INDUSTRIAL DEVELOPMENT AUTHORITY
OF THE
COUNTY OF PRINCE WILLIAM
February 14, 2019
Approved Minutes
A Special Meeting of the Industrial Development Authority of the County of Prince William was called to order by the Vice Chairman at 9:00am in the Potomac Board Conference Room of the Prince William County James J. McCoart Administration Building located at One County Complex Court, Prince William, Virginia 22192.
Present were: Lorna Wallen, Vice Chairman
Laurie Wieder, Secretary/Treasurer
Steve Dawson, Assistant Secretary/Treasurer
Paul O’Meara
Andrew Taylor
Doug Taggart
Absent were: Patrick O’Leary, Chairman
Donna Flory and Scarlett Barbee attended to provide administrative support.
Michael W. Graff, Jr., McGuireWoods, Bond Counsel to the Prince William County Industrial Development Authority, attended to present the Prince William County Adult Detention Center Expansion Project.
Brad Norris, Financial Analyst Manager with the Prince William County Department of Finance, attended to answer any questions regarding the County’s Adult Detention Center Expansion Project.
Joanna Easton of the Prince William County Department of Finance was also in attendance related to the County’s Adult Detention Center Expansion Project.
PLEDGE OF ALLEGIANCE
CITIZEN’S TIME:
NEW BUSINESS: Prince William County Adult Detention Center Expansion Project Financing: Vice Chairman Wallen recognized Brad Norris and Joanna Easton of the Prince William County Department of Finance. Mr. Norris stated that he and Ms. Easton were in attendance to answer any questions that may arise regarding the County’s Adult Detention Center Expansion Project.
Mike Graff, Bond Counsel to the Prince William County IDA, stated that the conduit financing to be considered by the IDA is at the request of the Prince William County as opposed to a private applicant. Usually, the IDA is working with a private applicant such as the Glen Arbor Apartments affordable housing project, a conduit revenue bond financing that the Prince William County IDA undertook in 2016. Government facilities are another type of tax-exempt revenue bond financing that the IDA is authorized to facilitate. The County is asking the IDA’s assistance with short-term, variable rate, tax-exempt financing to assist with expansion of the Adult Detention Center, located in Manassas. For timing purposes, the County is bringing this financing to the IDA subject to annual appropriation rather than on a general obligation basis. It is more expedient to go to market using this structure. The County’s full faith and credit is not pledged to this particular financing. Rather the Constitution of Virginia, the IDA statute, allows municipalities like the County to enter into arrangements with its development authority to assist the development authority to technically borrow the financing. However, the financing is paid solely by payments from the County. This arrangement often utilizes a Lease-Leaseback structure. This project is different in that it utilizes installment payments. The County has agreed to make all payments that the IDA is required to pay to Wells Fargo, which is the provider of the financing. At the time that Mr. Graff was reviewing the County’s paperwork this morning, the variable interest rate was 79% of LIBOR (London Interbank Offered Rate) plus a credit spread of 35 basis points, based on the County’s triple A credit rating. This rate is well under 3%, making it a very attractive tax-exempt interest rate. The IDA’s role in this transaction is similar to its role in the Glen Arbor Apartments project except that Glen Arbor was a private applicant. Mr. Graff noted that the IDA has also assisted 501(c)(3) organizations, including Prince William Hospital and George Mason University’s Foundation. Governmental facilities are another type of project that IDA’s are authorized to facilitate by the Tax Code and the IDA Act. The IDA provides access to tax-exempt financing at no liability to the IDA. The IDA is fully protected and indemnified by the applicant, in this case Prince William County. For this project, the IDA is serving as a pure pass-through to help the County achieve its objective. Unlike the private activity bonds, there is no requirement under the federal tax code for a public hearing to be held before the IDA. There may have been a public hearing before the Board of County Supervisors as a state law matter. Mr. Graff stated that he reviewed the documents prepared by the County’s bond counsel as well as the resolution. From his perspective, everything appears to be in order and appears to contain the customary protections for the IDA and the IDA directors. Mr. Graff concluded his remarks by asking Brad Norris to provide additional information on the substance of the project.
Brad Norris stated that he and Joanna Easton are responsible for the debt portfolio for the County and its execution in various forms. The IDA has been very helpful over the years by facilitating financings that don’t involve a referendum and that are not issued through the Virginia public schools. The Adult Detention Center project that is being financed is one that has been in Prince William County’s Capital Improvement Plan for several years. The needs of the Adult Detention Center in Manassas, along with the inmate population, are continuing to grow. This project sets aside approximately $46 million to fund the expansion of the detention center facility. The Agreement before the IDA is for the first part of the financing, as a variable rate note. The Commonwealth of Virginia will reimburse the County 50% of the project costs, plus interest. This is basically “placeholder financing” until the Commonwealth reimbursement comes in upon completion of the project. The County expects to go to market with the second round of financing for this project in the spring of 2020. It will be bundled with other County projects including the County animal shelter and a fire station. The County engaged in a competitive process before selecting Wells Fargo. As part of the public process, an RFP was created. It received 2 responses and Wells Fargo was the successful bidder. The County entered into negotiations with Wells Fargo and was satisfied with the terms at the end of the negotiation. The Board of County Supervisors approved the project on Tuesday, February 12, 2019. Paul O’Meara noted that the actual construction on the project is well underway. He asked if the project is currently being funded from County funds on hand. Mr. Norris responded that there are 3 payment streams associated with this project. There is a $5 million County General Fund appropriation and there is $40 million in two separate bond issues. Mr. Norris anticipates reimbursing the County cash for approximately $16 million at settlement. Ms. Wieder noted that Mr. Norris indicated the expansion project would cost approximately $46 million. Mr. Morris clarified that the $40 million is two bonds of roughly $20 million each. Ms. Wieder noted that the state will reimburse half of the funding. She asked if that money will go back to the County’s General Fund. Mr. Norris responded affirmatively. Ms. Wieder noted that the loan agreement with Wells Fargo is for $21 million. She asked if draws will be taken as needed. Mr. Norris responded affirmatively, noting that draws are restricted to not more than one per month. He explained that expenses are fronted with cash from the County’s General Fund and, as invoices come in, the County is reimbursed with draws. Mr. Norris expects to return to the IDA in the spring of 2020 to seek a bond that will finance the second half of this project, bundled with additional County projects. Ms. Wieder confirmed that all of the documents reviewed by Mr. Graff will hold the IDA harmless and that the IDA is not obligated for any financial repayment unless the County provides the funds to repay the obligation. Mr. Graff responded that Ms. Wieder’s statement is correct. Donna Flory confirmed that there will be no IDA administrative fees associated with this project since it is a County project. Mr. Graff responded affirmatively. Ms. Flory asked if the word “draws” implies that there will be financial draws through the County’s incentive account. Mr. Norris responded that there will not be draws through the IDA. The County sought to limit the IDA’s operational responsibility. The draw request is signed by Michelle Attreed, Director of Finance for Prince William County. The funds will not go through the IDA. Ms. Wieder asked that the minutes reflect that the IDA implemented a policy in 2016 that states that the County, when an applicant for IDA revenue bonds, shall not be required to pay IDA applicant or annual administrative fees.
Following this discussion, Laurie Wieder made a motion to approve a Resolution of the Industrial Development Authority of the County of Prince William approving and authorizing the execution and delivery of a loan agreement and a payment agreement with the IDA and Wells Fargo Bank, National Association, pursuant to which a loan in the aggregate amount of up to $21,153,000 will be provided by such bank for the benefit of the County to finance a portion of the cost of the expansion of the County’s Adult Detention Center. The motion was seconded by Doug Taggart and passed unanimously with Lorna Wallen, Laurie Wieder, Steve Dawson, Paul O’Meara, Andrew Taylor, and Doug Taggart each voting aye.
Laurie Wieder signed the Resolution documents as Secretary/Treasurer. Mike Graff will send the documents to IDA Chairman Pat O’Leary for his signature.
Following the vote, Brad Norris and Joanna Easton exited the meeting.
Cell Phone for the IDA: Laurie Wieder began by stating that there was general agreement at the last meeting that the IDA needs to obtain a phone number and cell phone as soon as practical as the Flory Center’s phone number will no longer be available. The IDA is seeking to purchase one phone that will be monitored by Scarlett Barbee. It was generally agreed that a basic data plan was helpful so that email can be received on the phone. She also said that any carrier selected should be one which worked well in Ms. Barbee’s home, where she will be working for the IDA.
Ms. Barbee presented the following information:
Metro PCS in Manassas: Employee at the store (Carlos) stated that any organization can get the phone in the business name of the group. A board member would need to be present with their ID. They have $30/month plans but he stated those were flip phones. Carlos stated that if we selected the $60/month plan for the first month, we could get a free smartphone and the second month could drop to the $30/month plan. There is a one-time $50 activation fee.
Verizon in Manassas: Samsung Galaxy J3 is free with a plan and 24-month contract; Apple iphone 6s is $5.00/month; Samsung J7 is $5.00/month
2G Data for $35/month, plus $20/month line access fee for $55/month
4G Data for $50/month, plus $20/month line access fee for $70/month
Any organization can get the phone in its name with proper documentation
T-Mobile: $70/month taxes and fees included or $40/month for Simply Prepaid plus the cost of the phone. Pay as you go plans are available. Phones are $150-$250 minimum
Boost Mobile: $35/month 3G plan; $50/month unlimited plan; Phones are $100 to $200.
AT&T: Donna looked at AT&T and is familiar with its plan as she currently has AT&T
Most affordable plan is $60/month. First month costs $95 which includes $35 activation fee
Free Samsung J7, Plan is $60/month plus 8 to $10 month in fees. Includes 3G data plan and unlimited talk and text, including to Mexico.
Laurie Wieder stated that she prefers a large carrier like AT&T or Verizon to ensure quality service. Mr. Dawson agreed as there are areas of the County that do not get good reception. The cell phone will be set up in the name of the IDA, but an individual member of the board will need to go to the store with Donna or Scarlett to obtain the account. Mr. O’Meara asked about the actual phone number for the IDA. Ms. Wallen and Ms. Wieder responded that a 703 area code number will be requested. Mr. O’Meara suggested transferring the Flory Center’s phone number to the IDA as it could be beneficial to continue to receive calls from entrepreneurs seeking help. Ms. Wieder did not think it was a good idea to utilize another organization’s number and she stated that the way calls to the Flory number would be received was something that only the Flory Board could decide. Mr. O’Meara suggested waiting until Pat O’Leary is present at the March 4 meeting of the IDA to make a final decision. Ms. Wieder stated that she had advised Mr. O’Leary of the cell phone discussion at the last meeting and he was in agreement with the IDA acting this evening. Ms. Wieder made a motion authorizing the IDA to purchase a cell phone plan from AT&T that provides unlimited talk and text, including to Mexico, as well as a free Samsung J7 phone at a cost of $60/month plus $8-$10 fees, with a first month cost of $95 including a $35 activation fee. The motion was seconded by Andrew Taylor and passed unanimously with Lorna Wallen, Laurie Wieder, Steve Dawson, Paul O’Meara, Andrew Taylor, and Doug Taggart each voting aye.
It was agreed that Donna Flory will go with Pat O’Leary to the AT&T store to purchase the phone as soon as he returns to Virginia. Doug Taggart reminded everyone that the Flory Center’s phone number may be the default number on the IDA’s Gmail accounts. If that is the case, the number needs to be updated as soon as practical.
Donna Flory noted that she and Laurie Wieder had a meeting with DED representatives regarding the payment procedures. Ms. Wieder agreed but noted that several DED staff members are retiring or moving to other positions. Both the DED representatives and Donna Flory have done as much as possible to ensure that the next payment to Neabsco Creek LLC goes smoothly. It is expected to arrive in the Neabsco Creek, LLC account by Friday, or Monday at the latest.
OTHER MATTERS TO COME BEFORE THE AUTHORITY/INDIVIDUAL MEMBERS TIME:
Lorna Wallen noted that she and Laurie Wieder attended the viewing for Supervisor John Jenkins and his memorial service was held yesterday. She expressed her appreciation for his long service to Prince William County.
Doug Taggart will be absent from the March 4, 2019 meeting of the IDA as he will be out of the country.
The next meeting of the IDA is scheduled for Monday, March 4, 2019 at 6:30pm.
There being no further business to come before the Authority, the meeting was adjourned at 9:40am on the motion of Laurie Wieder, seconded by Steve Dawson.
APPROVED March 4, 2019