Middleburg council approves interfund loan, amends FY25 to pay off 2020 loans

Middleburg — The Middleburg Town Council voted to authorize an interfund loan from the general fund to the utility fund and to amend the FY2025 budget to appropriate $1,400,000 to pay the outstanding principal on Series 2020 A and Series 2020 B loans.

Council members approved the ordinance and budget amendment after staff said the loan would allow the town to pay off existing lines of credit and carry the balance as a demand note between town funds. Danny (special projects staff) told the council the proposed interfund loan would be for $1,100,000 from the general fund to the utility fund and that the town would pay interest at the rate the town currently earns through the VML/VACO liquidity fund, “currently around 4 and a half, 4.75%.”

The ordinance and amendment passed on a roll-call vote. Vice Mayor Chris Bernard, Council members Pam Curran, John Kevin Daley, Darlene Kirk, Lisa Lehi Morgan and Cindy Pearson voted yes; Council member Jacobs was absent.

Council members and staff discussed structuring the note as interest-only in year one to preserve flexibility for the utility fund and then returning to the council with a proposed amortization schedule. Danny said the demand-note approach would allow the town to review principal payments annually and to prepay without penalty. “If the council’s desire is that we begin to pay this down on a regular basis, I think we can find a way to do that,” he said.

Council members pressed on fiscal responsibility. Peter (council member) asked why the town would make interest-only payments rather than including principal. One council member answered that interest-only payments were chosen to avoid adding an unplanned principal payment to the FY26 budget; others suggested structuring the note to be interest-only for the first year and then principal-and-interest on a multiyear amortization thereafter.

Staff noted practical constraints: the loans must be paid by the end of the week. Angela (town treasurer) was identified as handling the payoff mechanics. Danny said staff would complete the payoff and return with a revised note that could specify interest-only year one and a defined amortization schedule thereafter.

Clarifying details in the discussion included the loan amounts described by staff: an interfund loan of $1,100,000 to address the utility fund line of credit, and a total appropriation of $1,400,000 to pay Series 2020 A and 2020 B principal. Staff said the town’s liquidity fund rate was approximately 4–4.75 percent and that the utility fund balance was about $1,700,000.

The council’s action was procedural: it authorized the interfund loan and amended the FY25 budget to allow the town to retire the specified 2020 loans immediately and return to the council later with permanent repayment terms.