The Dinwiddie Board of Supervisors are moving forward with refinancing debt services for the county and the Dinwiddie Water Authority per the recommendations made by Davenport & Company.
The Dinwiddie Water Authority is moving forward with Davenport & Company’s recommendation that will generate $1,114,248 in savings through 2031, utilizing an offer made by BB&T Bank to repay and consolidate loans held by SunTrust and the USDA. The board unanimously approved the recommended measure to generate savings after considering three options with varied levels of savings.
“This particular item is related to a potential refinancing of the existing debt of the Dinwiddie County Water Authority,” said Ted Cole, the co-head of public finance at Davenport and Company. “The water authority approved moving forward with the proposal provided by BB&T Bank. They were one of three banks that proposed to finance this refunding.”
BB&T offered three loans, but only two were considered. One option considered expired in 2020 at a 1.31 percent interest rate. This option required larger payments annually, but offered higher overall savings. A loan offered through the Virginia Resources Authority (VRA) was similar in its payment schedule.
These options called for an increase of more than $40,000 annually, substantially lower payments on the back end. Cole explained the favored option of lower annual payments and total savings as giving the water authority latitude.
The Dinwiddie Water Authority and the Dinwiddie Board of Supervisors favored and approved moving forward with a 2.27 percent loan that matures in 2031. This shortens the USDA loan by three years, saves $1,114,248 and lowers annual payments an average of $24,000. The savings will be between $100,000 and $300,000 annually on the back end.
The board also approved moving forward with 15 -year Virginia Resources Authority summer pool financing for the new government complex. Again, the board had options on loan sources with varied interest rates and terms.
The deal is not set in stone, and Cole assured the board that this measure is not necessarily leaving the banks off the table. The board would have until the week of July 25 to close the VRA loans without jeopardizing the rates. The estimated VRA rate is just 2.019 percent, and Cole said it isn’t likely that the rate would shift much.
“The one caveat on VRA is they actually won’t sell their bonds, they won’t lock in that interest rate until July 27,” Cole said. “Since June 7 to now, those rates have actually come down significantly, almost a quarter of a percent. Interest rates would have to rise by 1.3 percent, or what we call 133 basis points, in order for the VRA option to match the Capital One Option.”
Cole said this movement is not completely unprecedented in history, but it would be a very significant market movement. Davenport & Company said all indicators suggest this drastic market movement is unlikely to be the case. Even if the VRA rates rise above the bank rates, there is some room to work with one of the banks.
“I think the county really has demonstrated our ability to have some financial discipline,” County Administrator W. Kevin Massengill said. “If 15 years is what you wish to do … we can do that.”
Massengill did mention the need for funds to cover a communications tower project in the near future that will likely have a cost somewhere in the millions. The Dinwiddie County Public School System is also working on a facilities management study, which it will eventually present to the board for consideration.
Supervisor Dr. Mark Moore vouched for a shorter term and lower rate as a means to reduce tax burdens on the citizens of Dinwiddie County. The 15-year plan has a higher yearly payment plan, but the overall sticker price is more than $2 million lower than the bank proposals and almost $4 million less than the 20-year VRA loan.
The final approval securing financing for the new government complex will take place July 19. The board had to take action in the form of a resolution, showing commitment to the VRA, and that is what took place.