The Cumberland County Board of Supervisors approved the issuance of a general obligation bond from the Virginia Public School Authority (VPSA) for up to $18.5 million during its Sept. 13 meeting in an effort to restructure the county’s debt load.

According to County Administrator and Attorney Vivian Seay Giles, roughly $17 million is currently outstanding on a SunTrust loan. Giles said projected lower interest rates would result in savings for the county through restructuring. The Sept. 13 meeting included a public hearing on the matter, growing out of discussions during an Aug. 25 workshop where a majority of the board ended up favoring the VSPA option following a presentation by Davenport & Company.

District Two Supervisor and Board Chairman Lloyd Banks estimated the new rate would be in the 2 percent range — 1 percent lower than the current SunTrust note, according to Davenport’s Jimmy Sanderson. That’s why, Sanderson said, it “made sense” to refund the transaction.

According to Sanderson, the lien on the county’s middle and high school complex — a part of the current loan structure — would go away by structuring the savings a certain way. He said debt service would be about $3.3 million lower during the first seven years of the loan and about $2.7 higher during the last few years.

“Your overall debt service … (will be) a level debt service structure so that your debt service in 2018 would go to approximately $2.9 million and would remain at $2.9 million through FY 2030,” Sanderson said, contributing to an estimated $1 million in overall savings to the county.

“It … is a real dollar savings because of the lower interest rate,” Giles added. “Based on the market right now, it seems that VPSA would be the most advantageous.”

More than 10 percent of the $18.5 bond proceeds are proposed to be used to finance and refinance the county’s high and middle school complex facilities.

According to the Davenport presentation, 2012 bonds — as a direct bank loan from SunTrust — refinanced the county’s 2008 lease revenue bonds. Those bonds were incurred through the construction of the school complex. Giles said the remaining $17.9 million debt represents about half the county’s total debt.

Banks said he had reservations about delaying the larger payments until later “because they do come at a cost.” He also expressed concern with Davenport charging $100,000 for its financial consultation and advice.

“It gives our reserves a shot in the arm,” District Three Supervisor Kevin Ingle said.

Giles said the county’s reserve fund balance is at just under $3 million, noting it should be about $4 million.

According to Dan Siegel, of SandsAnderson — the county’s bond counsel — the new true interest cost won’t exceed 2.96 percent, “which was the highest that was possible during the old loan.”

Under the current arrangement, the SunTrust debt should be paid off by July 15, 2029, but with a fixed interest rate of 2.96 percent only good through Jan. 1, 2025.

The restructuring option the board agreed to will see the debt paid off by Aug. 1, 2029, with a fixed interest rate throughout the term.