Gloucester supervisors approve up-to-5% cap for $2.35M water and sewer revenue bonds

Gloucester County supervisors held a public hearing on proposed water and sewer revenue bond financing and approved a resolution authorizing staff to pursue revenue-pledged financing for utility projects included in the FY26 budget. The board set a not-to-exceed interest-rate cap of 5% and maintained a 25-year planning horizon for debt maturity.

The public hearing reviewed options from multiple banks and the Virginia Resources Authority (VRA). Maria Calloway, Gloucester County chief financial officer, told the board the county was considering borrowing to fund roughly $2,350,000 of utility projects in FY26 and that Davenport Company had solicited proposals from more than 200 banks to compare market alternatives. Ted Cole, senior vice president at Davenport Company, summarized proposals and said VRA would not lock its interest rate until late October, while some bank proposals could be locked immediately.

Why it matters: the board’s choice determines how the county will secure near-term funding for water and sewer repairs and upgrades while managing the county’s long-term utility debt burden. The resolution authorizes revenue bonds secured by water and sewer system revenues rather than the county’s general obligation credit.

Board members debated term length and rate caps. Staff and advisors recommended a 25-year structure to smooth payments across anticipated additional future borrowings for the utility system; the VRA illustrative rate for 25 years shown in the presentation was about 4.45% (not locked). After discussion the board approved a resolution authorizing pursuit of VRA financing (or comparable bank financing) provided the final rate does not exceed 5% and final maturity does not exceed 25 years from closing.

Public commenters raised concerns about the scale of the county’s utility needs and whether the proposed amount would adequately address aging pump stations and lines. Nathan Brown of the Wade district said the county had a backlog of projects and cautioned the county might need much larger expenditures; Paul Toopin asked whether planned borrowing focused on maintenance would be sufficient if the county grows.

What the board decided: the resolution was adopted (recorded roll-call vote in the minutes). The county will proceed with required documentation and return with final loan documents; if VRA is selected its bond sale timetable would lock rates in late October. The board instructed staff to work with bond counsel and Davenport on final documents and to return if parameters change.

Less critical details: the financing would be a revenue pledge of the water and sewer system and would allow, but not require, county financial support to the utility system. The presentation included side-by-side modeled debt-service schedules for VRA and several banks and noted the practical tradeoffs between locking a bank rate immediately and floating until VRA’s sale.