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Board directs staff to pursue Chesapeake Bank proposal for Station One financing
Summary
The Board voted to move forward with a bank loan proposal from Chesapeake Bank to finance a new Gloucester Volunteer Fire & Rescue Station One, choosing a 20‑year structure with flexibility to draw funds during construction and favorable prepayment terms; bids for the project are due June 1.
The Gloucester County Board of Supervisors on May 5 directed staff to accept a bank financing proposal from Chesapeake Bank to support construction of Gloucester Volunteer Fire & Rescue Station One.
Deputy County Administrator and CFO Maria Callaway and Ted Cole, senior vice president at Davenport Company, presented updated loan proposals from five banks and recommended that the county pursue one of two competitive options — Chesapeake Bank or Webster Bank. Both proposals envisioned a roughly $20 million borrowing (final amount to be set after construction bids due June 1), a 20‑year term, and a support agreement by the county to make annual payments under an Economic Development Authority issuance.
Davenport advised that Chesapeake’s proposal offers greater flexibility: the loan would be prepayable in whole or part without penalty immediately after closing and Chesapeake offered a "draw‑down" approach so the county would not necessarily take the full principal at closing but could draw funds as construction invoices are presented. Chesapeake’s refreshed fixed rate for the proposed term was presented as 4.664%; Webster’s refreshed fixed rate was presented as 4.575% with more restrictive prepayment terms (1% penalty on prepayments after year five until year eight).
Cole and staff noted tradeoffs: Webster’s slightly lower rate yields a modest present‑value savings if both loans were held to maturity, while Chesapeake’s draw‑down option reduces interest during construction and gives greater flexibility to refinance or prepay later. The county’s model assumed roughly $1.44 million in additional debt service over a four‑year period under certain scenarios (equivalent, staff said, to roughly one penny of revenue between fiscal years 2028 and 2029, depending on final structure and drawdown behavior).
Following discussion, a motion was made to proceed with Chesapeake Bank’s proposal; the board approved the motion by roll call. Staff said construction bids are due June 1 and the county would aim to close financing by late July, with required EDA public hearing and EDA action scheduled in late June.
The county will continue document finalization with attorneys and the lender; staff flagged that closing costs and issuance fees will be confirmed as bids and counsel review proceed.
