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Bond sale will repay Middlesex $1 million

by Larry S. Chowning

The Middlesex Industrial Development Authority (IDA) last week approved a $1,032,000 revenue bond sale to repay Middlesex County funds it previously used to pay for school roof repairs and to build 10 airplane hangars at Hummel Field.

The original funds to pay for these projects were appropriated from the county’s fund balance. Now, in essence, the county is borrowing through the bond sale to pay itself back.

The bonds will be issued by Middlesex County and the sale will be handled by the IDA and the Bank of Lancaster. The interest rate paid on the bonds will be 4.3 percent.

History

In February 2002, the board of supervisors adopted a resolution that would allow the county to reimburse itself for expenditures associated with repairing the roofs at St. Clare Walker Middle School and Middlesex High School, and building the airplane hangars.

Last week, supervisors voted 4-1 to request the IDA-issued bonds that will pay the county back.

The $1,032,000 previously spent includes $159,504 spent on part of the airplane hangar construction cost, $749,763 for the replacement of a portion of the roof on Middlesex High School, and $46,010 for pre-engineering and clerk’s work on the middle school roof project.

Refinancing Option

The 4.3 percent interest rate on the $1,032,000 bond sale offered by the Bank of Lancaster was not the lowest interest rate that was bid. However, the Bank of Lancaster was the only bidder that would allow the county to refinance if interest rates went down enough to justify refinancing.

Middlesex County Administrator Charles Culley noted the county previously saved $600,000 by refinancing its debt on funds used to build the new county courthouse and an addition to Middlesex High School.

“It (refinancing option) gives us some flexibility that may save taxpayer money in the future,” Culley said. 

Sewage Plant

At its Feb. 11 meeting, the IDA board also learned the county is anticipating borrowing approximately $6 million to install a sewage treatment plant for the Saluda area. However, the county does not plan to borrow these funds through the Middlesex IDA.

The construction of a Saluda sewage treatment plant depends on approval by the Virginia State Water Control Board in March or April on whether the county can build the plant.

Culley said the county plans to borrow funds for the sewage plant construction through the Virginia Resources Authority (VRA). The VRA was set up by the state to loan funds on sewage and water works projects, explained Culley, and the needed funds should be available in the spring and fall. 

“We hopefully will be bidding out the [Saluda sewage treatment plant] project in May or June,” he said.

Culley indicated the bidding process for similar projects is coming in 30 to 40 percent under anticipated costs, and he is “hopeful” the Saluda plant bid will come in at around $4 million. 

The $6 million cost to build the sewage plant was estimated before the recent economic recession.

posted 02.18.2009

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