County IDA considering bond request
by Tom Chillemi
A refinancing proposal by Rappahan-nock Westminster-Canterbury (RWC), an assisted living facility for seniors in Irvington, could net the Middlesex Industrial Development Authority (IDA) $22,000 in annual income.
At its September 20 meeting, the IDA approved a resolution that paves the way for up to $19.5 million in bonds to be issued for RWC, a non-profit corporation.
RWC president and CEO Stuart Bunting told the IDA the Lancaster IDA has already committed its funding for 2012 and could not issue bonds until January 2013.
Bunting said refinancing could lower RWC’s current interest rate of 6% to about 4.5% rate.
The new financing would be used to retire debt of $17.9 million that was used to build the facility, which opened in 1985.
The IDA involvement is necessary to make the bonds tax-exempt, said Middlesex IDA bond attorney Dan Siegel.
Siegel told the IDA that each IDA can issue $10 million annually in “bank qualified” bonds. These bank-qualified, tax-exempt bonds are given special tax treatment by the IRS, making the bonds more attractive to banks, he explained, because the interest on bank-qualified bonds is not taxed.
There is no limit on “non-bank qualified” bonds.
He said the Lancaster IDA issued its bonds for 2012 to finance the Mariners Museum.
Because this is a re-financing, there would be no public hearing required by state or federal law for either the IDA or the board of supervisors. However, the Lancaster Board of Supervisors would need to approve the bonds, since they are outside of its county.
Bunting answered a question from IDA member Gordon White by saying RWC has a waiting list of 110 persons who want to be residents in coming years.
The IDA entered a closed session to discuss its fee, which usually is 1/8th of a percent per year of the unpaid balance. It took no action after returning to open session other than to adjourn.
Bunting had asked that the fee be waived, but added that paying the fee would not break the deal.
The resolution states that “neither the IDA nor Middlesex County has endorsed the creditworthiness of the corporation” (RWC) or its ability to repay the bonds. The bond purchaser does so at “its sole risk.”
Middlesex interim county administrator Bill Whitley said there are currently no bond applications pending from Middlesex entities, so issuing the RWC bonds would not affect local groups.
In the past, the Middlesex IDA has issued bonds for Camp Piankatank in Hartfield, Christchurch School and, most recently, for Cape Henry Public Schools. Those bonds help provide about $46,000 in annual income to the IDA through 2018.
IDA chair Philip J. Allan asked authority members to suggest projects for Middlesex.
The IDA’s next meeting will be Tuesday, October 23, at 9:30 a.m. at the Historic Middlesex Courthouse in Saluda. It is open to the public.