The Real Story behind the USDA Debt Resolution

During the CBES candidate forum at Northampton High School on Thursday, Board of Supervisors member Rick Hubbard mentioned that one of the successes of the current Board was its effort resolving the $600,000 USDA debt that the county incurred in building the Sustainable Technology Industrial Park in Cape Charles.  Not to take away from the work done by BoS, or Administrator Nunez, the truth of the matter is that there was no single person who can take credit for this win. It was instead, a team effort, led first and foremost by boots on the ground citizen actions. If anyone can assume credit for at least getting the ball rolling towards a solution, it would be David Boyd of Cape Charles, who took the initiative which resulted in this debt not only getting settled, but also for bringing close to $600,000.00 in much needed new equipment to our schools and first responders.

Here’s the rest of the story.

During the last six years, County staff and Members of the Board of Supervisors had made little if any effort to take on the USDA debt obligation, which was near $600,000.00. Just to be clear, this debt was an unfunded liability that had the potential to inflict financial hardship the County, a hardship that would be felt by most every resident in Northampton. Shortly after he took office, Supervisor, Granville Hogg brought this problem to the forefront, concerned the debt might affect the County’s credit ratings.

Email Hogg sent to Administrator Nunez:

Have not received the information below. I have also performed a more thorough look at the Middle School. Until the Board has investigated other projects to determine if they qualify for the USDA funding, I do not understand why a request for the Architects presence. According to Katie’s comments, Time for USDA is running out. There is a need to determine if the Drummond Site improvements will qualify for USDA terms to relieve the financial obligation. In addition there is a need to determine what other projects the county desires to entertain. In the past I have suggested the Board travel to the USDA Office with a list of projects to be accomplished to determine those that qualify v. those that don’t qualify. Let’s talk about that list of projects.

The information requested by Hogg included the following:

• Cost of Operation and Maintenance of Indian Town Park.
• Cost to operate the building (heat, cool, etc.)
• Cost to operate the Night lights (Sporting Events)
• What are the limitations on the sale of the Indian Town Park property?

Supervisor Hogg’s frustration at what appeared to be a lackadaisical approach to a brewing financial storm for the County was palpable. Mr. Hogg has had an open door policy since being elected, and he discussed this issue with several constituents, including, David Boyd of Cape Charles. Boyd obtained USDA contact information from Hogg, and as a concerned citizen mailed the USDA directly. USDA officials David Foster and Peggy Jordan, upon finally being contacted by someone from Northampton, were delighted, and offered to set up a meeting to discuss possible resolutions. With news of the USDA’s willingness to help find a solution to the debt issue, Spencer Murray set up and hosted the meeting, hoping to finally get an accurate reading on just where all the parties stood, and more importantly, what was the USDA’s position. Prior to this meeting, the actual numbers were murky to say the least. According to calculations from Administrator Nunez, the obligation was around $1.2 million (projects involving the middle school at Machipongo, mainly the EMS training facility, as well as then Economic Director McSwain’s Community Kitchen, were part of the County’s goals).

During the meeting with the USDA, Mr. Murray and Mary Miller provided the vast majority of background and information on the history of the debt and efforts to resolve it. Along with Supervisor Hogg, Murray and Miller also developed a number of possible options that would satisfy USDA grant requirements and provide maximum benefits to the county. From the USDA’s original perspective, they informed Spencer Murray that debt obligation was going to be in the vicinity of $1.7 million. According to Murray, “When we heard that, my teeth were ready to fall out. I told Peggy (Peggy Jordan of Courtland Office of Rural Development), we are a poor county, we normally don’t have projects that come close to that amount of money.” The dialog that began with this meeting, soon led to the USDA escalating the process from the Courtland regional offices to the Richmond State Rural Development office.

Major Points covered in call with USDA:

1)      USDA participated in funding the county’s Sustainable Development Industrial Park with Rural Business Enterprise Grant funds, which required no match from the county.

2)      The County failed to fulfill grant requirements for job creation through the STIP.

3)      The RBEG program no longer exists, and the obligation of Northampton County was transferred to the Community Facilities program, which does have a dollar match requirement.

4)      The dollar match requirement is based on a locality’s population and Median Household Income.

5)      Community Facilities grants are not at the 100% level.  Northampton’s obligation to USDA will be based on a 35%-65% match—35% of a project’s cost will be applied to the debt obligation by USDA and 65% of the cost will be borne by Northampton County.  (ie. $1.7 million county project spending required to obtain full USDA debt forgiveness of $599k)

6)      Eligible options for “essential facility projects” county could include public safety, emergency medical services structures and vehicles, school bus garage, communication, stand-alone emergency/stabilization facilities and other public health needs.  Options cannot include schools or recreation facilities.

7)      One comprehensive project would be preferred over multiple plans.

8)      USDA requires a preliminary architectural report and an environmental assessment.

9)  USDA would evaluate “other options” for eligible projects to make sure they are sited in the best place.

Oddly, Administrator Katie Nunez, after being briefed on the meeting and possible solution, attempted to downplay these efforts, feeling that individuals probably should not be getting involved in County business. Later, Nunez did finally take up correspondence with the USDA. The initiative started by Boyd, and furthered by Murray, Miller and Hogg soon began to bear fruit. Notice from Janice Stroud-Bickes, Assistant to the State Director for USDA Rural Development came down on June 17^th of this year, informing the County that the debt, based on circumstances, had been negotiated down from $1.7million to $599,734.80. However, Ms. Stroud-Bickes made it clear that the USDA was tired of this debt obligation, and that a detailed project plan was due 30 days after the receipt of her letter, and that all projects must be completed by June 30^th 2016, or the full amount of the debt would be due.

With this agreement in place, the County submitted a plan for much needed items, such as Prometheus boards for the schools, and equipment for our EMS units. The resolution of the USDA debt obligation was one of the biggest wins of the last year for the citizens of Northampton County. It is also anexample of what can be accomplished when the citizens and the County work together to solve a problem.