Beginning Sept. 23 with early voting for the 2022 general election and continuing through Election Day on Nov. 8, Chesterfield residents will be asked to vote on the Community Facilities Bond Plan to authorize the issuance of $540 million in General Obligation bonds.
If approved by voters, the bond proceeds will fund capital improvements in four categories -- schools, public safety (police and Fire/EMS), libraries and parks – over the next 8 to 10 years.
Details about the specific projects that comprise the Community Facilities Bond Plan will be outlined in a series of upcoming articles. For now, we’d like to dive a little deeper into the concept of a bond referendum and explain how it works so you are well-informed when you head to the polls.
What is a bond referendum?
A bond referendum is a vital component of the local democratic process in which citizens vote on the financing of their municipal government’s long-range capital plan.
What is a bond?
A bond is a form of debt obligation that, when issued, provides a government with funds to finance large capital improvements. The sale of municipal bonds to investors is a form of long-term borrowing that spreads out the cost of public facilities and ensures that both current and future residents help pay for them. Bond funding cannot be used for everyday operating costs, such as salaries, benefits, operating supplies, etc.
Why conduct a referendum?
Governments are permitted to sell certain types of bonds without voters’ authorization. But a referendum is legally required for the issuance of General Obligation bonds, which represent a future debt for the locality to be paid with tax revenue.
Why is General Obligation authority so important?
Because they are backed by the “full faith and credit” of the government, General Obligation bonds allow a locality to finance capital improvements at the lowest available interest rates. As part of a select group of U.S. localities to hold a Triple-AAA bond rating, equivalent to a perfect credit rating for a citizen, Chesterfield already can borrow money far more cheaply than those with lower ratings. The combination of the Triple-AAA and General Obligation authority positions Chesterfield to achieve considerable savings in debt service.
How much is “considerable”?
For a $540 million bond issuance, the difference between AAA and AA interest rates would currently generate approximately $23 million in savings over the life of the bonds. For perspective, that’s roughly equivalent to the projected cost of the replacement Ettrick fire station ($12.3 million) and Swift Creek police station ($10.1 million). As interest rates rise nationally, Chesterfield saves even more by being able to borrow so cheaply.
Will property taxes increase, or any new taxes be added, to pay off the bonds?
No. Among the prudent financial management policies Chesterfield employs to maintain the Triple-AAA rating is structuring its debt so there is capacity to issue new bonds as older ones are paid off. As such, the Community Facilities Bond Plan can be supported with existing resources without adversely affecting other operational priorities. No new tax is associated with the plan.
Why are the proposed capital improvements needed?
According to the 2020 U.S. Census, Chesterfield’s population increased by about 15% over the previous decade. With more than 366,000 residents, Chesterfield is the most populous locality in the Richmond region and the fourth-largest county in Virginia – and growing at about 1.8% annually. New and modernized facilities are needed to accommodate both current and future growth and continue providing the high-quality public services that make Chesterfield a great place to live, work, play and do business.
What is the breakdown of bond proceeds – i.e., county vs. school projects?
If authorized by voters, $375 million from the Community Facilities Bond Plan will be allocated to Chesterfield County Public Schools. The county government will receive $165 million: $81.1 million for public safety, $45.7 million for libraries and $38.2 million for parks and recreation.
How were the specific projects chosen?
It is very much a data-driven process. All projects included in the Community Facilities Bond Plan were vetted through a public engagement process and ultimately approved in April by the Board of Supervisors and School Board, following extensive study of Chesterfield’s infrastructure needs by county and school staff. Chesterfield also forecasts future population changes and corresponding facility needs through data generated by the county’s new StratIS modeling tool.
Will residents approve or reject the entire bond program with one vote?
Yes. The question voters will see on the ballot is: “Shall the County of Chesterfield, Virginia, contract a debt and issue its general obligation capital improvement bonds in the maximum amount of Five Hundred Forty Million Dollars ($540,000,000) to provide funds to finance various capital improvement projects for (1) public school system purposes, (2) public safety purposes, (3) public library purposes and (4) parks and recreation purposes?” A “yes” vote means Chesterfield follows the plan as outlined; if the referendum fails, projects may have to be delayed, eliminated or reduced in scope.
How do you learn more about the Community Facilities Bond Plan?
Chesterfield has launched a website that includes the latest information on the bond referendum and proposed projects. There also will be community meetings held in all five magisterial districts so residents can ask questions and provide feedback about the plan. In addition, you can schedule county staff to come out and talk to your group about the projects through our Speakers Bureau. Again, we want to make sure you have all the information you need before you cast your ballot.