Virginia City approves $835,000 equipment certificates to fund mandated steam‑conversion after heated debate

The Virginia City Council on May 12 approved a resolution authorizing $835,000 in general‑obligation certificates to buy equipment for a state‑mandated steam‑to‑gas conversion, following a lengthy presentation and debate about financing choices and process.

Steve Scharf of Baker Tilly presented the sale results, saying the negotiated offering landed near initial estimates with interest rates across maturities roughly 3.9%–4.75% and a roughly 20‑year structure. "The purpose and goal of the financing was to fund the acquisition of equipment for the steam conversion project for the city," Scharf said. He said closing is scheduled for May 28 and estimated the tax impact at about $29 a year on a $300,000 homeowner.

Councilors pressed advisers on the term and total interest cost. Councilor Paulson asked why the city issued a 20‑year structure for an $835,000 obligation that could accumulate about $455,000 in interest; Scharf replied that longer amortization reduces near‑term levy pressure and is a common practice when the asset life supports it. "It is a common practice to amortize your obligations commensurate to the life of whatever the asset is you're funding," Scharf said.

Several councilors proposed alternatives to reduce borrowing, including tapping the city's OPEB (other post‑employment benefits) asset account to free general‑fund cash for one year. Councilor Paulson summarized staff consulting with the city's actuary and said the city holds about $5.5 million in an OPEB asset account against roughly $16 million in liabilities; she described a theoretical approach to paying retiree premiums from that account for 2026 to free about $1.1 million in the general fund. Finance staff and advisers cautioned that OPEB assets are part of the city's overall reserves and that drawing them down could harm the city's credit profile.

Bond counsel Mia Thibodeau and the city attorney explained the council had previously passed a March resolution delegating authority to a three‑member pricing committee (the mayor, city administrator and finance director) to award the sale within set parameters. Thibodeau said that delegation allowed the pricing committee to accept orders and award the sale last week; she described the resolution before council that night as completing the approving documentation. Several councilors said they thought final approval remained with the full council and expressed frustration at the process and perceived lack of clarity.

After legal counsel warned that the sale has been awarded and investors expect closing, councilors reconsidered and moved to adopt the approving resolution. Some members said they opposed the specific terms but voted in favor to avoid breaching contract. The motion carried.

Next steps: officials said the certificates are scheduled to close on May 28 and staff will provide follow‑up information about the OPEB account, debt schedule and potential refinancing options in future meetings.