VRE is refunding existing bonds through the Virginia Resources Authority (VRA) to achieve interest rate savings of approximately $600K per year over the next 15 years.  Counties participating in VRE are responsible for VRE debt service through the annual subsidies paid to VRE.  VRE cannot issue debt to achieve this interest savings without the unanimous consent of participating localities through adoption of a resolution.

The Virginia Railway Express (VRE) is refunding existing bonds through the Virginia Resources Authority (VRA) to achieve interest rate savings of approximately $600,000 per year over the remaining 15 year term of the bonds.  Spotsylvania County and other participating localities are responsible for VRE debt service through our membership in VRE in accordance with the Master Agreement and the Spotsylvania-specific joining agreement (both documents attached).  VRE cannot issue debt without the unanimous consent of the participating localities.  This is the first time since Spotsylvania County joined VRE in February 2010 that VRE has issued debt.

The VRE Operations Board has authorized VRE staff to move ahead with the refunding transaction, and the two transportation commissions (PRTC & NVTC) have adopted their own respective resolutions.  Each VRE-participating locality is now being asked to approve a resolution, as well, consenting to this refunding debt.  The resolution is attached along with the VRA Term Sheet referenced within the resolution.  

Finance staff has no reservations about this resolution.  Spotsylvania County is already obligated to pay VRE debt service by virtue of our membership in VRE.  We pay an annual subsidy to VRE ($1.5M in FY 2018) which includes a small portion that VRE uses to pay the debt service.  As you are aware, the County has refunded bonds on occasion, as well, and staff believes refunding to be the financially and practically smart thing to do when interest rate savings are to be had.  Staff has confirmed that the term (length of loan) of the bonds is not planned to be extended to achieve this savings.  Also, based on conversations with VRE officials, VRE is expecting to use the debt service savings for future additional capital improvements.

The subsidy payments the County makes to VRE are subject to appropriation, of course.  If, for any reason, Spotsylvania were to not appropriate a payment to VRE as part of its annual budget process, VRA could institute the “state aid intercept” process described in §62.1-216.1 of the Code of Virginia.  Through this process, the State would withhold from any payment due to the County an amount equivalent to our non-payment to VRE for the County’s share of the debt service payment due to VRA.

VRE is refunding existing bonds through the Virginia Resources Authority (VRA) to achieve interest rate savings of approximately $600K per year over the next 15 years.  Counties participating in VRE are responsible for VRE debt service through the annual subsidies paid to VRE.  VRE cannot issue debt to achieve this interest savings without the unanimous consent of participating localities through adoption of a resolution.