Hold on to your wallets

We could all pay for TCSD bloopers

A matter close to home that has been festering for almost a decade could raise your real estate tax bill.

Earlier this year, the Goochland Board of Supervisors retained Davenport & Company to review the structure of the debt for the Tuckahoe Creek Service District and suggest ways for the county to deal with staggering debt service payments due in the next few years.

(The report is available in the finance department section on the county website at www.co.goochand.va.us. A recording of the actual presentation is in the supervisors’ tab. Be sure to read and listen to the disclaimer at the beginning of the report.)

Once again, an action that was supposed to answer questions only raised more and did little but stir the depths of an already muddy pond. The board took no action at the conclusion of the presentation.

Barring a dramatic reversal of the downturn in property valuations or significant development in the TCSD, the county’s options are to raise the ad valorem tax; increase the real estate tax rate for all county taxpayers by as much as ten cents per $100 of valuation just for debt service, said the Davenport representative. Under this option, a 15 cent ad valorem tax would still be levied on property owners in the TCSD in addition to the countywide rate.

Davenport also stated that the bonds may be restructured with new bonds, even though the TCSD bonds, as issued by the Virginia Resources Authority in 2002, cannot be restructured.

No explanation for the selection of Davenport for this task was given. Please listen closely to the start of the presentation, which states that the study did not review Davenport’s involvement at the inception of the TCSD.

Sadly, this smacks of an organization checking its own work, which removes even the appearance of impartiality.

The report paints a bleak picture at best.

Utility rates and ad valorem taxes will skyrocket over the next few years, which will translate into less development in the TCSD. Given that there has been virtually no development there for the past five years, this is truly distressing.

Suggestions offered for the county to dig itself out from a huge debt including an across the board real estate tax increase for debt service or using money from the general fund for debt service, which amounts to the same thing.

So, we could be paying higher taxes to cover debt not build new schools; hire more deputies, teachers and fire-rescue providers or keep the library and transfer stations open more hours.

The report alludes to initial assumptions made about growth in the TCSD that seem to have been based on wishful thinking. No feasibility study was ever performed to see if an 11.8 per cent ANNUAL growth rate was reasonable or achievable. In reality the growth rate there has been similar to current return on cash with several zeroes to the right of the decimal point.

Other documents indicate that the initial annual growth assumptions for the TCSD were closer to 14 percent. While, to the casual observer in 2002 when the local economy was chugging along that growth rare may have seemed achievable basic common sense and prudence should have lead financial professionals to investigate the reasonableness of aggressive projections.
Indeed, letters from the VRA discussing the TCSD financing question the “aggressive” growth assumptions used in analysis of the county’s ability to manage debt service.

So how did we get here?

It all seems to have started with the creation of the West Creek business park in the 1980s. A 3,500 acre amalgamation of parcels of land between Broad Street Road and Patterson Avenue just west of the Henrico County line, West Creek got off to a slow start.

Then Motorola announced intentions to build a $5 million chip factory in West Creek. Goochland’s future seemed bright. The plant would bring jobs and tax revenues and attract other companies to the area.

Motorola needed five million gallons of water per day to operate. Goochland and Henrico collaborated to supply the water. Lines were built through the old Oak Hill golf course. Parking lots were built.

By 1998, it was clear that Motorola was not coming. The good news is that it left behind raw land with nice parking lots instead of a white elephant plant. A few local companies built their corporate headquarters in West Creek. Growth proceeded at a graceful but optimistic pace.
West Creek was sold and the path of long anticipated Rt. 288 was established through West Creek.

Suddenly, the interior of West Creek was accessible. Then Capital One bought an interior parcel and was the catalyst for Rt. 288 as a toll free connector between Interstates 64 and 95.

Capital One consumed the remainder of the utilities initially destined for the Motorola plant. To accommodate more growth, additional capacity was needed.

At the start of 2002, various state officials on both sides of the aisle seem to have decided to ensure that Goochland would be able to afford public water and sewer.

In May 2002, the TCSD was established and funded by state issued bonds. It was the largest bond issue undertaken by the Virginia Resources Authority. This was a little like giving a Maserati, complete with huge car payments, to someone with a bicycle and a paper route expecting the paper route to explode beyond reason.

Sen. Mark Warner, who was newly elected governor at the time, changed leadership at the VRA just in time to grease the skids for the TCSD project even though his predecessor expressed serious doubts that Goochland could handle such a large project.

Tim Kaine then mayor of Richmond and state senator Walter Stosch have their fingerprints on the TCSD too. It would be very interesting to know who purchased the $63 million worth of bonds and locked in six percent for 30 years.

Davenport stated that it is unusual for municipal debt to be structured like the TCSD. There is no provision to pay off the debt before its 2036 maturity. That’s like taking out a 30 year mortgage and being unable to pay if off early. Interest payments were back loaded postponing interest payments for the first few years assuming sufficient appreciation and new development to generate revenue to make significantly larger payments later.

Sadly, none of these dreams came true.

Although the Davenport study was completed at least a month before its presentation to the supervisors, the county shielded it from a Freedom of Information Act request by contending that the document was work product.
That is way too reminiscent of the bad old days when this stuff was aired only behind closed doors. Seems like the supervisors waited to address this matter until folks were distracted by an earthquake and hurricane.

Why the multi-term incumbents are so eager to hang on to jobs that pay little and bring huge headaches? You’d think they would be eager to hand off this mess to successors. Could it be that they need to hide things that could come back to bite them?