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Chesterfield On Point

Posted on: March 21, 2022

Breaking down the differences between a capital improvement program and a bond referendum

New Midlothian fire station

New Midlothian fire stationThe new Midlothian fire station is under construction at the intersection of Route 60 and Charter Colony Parkway

With Chesterfield planning for its next bond referendum in November, there have been questions about the purpose of such a referendum and how it functions in alignment with the county’s capital improvement program (CIP). 

We’d like to take this opportunity to clear up any confusion in advance of public hearings on Chesterfield’s proposed fiscal year 2023 operating budget and CIP at the March 23 Board of Supervisors meeting. 

The CIP is a planning tool that guides the design, financing, construction and maintenance of public infrastructure -- such as schools, fire and police stations, libraries, parks and roads – and promotes efficient allocation of financial resources.

Having such a living document helps county administration manage Chesterfield’s ongoing debt service obligations, while also balancing the maintenance of existing buildings and the need for new facilities to address population growth.

In accordance with state law and the county charter, Chesterfield maintains a 5-year CIP that is updated annually based on available revenues and public facility demand data – for example, school enrollment/capacity projections and fire department response times.

County residents have multiple opportunities every year to provide feedback on the proposed CIP, including community budget meetings for all five magisterial districts and a public hearing two weeks prior to a vote by the Board of Supervisors.  

By contrast, there have been only four bond referendums in Chesterfield over the past 34 years: 1988, 1996, 2004 and 2013.

The $540 million slate of projects proposed for this year’s referendum was presented to the Board of Supervisors last month. If approved by the board in April, those projects will be incorporated into the county’s and school system’s fiscal year 2023-27 CIPs and voted on as a bloc in November’s general election. 

A bond referendum is the process by which municipal governments ask residents to authorize the issuance of general obligation (GO) bonds to pay for a specific package of capital projects.

Under Virginia law, local governments must conduct a referendum before selling GO bonds, which are backed by the “full faith and credit” of the issuer. 

Because Chesterfield maintains a Triple-A bond rating from all three of America’s major rating agencies – equivalent to a perfect credit rating – having GO authority allows it to borrow money at the lowest available interest rates.

That doesn’t mean Chesterfield can only move forward with capital projects that are directly voted on by residents in a referendum, however.

Part of every 5-year CIP is funded with cash, in alignment with the county’s emphasis on fiscal responsibility and debt management principles. 

Local governments also have the authority to sell certain types of bonds without conducting a referendum. 

Last fall, the Board of Supervisors authorized the issuance of $130 million in Virginia Public School Authority (VPSA) bonds for the construction of two new middle schools: one in the western Route 360 corridor to relieve overcrowding at Tomahawk Creek Middle, as well as a larger, modern replacement for Falling Creek Middle.

Previously, the board approved $85 million in economic development revenue bonds in September 2020 for school major maintenance and road projects to improve drainage in flood-prone areas.  

Using cash or selling non-general obligation bonds gives Chesterfield the flexibility to fund pressing capital improvement needs without having to wait until the next bond referendum.

Moseley ElementaryThe new Moseley Elementary will open in August in the Magnolia Green community

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