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$5.2 million bond for Conservancy approved
BY CHARLES GARRATT • STAFF WRITER
 | | Richmond attorney Hart Lee briefs Bath supervisors on TNC's request to sell $5.2 million in tax exempt IDA bonds. The proceeds will be used to refinance the debt on the Warm Springs Mountain preserve. |
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WARM SPRINGS - Bath County supervisors have ratified issuing a tax-exempt bond for up to $5.2 million by Bath's Industrial Development Authorityfor The Nature Conservancy to refinance the debt on the Warm Springs Mountain Preserve.
The bond will allow the Conservancy to reduce the interest rate being paid for the property purchased in 2002 as part of the deal that saw land holdings of Virginia Hot Springs Co. divided between TNC and Celebration Associates, owners of Homestead Preserve.
Tuesday, supervisors questioned attorney Hart Lee and Conservancy representative Monica Dean about public access to the property and continuing the payment in lieu of taxes.
As a not-for-profit organization, TNC is not required to pay property taxes on the 8,000 acres it owns in the county. However, Virginia chapter TNC officers made an agreement with supervisors shortly after the sale to make an annual payment to the county equal to the taxes on the land at the time of the sale.
Lee and Dean said TNC would continue to make the $34,000 payments.
Supervisor Percy Nowlin said, "We've got that in the minutes."
Supervisor Richard Byrd added the same commitment was in the minutes of the public hearing held June 20 before the industrial development authority.
The resolution passed by the board states that neither the county nor the IDA are responsible for repaying the bond should TNC fail to make payments.
Lee said Wednesday that while the bond is technically issued to the IDA, the IDA has only a special limited obligation - TNC is unconditionally obligated.
The only obligation the IDA has, said Lee, is to pay to Suntrust the amount paid to the IDA by the Conservancy. The IDA acts as a "pass through" entity, Lee said.
Suntrust Bank has agreed to purchase the bond at a rate approximately 2 percentage points below the current loan to TNC, said Lee.
Supervisor Jon Trees asked Lee how much money TNC would save. Lee said it could be as much as $100,000 the first year but would decline each year as the principle declined.
Dean said some of the savings could go to additional outreach programs on the preserve. Currently, TNC provides weekly hikes on Fridays and monthly guided hikes on Saturdays. TNC personnel also work with Bath County schools, Dean said.
The Ingalls trail is open dawn to dusk seven days a week, year around, Dean told the board. The trail runs south along the top of Warm Springs Mountain from the Ingalls overlook on Route 39.
Chairman Cliff Gilchrest noted the trail has a number of nice views.
Trees would like to see even more public access, he said. "Flag Rock is a beautiful place. I would really love to see that trail opened to the public without having to be guided," he told Dean.
Supervisor Stuart Hall noted hunters have appreciated the continued lease of the Conservancy's preserve to a Bath County hunt club. "I think you've been a great neighbor," he added.
Byrd attended the IDA hearing and pointed out the bond deal will benefit the authority. The agreement calls for the IDA to receive a fractional percentage of the bond payment each year for administration. This will amount to about $6,500 per year, Byrd said.
Things the IDA does to help usually cost the taxpayers, Byrd said, but in this case, the IDA has the opportunity to make some money. The deal does not jeopardize the county or IDA in any way, he stressed.
County administrator Bonnie Johnson said Wednesday TNC came to the IDA about two months ago with the request for the tax-exempt bond. The IDA, she said, has the authority to issue up to $10 million per year in bonds for industrial development and community organizations.
As a not-for-profit, TNC falls under provisions as a community organization, she said. Both the IDA and supervisors considered other possible public and industrial bond needs before agreeing to the Conservancy's request, she added.
George Bartow of the The Nature Conservancy's Virginia chapter in Charlottesville worked with Lee on the loan documents. He said the original purchase price for the property in Bath County was $6,259,091.
The original note from Suntrust was for $6.3 million of which $6,223,941 was drawn for the land purchase.
Over the past five years, TNC has paid about $1 million of the loan principle from donations.
Bartow notes TNC is still seeking donations to retire the debt.
The Nature Conservancy is a District of Colombia corporation with national offices in Northern Virginia and state offices in Charlottesville, and a local office is in Warm Springs.
Keith Carson is currently staffing the Warm Springs office part-time while the Conservancy searches for a replacement for Brad Kreps, who left the Warm Springs office last month to take over the TNC office in Abingdon.
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