City Council Regular Meeting
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New Business   Item #: E.
Intitation of Referendum for School Bonds
At its May 20, 2021 meeting, the School Board of the City of Danville determined that needed construction and improvements to Danville Public Schools’ facilities, physical plants, security, and technology infrastructure were critically overdue, and the Board determined that it had insufficient existing capital funding to meet its long-term capital needs for construction, renovation, technology and security upgrades to its facilities. The Board also formally requested that the City Council of the City of Danville, pursuant to Virginia Code § 58.1-605.1, initiate a referendum on the question of, whether the City shall levy a one percent (1%) sales tax that will be solely used to finance those bonds for the construction or renovation of schools. An ordinance is now needed requesting the Circuit Court to order a special election on the issuance of the related general obligation bonds for these construction and improvement projects.
The Virginia General Assembly approved HB 1634, which was signed into law by the Governor on March 19, 2019, and which took effect on July 1, 2019, as Chapter 648 of the 2019 Acts of the General Assembly of the Commonwealth of Virginia. HB 1634 is codified at Virginia Code §58.1-605.1. It provides the City of Danville with the statutory authority to levy a general retail sales tax at a rate not to exceed one percent (1%) to provide revenue solely for capital projects for the construction or renovation of schools in the City of Danville if approved by a majority of the voters in a referendum, held in accordance with Virginia Code §24.2-684 and initiated by a resolution of the Council of the City of Danville. This resolution was passed by City Council on June 1, 2021.
After analyzing the revenue that will be generated by this 1% local option sales tax, and working with Davenport & Company the City's financial advisor, it has been determined that general obligation bonds in the amount of $141 million could be issued. The resulting debt service would be covered in full by the 1% local option sales tax revenue, with any excess revenue being used for pay-as-you-go school capital needs. This is the maximum amount that would be issued. The actual amount of bonds issued may be less once project timelines, the mix of taxable/nontaxable bonds, and the prevailing interest rates have been determined.
Staff recommends adoption of this ordinance to initiate a referendum on the question of, whether the City shall issue general obligation bonds for the capital construction and improvement needs of Danville Public Schools, in an amount not to exceed $141 million. Further, Council authorizes and directs the City Attorney and such other appropriate officers of the City of Danville to execute, deliver, and file all such documents, pleadings, petitions, certificates, and instruments, and to take all such further actions as may be necessary, expedient or desirable in connection with, and that are in conformity with the purposes of this ordinance to initiate the above referenced referendum to be held on November 2, 2021.
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