Shenandoah County hears multiyear capital plan from Davenport, weighs debt and tax options
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Summary
Davenport & Company presented Shenandoah County's multiyear capital and debt picture, showing $49 million outstanding debt and scenarios for increasing operating capital from $5M to $8M that would require financing or new revenue (roughly 1.8 pennies in FY27 under a financed scenario).
Ted Cole, a financial adviser with Davenport & Company, told the Shenandoah County Board of Supervisors on Feb. 10 that the county's existing tax-supported debt stands at about $49,000,000, split roughly into $13.7 million in operating-capital debt and $35 million in major-capital debt. Cole said the county's entire debt profile is fixed-rate and that scheduled step-downs in major-capital payments create future capacity for borrowing.
Cole explained how rating agencies evaluate local governments, saying economy and financial performance each account for about 30 percent of a credit assessment and that Shenandoah County is unrated only because it historically has not sought a formal bond rating. "You have debt capacity," Cole said, "but capacity is different from affordability. How do we pay for it?"
Using three modeled approaches for operating capital, Davenport showed the difference between financing $8 million annually over five years, funding $8 million per year with cash (PAYGO), and a 50/50 blend. Under the financed scenario Cole presented, the county would need about 1.8 pennies worth of additional tax revenue in fiscal 2027 (about $1.1 million) to service the borrowing. The PAYGO case would require a one-time equivalent of roughly 14 pennies on the tax rate in year one.
For major capital, Davenport ran cases with no new dedicated revenue and with one additional penny dedicated to major capital, across 15-, 20- and 30-year repayment terms. The results ranged from roughly $33 million of potential borrowable projects (15-year term, no new revenue) up to about $55 million (30-year term with 1 penny dedicated). Cole emphasized that longer terms increase borrowing capacity but raise interest costs.
Board members asked technical questions about classification of major maintenance versus operating capital, refinancing options, and whether the consultant had examined water and site availability alongside economic-development needs. Cole said useful life and project scope determine the bucket (operating vs. major) and that refinancing opportunities depend on loan prepayment terms and market rates.
The presentation concluded with a recommendation that the board consider debt-policy guardrails to protect key ratios and to ensure future borrowing aligns with budget capacity; staff agreed to follow up with more granular tables comparing alternate operating-capital levels and tax-rate impacts.
The county will use the analysis as input to budget planning and to future discussions about whether to issue debt, dedicate tax-rate pennies, or increase PAYGO funding.