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Davenport analysis: Amherst faces an $8.2M FY27 capital spike; financing could lower advertised tax rate
Summary
Davenport & Company told the Board that Amherst—s draft FY27 CIP lists about $8.2 million of projects concentrated in 2027; financing roughly $7.5 million across 4/7/15‑year terms would spread payments and could reduce the advertised tax rate (staff model reduced to ~58¢), but the board must weigh debt-service peaks in 2027–2031 and the use of reserves.
Sam Stewart, a financial adviser with Davenport & Company, presented a five‑year capital and debt analysis for Amherst County, saying the draft FY27–31 CIP places roughly $8.2 million of projects in FY27 and a smaller program (~$1M/year) thereafter. "Without any strategic use of debt financing that would cause about $6.7M use of reserves or other revenue sources" in FY27, Stewart said.
Davenport proposed financing about $7.5M of the FY27 needs across maturities matched to asset life (some shorter, some 15 years) to reduce the immediate FY27 cash hit and smooth annual debt service into a roughly $1.8–$2.3M annual debt-service profile in the near term. Using that model, county staff said the advertised tax rate could drop from the working 61¢ level to about 58¢.
Stewart emphasized tradeoffs: tax-supported debt service is projected to be about $4.85M in FY27, step to roughly $5.6M in FY28, and then decline after 2031 to around $3.6–3.7M. The county—s key credit metrics (payout ~53% in 10 years; debt-to-assessed value ~1.8%) are within normal Virginia peer ranges, but the board faces limited affordability during the FY27–31 peaks. Davenport estimated that the FY27–31 peaks would require roughly $3.8M of additional recurring revenue or use of fund balance to avoid shortfalls.
Board members discussed alternatives: increase recurring revenues, scale projects back, use one‑time fund balance, or pursue restructuring/refinancing of existing obligations to smooth payments into/after 2032. Stewart noted the county—s 2025 landfill financing carries an interest rate near 3.99% and that market rates influence the decision whether to refinance or extend principal.
The board asked staff to run scenarios: what the financed tax rate looks like at 58¢, 57¢, 56¢ and 55¢, and what subset of projects could be funded at each level. Members also asked for an implementation worksheet (Davenport shared a tool) to test packaging police cars, fire apparatus, and other capital into different financing or pay‑as‑you‑go strategies.
What happens next: staff will model stepwise tax-rate scenarios using Davenport—s spreadsheet and return with specific packages of projects tied to each tax-rate option so the board can finalize the FY27 revenue plan before the public hearing.
