bonds
Low interest loans (0%)
Can be used for specific capital projects
Three (3) year spend down period
Must incorporate Davis Bacon Act
Must spend 10 % within six months
Must have maximum maturity limit (16 years)
Applied for funding
Notification first of year
Will not be impacted by RFP re-issuance
Fund created by Commonwealth
Can be used for specific capital projects
Amount is allocated each budget year
Currently not funded
Interest rate based on LCI (2% for WCPS)
Apply for $9.5M per each school
Apply for $15M in total
May save as much as $8M over 20 years
Use as temporary financing for reimbursement
Submit RFPs after application is received
Have School Board reject all PPEA proposals
Have School Board approve Literary Loan
Complete Geo-Technical work
Issue PPEA RFPs after Literary Loans are received
Close proposals in mid-January
Complete comprehensive agreement
Begin site work in late March
Complete project in Fall 2013
IN RE: BOARD COMMENTS AND DISCUSSION
Regarding the Comprehensive Agreement Supervisor Fred Luntsford asked if he understood that there would be outlined details of the construction of whatever would be built and if it would include the gym at Appalachia Elementary School.
Dr. Perry stated that the gym was not included in the comprehensive agreement. The procurement for the gym would be in the PPEA process, which would be with the company selected. The gym has already been selected for T&L and there would be two different agreements procured in a different fashion and would go through a different process. He told Mr. Luntsford that if he wanted those together it would have to go through the funding resolution.
Supervisor Luntsford asked if they had to approve the comprehensive agreement for the two schools, and also approve an agreement with T&L.
Dr. Perry said they would have to approve the funding resolution and it would have to be approved by the Board of Supervisors. He told Mr. Luntsford if he wanted to connect the two, they could do so by the sale of Virginia Public School Authority Bonds. There would be one resolution to fund the two schools and the Appalachia Elementary School gym. If funding for both projects is handled under one resolution, any attempt to vote down one would vote down the other. Mr. Luntsford stated that he was prepared to ask that this happen. He said he would like to ask both Boards to assure him that the gym would be built by including it in the description of the bonding issue. Dr. Perry noted that there was an easy way to combine both projects into the funding resolution to make sure they are connected. Mr. Luntsford stated that he was doing this for the children and to take this gym off the table as a bargaining stance. He also said he was doing this to have an assurance that it would be built and that he was going to insist that this be done before he would approve issuance of a bond.
Dr. Perry noted that the School Board had already voted to go forward with the construction of the gym at Appalachia Elementary School and information would be provided to both Boards in January and he did not see this as a significant problem.
Mr. Luntsford asked if this would happen in January. Dr. Perry stated that he would bring the concept to the Board in January and they would vote on it in February because his Board had a policy that they discuss issues before voting on an issue. Mr. Luntsford asked that the information be made available to the Board of Supervisors for their January Board meeting.
Supervisor Rivers stated that he did not think the Appalachia Elementary Gym should be a part of the consolidation or PPEA. In his opinion, the School Board was going to vote to restart the PPEA process because they messed it up. If the gym had not been a part of this, it could have already been moving forward. Mr. Rivers said that they needed to use the $1.2M in contingency funds and that there would be assurance that the children would have a gym and be protected.
Dr. Perry stated that if the entire Board was in agreement and if they had the funding resolution, it could be put on the agenda for the January meeting.
Supervisor Rivers read a portion of the resolution adopted by the Board of Supervisors on October 26 which set aside $2M for a gym at the Appalachia Elementary School. He said that documents stating that the Board of Supervisors had committed $69M for the consolidation of high schools were wrong, only $67M had been committed. Dr. Perry informed Mr. Rivers that a recent Attorney General’s opinion ruled that supervisors could suggest but not dictate how to spend the money and that the resolution had very little standing. Mr. Rivers said the $69M was being used in the two applications for the literary loan applications, which made the two applications wrong.
Betty Cornett noted on the cover page of the PPEA guidelines that it was revised in 2008 but in the contents of the document it shows that it was adopted on May 12, 2008. Dr. Perry stated that he would check for a clerical error.
Attorney Scott Mullins explained that VSBA sends revisions and he understood that the Board had adopted the guidelines on May 12, 2008 and that VSBA sent updated revisions in September 2008.
Mark Hutchinson asked if the $9M set aside by the Board of Supervisors was earmarked. Steve Bates said he remembered that it was for high school projects only. Robby Robbins stated that he seconded the motion in question and the $9M had no strings attached. Attorney Karen Mullins stated that they could provide a copy of the resolution and further stated that it was limited to high school construction or renovation but it did not mean it could not be changed. She said the Board has the authority to modify the language. Mr. Hutchinson said if that is all that has to be done, then the money is there and they could go ahead and build the gym. Mr. Rivers said he was in agreement with Mr. Hutchinson. Mr. Hutchinson said he wanted to clarify that if the School Board sent the Superintendent to the Board of Supervisors and requested the $1.5M for the gym, the Board of Supervisors could approve the $1.5M to construct the gym.
Mr. Rivers asked if there was an approved PPEA guidelines policy approved by the School Board. He said it had been pointed out that it was approved on May 12, 2008 and revised in September 2008 with no specific date listed. After checking the September 2008 School Board minutes, there was no record showing that the revised PPEA guidelines were approved. He said the School Board was operating under guidelines not approved by the School Board. Dr. Perry said he was not sure that was a correct statement but that he would verify the status of the PPEA Guidelines Policy.
Supervisor Shortt asked about the timeline of the comprehensive plan. Dr. Perry stated that they wanted it signed and executed by March 15 and finished in three months. Mr. Shortt asked about the VPSA bonds and the amount they could save. Dr. Perry stated that he thought he meant Literary Loans and they could save $5-$8M. Mr. Shortt asked about the funding resolution and if this was a combination of the VPSA Bonds, Literary Loans, or QSCB. Dr. Perry said it depended on what they wanted the intent to be, but it probably could be brought forward on the VPSA Bonds and then those projects would be on the same path to be accomplished.
Mark Hutchinson pointed out those counties bigger than Wise County only got a third or less of what they asked for. Dr. Perry said that the Literary Loans were less likely but the QSCB would be good.
Supervisor Robbins referenced an update from Governor McDonnell regarding cuts on his proposed two year budget and cuts of $191M. He asked if the Literary Loans were tied to educational monies. Ron Vicars said the Literary Loan funding comes from the General Assembly setting aside money in their appropriation for each biennium. He said they would make caboose amendments in the spring. He further noted that if we are not on the list, we will not be able to take advantage of any savings if money becomes available. Right now on the caboose bill, he did not see anything in Literary funding. Mr. Robbins asked if they could still apply for Literary Loans for a project that was already underway. Mr. Rose, representing Davenport, verified that as long as they were on the list for Literary Loans, they could begin and finish a project, but once money becomes available they could then exchange interim financing with the 2% Literary Loan monies and this was very common place. He stressed the point that they had to first get on the list. Mr. Rose noted that there were about 30 to 40 local governments on the list and that in the last 10-15 years everyone on the list, when Literary Loans have come back in, got the full funding. He said that in answer to the gentleman’s question earlier, this was probably tied to QSCB. He further noted that it was their hope that if they applied, money would come back. He said the funding was in their constitution and that a previous Governor added money and the list is cleaned up every few years. There are no guarantees.
Mr. Robbins asked what the last amount that was put in the Literary Loans. Mr. Rose noted that amount was $160M.
Supervisor Kilgore said that the Board would be asked tonight to look at a resolution to approve the application for the Literary Loans and asked Mr. Rose if there was any reason that they would not want to be on this list for a Literary Loan. Mr. Rose replied “no”. She further asked him if this Board wanted to be due diligent and do what they should as Board members, should they get on the list. Mr. Rose answered “yes”.
Betty Cornett asked Mr. Rose if he was advising this school system to submit a Literary Loan application without a set of detailed plans, and that there will be a new RFP for PPEA with no assurance that Branch would get the next bid. Mr. Rose answered that from the perspective of the DOE, they really do not care about any of this. All they care about is that you have identified two distinct schools on one campus and that those schools will be at least $7.5M each of either new construction or renovation that qualifies. Since the numbers are going to be considerably more than that, that’s all they care about in giving Literary Loans up to $7.5M, per project. He said they are not worried about PPEAs and certain other elements.
Supervisor Rivers said he disagreed with Mr. Rose. He said that he had been on the internet and that the VDOE had three lists for Literary Loans. And if they did not have detailed plans, they would not get on the list. Mr. Rose agreed that true but all that they were trying to do tonight was to be eligible to be on the list and move forward. Mr. Rivers suggested that they wait until they had the plans because they did not know what they were proposing. He said that part of the PPEA said they could get unsolicited proposals. He asked if this meant that the School Board is not going to look at or accept any unsolicited proposals. Mr. Rivers stated that Mr. Rose has said he was not counting on Literary Loan funds. Then, is that to mean that the proposal that he made in June showing $22.5M in Literary funds was not intended to be included.
Mr. Rose stated that in June he discussed two potential options, and they could be upwards to $20-$22M in Literary Loans, and they were looking at combination of QSCA and Literary Loans. The idea would be some combination to get roughly that amount. Another concern of his is that this Board was never put in a position that financially cash-flow wise, would not be able to pay for $67-$69M plus those other capital projects which was roughly $37M. These numbers, and the charge from the County staff was to create a financial plan that was certain not to raise taxes bur rather use the combination of current cash flow, the savings from some elements of the school program and using certain monies from Dominion resources. These three components were what they used and still stand by those numbers. They used an interest rate assumption of 5% for non-QSCB non-Literary Loans. They are still at or below the 5%.
Mr. Rivers said his assumption was that the interest rate was based on 4% not 5% and he stood corrected. Dr. Perry agreed that rates were going up and that is the reason they need to finish this project before the rates get higher.
Rocky Cantrell asked if the Literary Loans did not come through, if this process hinged solely on receiving those funds. Dr. Perry stated that they did not. There was a cash flow analysis done and they were not depending on this to make this happen. He said the bottom line to the Literary Loans was that there was no responsible reason why they would not get on this list. It does not cost anything. The application is easy to fill out and benefits the County financially in the future.
Supervisor Rivers commented on the proposed timeline requirements and the policy on solicited and unsolicited proposals. He asked if they would accept unsolicited proposals. Dr. Perry said they are looking for a design and would not accept proposals for six different schools or twenty separate schools when the school system has already adopted a plan of consolidation. Mr. Rivers asked both attorneys to take note of what Dr. Perry said, because he felt that this went toward not accepting unsolicited bids and further that the minds of some were already made up and what was just said confirms that. Dr. Perry asked Mr. Rivers not to speak for him at any time. He said they would accept all bids. However, his Board had adopted a plan of consolidation and within that plan it was very clear as to what design his Board is looking for.
Supervisor Robbins said he was interested in the economic impact to communities which would be losing their schools, the negative impact and tax rates in those communities. Dr. Perry noted that all elements would be included in the packet. He said they would work through a construction management group (M.B.Kahn) to get the studies done. Mr. Robbins said he would like to have an independent study done by someone who did not have anything to gain.
Dr. Perry said that an independent study would be up to the Board of Supervisors and not the School Board.
There was some discussion on the impact consolidation would have on the communities and the affect it would have on the students. Dr. Perry stated that with the current reputation that Wise County now possesses and the amount of ridicule that has been heaped upon the County by their failure to initiate any kind of positive action had already had a tremendous impact on the economic development throughout the County. Until this one issue is resolved, they will continue to be divided and continue to have a dramatic and negative impact on the county.
Supervisor Rivers asked Mr. Ott, M.B. Kahn representative, as to the number of proposals that they had done for the cost of $150,000 & whether or not they were going to continue to work under this contractual agreement without charge for their services. Mr. Ott stated that they had looked at 22 sites but had only done three detailed proposals and that this was a cap on the amount of money they would charge. This was done on an hourly basis and there was still money remaining under the $150,000 cap to evaluate the upcoming RFP process under PPEA. Mr. Rivers asked that Ron Vicars provide how much money had been paid to Kahn for services under Phase II. He also asked for verification if it was sites or proposals. Mr. Ott said it was 22 different sites and they had five proposals under the PPEA and they chose to have an additional four firms.
Dr. Perry asked if they were speaking of proposals or models. He said Kahn did not look at individual models; they look at bids presented. Mr. Rivers questioned how could they confirm that these were valid numbers if they did not look at these. Dr. Perry stated that when talking about detailed parts, these were the semantics that were missing. He noted that there were 22 different school models with close variation and he was speaking about the proposal piece, these were proposals that were actually sent in. However, if speaking about models, this is a great number.
Nolan Kilgore spoke briefly on responsibilities of the School Board and the Board of Supervisors. His concern was the children. He wanted to take the $3.5M in savings and spend on the kids. He advised that since the 1960s, the County had lost about 4000 students. He explained that the more spread out they allow the students at the secondary level, the more expensive operations become. He noted the increased work load for elementary people and reduced curriculum at the secondary level in order to meet budget. If the secondary schools were operated more efficiently, they could afford much better than what they are doing at the present time. This is the reason for consolidation
Mark Hutchinson said efficiency was an opinion and they had not shown him efficiency in curriculum in a 2-on-1 school program.
Betty Cornett questioned the current condition of the schools and why they had been let go for all these years.
Mr. Greear entered the meeting at 8:00 p.m.
Supervisor Robbins spoke on keeping the kids involved in school activities and teach a trade to those not going to college.
Mike Mullins was concerned regarding the elementary students and their lack of learning the basics, which is important to prepare them for high school and college.
Supervisor Luntsford stressed the importance of educating those elementary students and an important part of that is exercise. He said he wanted a gym at the school regardless of what the Boards did regarding other building projects.
Rocky Cantrell was concerned that the experienced teachers are retiring and they are the ones with all the knowledge. He said he was against this from day one.
Dr. Perry noted that there were some experts on hand to discuss construction financing and hiring firms to design and build the schools and urged Board members to stay on topic and utilize the time with them to move forward.
Supervisor Rivers questioned the money that would be reaped by Dominion. He stated that once Dominion is on line, the percentage goes down from 50% to 20%. According to his projections, this leaves $4.5M to fund the School Board and other projects. The projection to fund the $69M consolidation project was based on $5M revenue from Dominion. According to his projection, this was not going to happen. He stated that the LCI would go up and they would lose an additional $2M because of the additional revenue. He said they could say they were on stable ground and not have to raise taxes. He stressed the point that they could not overspend on education and let other things go. Revenue is important but times are uncertain.
Mr. Rivers spoke briefly on the upcoming redistricting process.
Mr. Bates voiced his concern on the downturn in the economy which indicates a need to operate the schools in a more sufficient manner. This is why they cannot continue to keep six high schools open. He spoke of proposed cuts in school funding that will require steps to be made by the School Board regarding the teachers.
Supervisor Kilgore said she has pushed for two years to make a decision on the schools which at the time would have been a 0% financing and get on the list for Literary Loans. This would save the County millions of dollars.
Betty Cornett said not to put a pretense out there to the citizens that they were going to get the Literary Loans. She referenced page 5 of the PPEA regarding a $10,000 fee and asked if that was consistent. Dr. Perry stated that there had been a fee charged the last time and this is consistent. Ms. Cornett said she remembered a charge of $40,000. Rick Ott, representing Kahn, said he did not remember a specific amount but the attorney who reviewed the PPEA had suggested charging the $10,000 review fee. Another point was that the entire amount may not be used and that any unused amount would be remitted back to the proposer. He noted that there was a lot of discussion about a subsequent fee under the initial PPEA proposal and that if additional funds were required, the school system would pick up the cost or roll into the successful PPEA provider. However, he said that all this was mute at this time because they had never gotten to that point. Dr. Perry said they agreed that the Literary Loan may or may not happen, but if they did not apply they would not have a chance of getting the loan.
Mark Hutchinson asked if they could have a ten-minute recess. Mr. Rivers suggested they take a break and come back because he still had several questions.
Supervisor Bates stated that thus far in the meeting they have not asked questions of the financial and construction experts and they are not getting anywhere as to the purpose of the joint meeting. Mr. Rivers disagreed and stated that he had asked specific questions. Mr. Bates said he thought they needed to adjourn the meeting.
A motion was made by Steve Bates, seconded by Dana Kilgore to adjourn the meeting.
Robby Robbins made a substitute motion to continue the meeting. J. H. Rivers seconded the motion.
Supervisor Rivers stated that under Roberts Rules of Order that they could not stop a discussion and he did not think it was appropriate. He asked if Roberts Rules of Order was applicable there, maybe not, but the spirit of Roberts Rules of Order were applicable.
The votes on the substitute motion follows:
Aye- Robby Robbins Nay- Ronnie Shortt
J. H. Rivers Steve Bates
The votes on the main motion to adjourn follow:
Aye- Ronnie Shortt Nay-
Bob Adkins J. H. Rivers
Dana Kilgore Robby Robbins
School Board member Phillip Bates made a motion to adjourn the meeting. Mike Mullins seconded the motion.
School Board member Betty Cornett made a substitute motion to recess the meeting. Mark Hutchinson seconded the motion.
The votes on the substitute motion follows:
Aye- Betty Cornett Nay- Larry Greear
Mark Hutchinson ` Nolan Kilgore
Rocky Cantrell Ted Thompson
The votes on the main motion to adjourn follows:
Aye- Larry Greear Nay- Betty Cornett
Nolan Kilgore Mark Hutchinson
Ted Thompson Rocky Cantrell
ATTEST: WISE COUNTY BOARD OF SUPERVISORS
Shannon C. Scott, Clerk J. H. Rivers, Chairman