Hanover debt is $158M; director cites low per-capita level

Posted on Tuesday, January 15, 2013 at 3:03 pm

Hanover has nearly $158 million of debt on the books, supervisors learned  Jan. 9.

That total includes $95 million incurred through the completion of the 2005 bond referendum projects, according to finance director Kathy Seay.

Ratings agencies consider this a low level of debt per capita, which is reflected in each agency’s AAA rating of Hanover, a status held since 2010.

Seay cited Hanover’s per capita debt as $1,880 and the federal government’s as $52,050.

“The rating outlook also remains stable. We expect to get these high marks, but it’s certainly good to have others affirm them,” Seay said.

Fitch Ratings, the most recent agency to affirm the AAA rating, recently commented on Hanover’s “sound financial performance, our solid economic indicators, low debt, and affordable pension costs,” Seay explained.

Hanover is one of 35 triple-AAA counties in the nation and the one with the smallest population.

The AAA rating could save Hanover County up to $400,000 over a 20-year period, she said.

Hanover’s average interest rate is 4.5 percent, “after recognizing significant ongoing refunding savings in the last few years.”

Seay said her office continues to monitor these refunding opportunities.

As development of the Fiscal Year 2014 budget continues, staff is identifying capital needs over the next five years, such as roads, school and county facility renovations, and radio replacements.

Beyond that, a “wish list” of major capital projects includes a new library, public safety training center, major school renovations, and a new courthouse.

Seay said the level of county and school debt service payments will begin to decline over the next five years, yielding approximately $13 million in debt service savings over that period.

This will allow for “pay-as-you-go” funding for capital projects.

“After Fiscal Year 15, our capacity for debt service reserves increases, which allows us some flexibility to discuss funding more long-term capital projects and improvements,” she said.

Chickahominy Supervisor Angela Kelly-Wiecek referred to the new reserve fund for school capital needs, which the board established in November right after eliminating Hanover’s cash proffer policy.

Kelly-Wiecek asked if the rules for this reserve fund have been established yet.

Seay said that would be discussed as part of the FY14 budget process.

Also at the time of the cash proffers elimination, the board scheduled a public hearing on the possibility of implementing a $10 automobile decal fee. In December, that hearing was cancelled.

Board Chairman Canova Peterson said the county’s debt service savings were part of the reason they decided there was no need to look into the decal fee.

“We were seeing that this was going to create actually more funds than that,” he said.

Hanover County’s budget is typically introduced at the end of February each year.

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