Chesterfield and Henrico voters each have $500M bond initiatives to consider
Henrico’s Quioccasin Middle School has few windows, and its gym doubles as an auditorium. Technology has changed since it was built in 1971. During a recent tour of the building, Henrico County School Board Chairperson Marcie Shea got right to the point.
“When you walk in Quioccasin, one of the first things you'll notice is that you come probably 15 yards before you hit your first set of steps,” she said. There’s also a set of six steps and another with seven. Shea estimated that there are about a dozen staircases in the building.
The stairs create a bottleneck for the more than 1,000 students who attend Quioccasin, Shea said, especially for people with disabilities.
Henrico County is asking voters to authorize $511 million in bonds to pay for investments like a replacement for the middle school.
Bonds are a way for governments — or corporations — to finance capital improvements or investments by borrowing money. Financial institutions and individuals can lend part of the money by purchasing a bond and receive interest after a specified period. Bonds are backed by a type of “security guarantee” — typically taxes.
County officials said the bonds won’t result in higher taxes: The county will replace older debt with the new bonds.
Funding for schools makes up the bulk of the Henrico bond issue: $340.5 million. A rebuild for Quioccasin has the highest price tag at $89 million.
The school’s design affects teachers, too. Quioccasin’s current layout limits hall monitors’ line of sight, so more teachers have to take on hall duty. A new design would free up their time, said Principal Robert Stevens.
“Those teachers are better able to use their planning time to meet together, plan instruction and contact parents,” he said. “It's just helpful, making sure we're utilizing our time adequately.”
Public safety capital improvements are the second largest portion of the bond authorization at $83.85 million. Recreation and parks would get $37 million in funding.
Flood prevention is the fourth area officials are asking to fund with $50 million. Twelve-hundred Henrico homes are in flood plains, Deputy County Manager Steve Yob said in a video posted to the county’s website. Yob said 7,700 residences have drainage issues, and that number has steadily increased each year. He cited 70 roads as experiencing frequent flooding, which can slow emergency services.
The last time the county issued bonds for flood infrastructure was in 1982. Bonds for projects similar to what’s being proposed on the November ballot were approved in 2016, although the bond authorization then was roughly half as much as the sum of the measures before voters this year.
Chesterfield’s bond priorities
As in Henrico, public safety is a significant part of a $540 million Chesterfield bond authorization, accounting for $81.1 million of its total.
“The bottom line is this building is just not big enough to properly house the crew and the apparatus that we need to deliver the service to the community that we serve today,” said Jim Fitch, assistant chief of Chesterfield’s Fire EMS Station 1.
Fire Station 1 was built in Chester during the 1960s, when fire engines were smaller. In the garage, doors to the ambulance and fire engine are open to facilitate access and quicker response times. But it's tight, and the doors block movement.
Changing workforce practices and make-up are also a reason why the station should be replaced, Fitch said.
In the firefighters’ barracks-style dormitory, a box fan whirrs and blackout curtains line the windows. They would sleep better in individual rooms, Fitch said. The separation would also mitigate the spread of viruses like COVID-19 or the flu to keep people on the job.
This station was originally built for a volunteer service, where firefighters came to the station from their home. Back then, it was also almost exclusively men, Fitch said.
“We’re hiring women in the fire service, and the individual bunk rooms helps with that quite a bit as well,” Fitch said.
Also, like Henrico, Chesterfield wants to expand and replace school buildings, with $375 million in funding.
Mike Uzel — who's part of a group of residents called Chesterfield Citizens United — is against the Chesterfield bond issue.
“Do we just issue a bond issue every eight or 10 years? And take it out of the taxpayer’s pocket?” he asked in an interview.
His criticisms were mostly centered on the fast development of the county. Since 2000, the county’s population has increased by about 1.6% per year, more than twice the nation’s 0.75% annual growth rate during that period.
“If the developers were paying along the way, we would have the money, and we wouldn't have to have a bond issue,” Uzel said.
Rising interest rates
One thing that could affect how Chesterfield and Henrico decide to issue their bonds is rising interest rates. The Federal Reserve has raised rates five times this year to combat inflation.
“As the Federal Reserve raises rates, that does translate to higher interest costs,” said Robin Prunty, managing director and chief analytical officer for S&P Global ratings, which rates state and local government’s ability to repay debts.
Federal tax law changes made in 2017 have also changed municipal bond issuers’ ability to refinance their debt, Prunty said.
“If they're issuing at a higher cost now, they won't have the ability to refinance that obligation in the future if rates go lower,” she said. “That is a different backdrop than what we have seen historically.”
Gerard Durkin, Chesterfield’s budget director said this only applies to certain tax-exempt bonds, which tend to have lower interest rates.
Prunty said that strong credit profiles could offset this.
Brandon Hinton, Henrico’s deputy county manager, said that Henrico’s high credit rating allowed the county to refinance tax-exempt bonds into taxable bonds and still save money on interest after the 2017 tax law change.
Officials in both counties said that if voters OK the referendums, they might wait until rates fall to actually issue the bonds.
“We are very conservative when it comes to our financial practices. So, even with the interest rates being where they are now, we don’t always assume the rates were always going to be low. We assumed that [there] are going to be fluctuations, and more than likely go up,” Durkin said.
In Henrico, voters can pick and choose which projects they want to support. The bond questions are split up by topic. On the Chesterfield ballot, the bond issue is a single question.