BOS members respond to recent public comments

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Note:  At the September 21, 2010 Board of Supervisors meeting, four of the

five members of the Board agreed to the following response to recent

letters to the editor and public comments regarding capital projects,

possible borrowings and related matters.

September 22, 2010

To the Editor:

A recent letter to the editor from a member of the Board of Supervisors

contained a number of assertions regarding County financial matters and

possible future borrowings.  In response to this letter and a request from The

Caroline Progress, we wish to clarify our views on this issue.  As members of the

Board, we strongly support keeping constituents informed about issues that

affect them through any means of communication available.  When doing so,

however, it is imperative to provide accurate information that can be

substantiated by the facts.

The letter indicated that the County is over $100 million in debt.    In fact,

County debt totals $88,079,452 as of September 10, 2010, including general

government, schools and utility debt.  The claim was also made that the County

has very little to show for our debt in terms of actual infrastructure.  We find this

statement mystifying.  A partial list of the projects paid for from these borrowings

includes the new Lewis & Clark Elementary School, Caroline Middle School,

renovations, additions and physical plant improvements to all primary and

elementary schools, a new courthouse (mandated by the judiciary), a heavily

used Community Services Center, a new administrative building, parks and

recreational facilities, fire engines, ambulances, sheriff’s vehicles and other

public safety improvements and water and sewer infrastructure.  All of these

projects have improved the quality of life for County citizens and enabled the

County to attract business and industry that has provided jobs for County citizens

and dramatically boosted tax revenue.

The letter also asserts that Caroline County schools have long gone

without proper attention.  This is simply not the case.  The fact that $32,361,490

of the County’s $88,079,452 total debt (or 37%) is for school projects attests to

this.  Debt service payments for school projects in the current fiscal year alone

(FY 2011) equal $3,320,877, or 57% of total payments.

Four years ago, the Board of Supervisors approved $6.8 million

borrowings for additional school capital projects deemed urgent by school

officials.  These borrowings provided funds for numerous school infrastructure

projects in recent years including technology upgrades, building improvements

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and refurbishments.  This summer, additional projects were approved from the

remaining balance of this borrowing including security improvements at Bowling

Green Elementary, Bowling Green Primary, Madison Elementary, Caroline

Middle School and Caroline High School.  Repairs to the Bowling Green

Elementary Annex roof and HVAC system were also approved.  Replacement of

the exterior doors at Caroline High is currently being considered.  To say that

school infrastructure has been neglected is simply false.

It is true the schools did not receive their entire request for operating funds

in FY 2011.  Very few departments or agencies did.  However, through federal

stimulus funds and $100,000 added by the Board of Supervisors to the County

Administrator’s recommended local contribution to schools (which now totals $11

million), they began the new fiscal year with a larger budget than originally

anticipated.

The proposed construction of a YMCA in Ladysmith has been a topic of

considerable interest.  It is important to point out that any debt service costs for

the project will be paid for by Ladysmith Village proffers and fund raising efforts

exclusively.  In the event the Board gives favorable consideration to the project, it

will not move forward unless and until these funding sources are secured.

Some believe the proposed expansion of the County’s wastewater

treatment plant is premature.  The plant already regularly approaches 80% of is

existing capacity.  Over the last six months, average flow has been 85% of

capacity, with a peak month of 96.4%. Expansion of a wastewater treatment

plant does not happen overnight.  The Virginia Department of Environmental

Quality requires completion of an expansion design when a wastewater

treatment plant reaches 90% of capacity and expects construction of the

expansion to begin when capacity consistently hits 95%.  Factoring in committed

connections over and above the average daily flow, only 167 additional

connections remain before the 95% threshold is reached and we must begin

construction.  Even with the current housing slump and economic downturn, we

could quickly use up the remaining connections by a combination of residential

and business hookups.

Failure to meet these milestones could result in a building moratorium

from state regulatory agencies, bringing economic development efforts and

housing construction to a grinding halt.  With a moratorium in effect there would

be no further connections to the system and no utility revenues to cover

operating and capital costs.  It will take at least two years to complete the project

from the time the Board gives the green light for construction to begin.  Further

delay will leave us precious little margin for error.

Despite these facts, the Board has no desire to spend $16.3 million to

expand the plant if a more cost effective alternative is available.  To date, no

such alternatives have been deemed possible by staff or the County’s utility

engineering consultants.  If any Board member or citizen knows of methods to

prolong the life of the existing plant, we would welcome them enthusiastically.

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The County’s past investment in water and sewer utilities has reaped

more than ample rewards in tax dollars.  Real estate tax revenue in Carmel

Church grew from $90,823 in 1990 when public water and sewer first became

available to $991,706 in 2010.  In Ladysmith, the numbers grew from $16,998 to

$679,060 during the same timeframe.  Business personnel property tax

assessments in Carmel Church increased from $93,920 in 1990 to $5,359,960 in

2010.  The corresponding increase for Ladysmith is $49,030 in 1990 versus

$1,951,180 in 2010.  Virtually no business license revenue (BPOL) was

generated in either Carmel Church or Ladysmith in 1990.  In contrast, Carmel

Church is expected to produce $526,998 in BPOL revenue in 2010 ($3,957,148

over the past 18 years) and $90,795 is expected for Ladysmith ($805,704 over

18 years).  Meals tax revenue in Carmel Church increased from $43,979 in 1990

to $603,057 in 2010 and from $4,801 to $131,790 in Ladysmith.  Growth in

employment has followed utility and business investment.  The obvious inference

is that utility investments more than pay for themselves in tax revenue generated.

Without this infusion of tax revenue the County’s budget picture really would be

catastrophic.

We also strongly disagree with the allegation that the Board has not been

careful or wise with taxpayer dollars.  Unlike the federal government, the County

is required to balance its budget each and every year.  The Board has worked

hard to hold the line on taxes and has maintained one of the lowest tax rates on

the I-95 corridor.  We will continue to do so even after the 2010 general

reassessment is completed.  The real estate tax rate has remained at $0.53 per

$100 of assessed value for the past three fiscal years.  In comparison, the rate

was $0.805 in FY 2004.  In the past five fiscal years, the rate has increased by a

total of 5 cents.  In these difficult times, we have held spending in check to avoid

tax increases to the fullest extent possible.  Despite this, we have managed to

fund a vast array of badly needed capital projects.

Our per capita debt of $3,260.99 as of June 30, 2009 (the latest figures

available) is below most localities that surround us and is in line with policies and

procedures approved by Davenport & Co, the County’s financial advisor.

Davenport has developed a plan to repay the County’s $88 million of debt using

conservative fiscal assumptions.  The County budget contains dedicated sources

of revenue to repay the debt including a portion of the personal property tax,

meals taxes, consumer’s utility taxes, local communication taxes and rent from

the Virginia Department of Health.  With recent increases to availability and user

fees the Utility Fund now pays its own operating and debt service costs.  In the

current fiscal year, it will begin paying back an interfund loan from the General

Fund.

It has been said that previous proffers go uncollected.  The only proffer not

collected to date is the construction of a fire station in Carmel Church associated

with the approval of Belmont North.  The Board is working with the County

Attorney to develop a plan to hold the developer accountable to his

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commitments.  Ladysmith Village is not in default on its proffer to construct a park

adjacent to Lewis & Clark Elementary School as some have alleged.  The proffer

specifies that as long as the developer, YMCA and the County agree to move

forward with the YMCA, the proffer for the construction of the park is not

necessary.  In the event any of the parties determine that the YMCA cannot or

will not be built, the proffers related to the construction of the park facilities are

applicable.  This determination has not occurred as of this date.  If citizens have

questions about the collection of any particular proffer, we encourage them to

contact us.

Many citizens are under the impression that the amount of borrowing

currently under consideration is $63 million.  This figure came from a preliminary

five year list of projects developed by staff at the request of the Board.  In

addition to the $700,000 for the new Dawn Library approved by the Board on

September 14, the only projects currently under consideration are the

wastewater treatment plant expansion ($16.3 million) and the proposed

extension of County water to the Caroline Pines subdivision ($3 million).  Costs

of issuance bring the total up to $22 million.  Both of these projects will be the

subject of a public hearing scheduled for the October 12 Board of Supervisors

meeting.

The YMCA project will likely be discussed in late 2010 or early 2011 when

the funding mechanism has been finalized.  The remaining projects that comprise

the $63 million will be considered as part of the FY 2012 Capital Improvements

Program (CIP) process.

Some consider the projects being considered to be unnecessary “bright

shiny objects”.  Others consider them to be essential amenities that a locality

should provide to its citizens.  To many, these “bright shiny objects” collectively

give a community the quality of life they are seeking.

Last, but certainly not least, we want to address the speculation that the

County will likely have to lay off additional employees next year.  This comment

was irresponsible and has caused needless alarm amongst County employees.

The Board greatly values the contributions of our employees.  As four of the five

Board members, we are committed to no additional layoffs next year.  Any

required cuts, if any, will be made from other sources.

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Thank you for the opportunity to clarify our views on these subjects.  We

look forward to the ongoing debate about the future of our great county and

welcome views from all citizens.

Sincerely,

D.M. “Maxie” Rozell, Jr., Chairman

Wayne A. Acors

Bobby J. Popowicz

Floyd W. Thomas

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