The Rockbridge County Board of Supervisors and Rockbridge County School Board took initial steps last week toward borrowing money to fund a proposed recreation center project, during a joint meeting held Thursday, Jan. 15, at the School Board office.
The discussion focused on a potential plan to borrow approximately $14.5 million through the Virginia Public School Authority (VPSA), a state-run financing program commonly used by local governments to fund school and recreation projects.
Under the proposed timeline, the School Board would consider a resolution authorizing the borrowing process at its Feb. 10 meeting. If approved, the application would be submitted to VPSA later in February, with bonds expected to be sold on a competitive market basis in early April.
David Rose, the county’s financial adviser and senior vice president of Davenport Public Finance, said at the meeting that the plan would involve issuing fixed-rate bonds, locking in interest rates at the time of sale and spreading repayment over multiple years.
“There really is no better long-term funding source,” said Rose. “The borrowing rate is essentially triple-A. That’s about as good as it gets in terms of cost.”
VPSA pools projects from across the state and sells bonds on behalf of localities, allowing smaller governments to access lower interest rates than they might obtain on their own. Investors purchase the bonds, providing upfront cash for construction, while the county and school system repay the debt over time through annual payments known as debt service.
Rose estimated the county’s annual debt service for the project would be approximately $1.1 to $1.2 million once payments are fully phased in.
According to a preliminary financing schedule prepared by Davenport, the borrowing process would include multiple formal votes and public notice requirements over the next several months. After the School Board’s expected vote on Feb. 10 authorizing the application to the Virginia Public School Authority, county officials would submit the application later in February. The Board of Supervisors could then call for a public hearing as early as its Feb. 23 meeting, with required notices published in early and mid-March, before taking final action later that month.
A public hearing on the proposed bond issuance is currently scheduled at the Board of Supervisors’ March 23 meeting, at which time the Board would consider adopting a bond sale agreement and related authorizing resolutions. That action would formally approve the borrowing, subject to final pricing and closing through the VPSA spring bond pool.
Davenport representatives are also expected to return to both boards in early March to present updated market estimates ahead of the bond sale. The schedule calls for VPSA bonds to be priced on April 7, locking in interest rates at that time, with a tentative closing date of April 28, when funds would be released for the project.
Until construction expenses are paid, borrowed funds would be temporarily invested through a state-managed program, generating modest interest earnings.
“We always err on the conservative side,” Rose said. “We’d rather come back later and say it cost less than expected than the other way around.”
While the boards were not asked to approve borrowing at Thursday’s meeting, the presentation prompted an extended debate over public debt, future capital needs, and long-term financial planning.
Newly elected Supervisor Steve Hart raised concerns about the county’s growing list of capital projects, including school upgrades, courthouse repairs, and jail and athletic facility needs, arguing that borrowing for predictable maintenance creates long-term financial risk.
“Every dollar we pay in interest is a transfer of wealth out of Rockbridge County,” Hart said. “We know when HVAC systems fail. We know when roofs fail. Those things should be handled with an accumulation fund, not debt.”
Hart also questioned whether the county could afford additional operating costs associated with the recreation center, such as utilities, custodial services and maintenance.
“If we’re going to add $122,000 to the budget, we’ve either got to stop doing $122,000 worth of stuff or raise $122,000,” he said.
Rose strongly disputed the suggestion that borrowing would necessarily lead to tax increases or crowd out future projects. The county operates under a debt policy limiting annual debt service to no more than 12% of the total budget, he said. Even with the proposed borrowing, debt service would remain well below that threshold.
“Our policy is less than half what banks recommend for household borrowing,” Rose said. “Right now, the county is using about seven and a half cents of every dollar for debt service. This project would take it to about eight and a half cents.”
Rose also challenged claims that the cost of borrowing could be attributed solely to households. “That’s scare tactics,” he said. “County revenues come from a variety of sources — businesses, sales taxes, fees — not just homeowners.”
County officials noted that several major capital projects are already being funded with cash rather than debt, reducing pressure on future borrowing.
Once the debate died down, the boards ultimately expressed consensus to continue the borrowing process and return with additional information and formal votes in the coming weeks, with Hart as the only “no” vote.
