Middlesex IDA okays bonds for RWC
Refinancing bonds for Rappahannock Westminster-Canterbury (RWC), an assisted living facility for seniors in Irvington, will net the Middlesex Industrial Development Authority (IDA) about $22,000 in annual income. The income is derived from the IDA’s fee of 1/8th of a percent per year of the unpaid balance.
At its October 23 meeting, the IDA approved a resolution to issue up to $19.5 million in bonds for RWC, a non-profit corporation.
Issuing bonds through the IDA makes the bonds tax-exempt, said the Middlesex IDA’s bond attorney Dan Siegel.
Siegel told the IDA that each IDA can issue $10 million annually in “bank qualified” bonds.
The Middlesex IDA’s new fiscal year begins January 1, 2013.
Bank-qualified tax-exempt bonds are given special tax treatment by the IRS so the bonds are more attractive to banks, he explained. Interest on bank qualified bonds is not taxed.
RWC president and CEO Stuart Bunting told the IDA the Lancaster IDA has already committed its bank-qualified bonds for 2012 and could not issue more until January 2013.
Bunting said refinancing through the Middlesex IDA bonds could lower RWC’s interest rate from 6% to the middle 4% rate.
The new financing would be used to retire debt of $17.9 million that was used to build RWC, which opened in 1985.
In the past, the Middlesex IDA has issued bonds for Camp Piankatank in Hartfield, Christchurch School, the Rappahannock-area YMCA 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 IDA bond projects for Middlesex.
On November 6, the Middlesex County Board of Supervisors, in a vote of confidence, endorsed the bonds for RWC. The IDA operates autonomously and is not under direct control of the board of supervisors, which does, however, appoint the seven IDA members.
The IDA collects an annual bond fee and this money was used recently by the IDA to issue grants for the Deltaville Maritime Museum in Deltaville, and the Middlesex County Museum in Saluda.
Middlesex County Administrator Matt Walker said the bonds will create no liability for Middlesex County or its IDA.
RWC will pay all closing costs for the bonds, which are being privately placed with two banks, Union First Market Bank and Chesapeake Bank, and the banks’ bondholders will sign documents stating releasing the IDA and the county from liability for the bonds.
The RWC bond issue must close by December 31, 2012.
Supervisors made it clear that the RWC bonds will not interfere with any bonds in Middlesex County because starting January 1, 2013, the Middlesex IDA will be able to issue an additional $10 million in “bank qualified” bonds annually.
Also, there are no bond applications currently pending before the IDA.