Charles City County taking steps with long-term planning to address financial issues

Charles City County’s Board of Supervisors is hoping that a financial plan will not only help bring the county back into a balanced mindset but also address capital expenditures that need to be addressed in the near immediate future.

County leaders received information of a possible long-term restoration plan during Tuesday night’s regular board meeting.

Davenport Incorporated, who serves as the county’s financial advising company, provided possible solutions to address Charles City’s depleted funding on a long-term scale. Representative David Rose’s presentation on behalf of the financial company provided detailed information about the county’s past shortfall and ways to address it.

“Right now, you all are making progress, but it’s not going to get done within a year,” Rose said as he began his presentation. “Our goal is to have long, sustainable approach and get the emergency RAN (Revenue Anticipation Note) resolved.”

Charles City borrowed its first RAN in fiscal year 2025 to address a $5 million shortfall. In the current fiscal year (2026), they took out another RAN to cover the first one. Rose said that the decline of funding can be attributed to the county’s previous boards using cash to fund projects.

“Over the past three years, the county has cash funded over $7 million of capital expenditures in the general and utility fund,” the financial advisor continued, pointing to projects that include Fire Station #2, Market 5, and the food pantry. “While all of those have useful lives of at least 15 years, the county can borrow money on a permanent basis and effectively restore cash balances.

“While most people like the idea of using cash to fund projects, but here in this county, it got swung too far and too much cash was used,” Rose continued. “By doing that, it made it difficult for the county to pay bills.”

To address the issue, Rose suggested the county put out an RFP to borrow $5 million. That money would be used and contributed to go back into the fund balance, with the goal not to take out a new RAN for fiscal year 2027. The advisor also said that if the county does follow their current projected budget, $2 million in revenue would go back into the fund balance, bringing it in alignment to where it was roughly five years ago.

Borrowing that $5 million would see the county pay it back over a 15-year span with an interest rate applied. Rose said that while questions have been asked about cutting expenditures, realistically cutting $5-7 million over a short period of time is something that can’t be done. By borrowing $5 million, the county would be obligated to pay at least $500,000 a year towards the loan.

“The county currently has less than six percent in cash revenues,” Rose commented. “If we move forward with this plan, that six percent can move north of 26 percent. And if the county is indeed correct and the budget is correct, that would add a couple million and the end of the fiscal year could see cash revenues as robust as 30 percent.”

But all is not well when it comes to finances in Charles City. Rose said that Charles City County Administrator Keith Rogers is currently working on a CIP multiyear program that will assist with estimates and costs of future projects, but there are currently utility capital needs that need immediate addressing.

The county currently has four wastewater treatment projects that need to be addressed. While the Wayside Tank Project ($3.3 million) and Jerusalem Hideaway Project ($5.6 million) are expected to be grant funded, two other projects are currently under a DEQ (Department of Environmental Quality) consent order. A consent order is a decree that are the result of violations of state codes. Currently, the Ruthville Wastewater Treatment Plant and Charles City Government Center Wastewater Treatment Plant are under those orders.

Rose said that the Ruthville facility would cost 1.6 million to replace. The county is expected to receive a $500,000 grant for that project, which means the county would need an additional $1.1 million to fund it. For the Government Center Wastewater Treatment Plant, the cost for total replacement is estimated at $4 million.

To address the issues, Rose suggested taking advantage of the economic situation by taking out two loans during a singular borrowing. The $5 million loan mentioned above would account for the first borrowing, while a borrowing of $2.5-$3 million ($1.1 million for the Ruthville project and $1.5 million for the Government Center project) would account for the second one. The financial advisor said that starting the projects would be critical to show DEQ that they are moving forward in the right direction to address the issues. The latter borrowing would be deemed as an interim credit facility borrowing.

Davenport Inc. will meet with the county’s EDA (Economic Development Authority) on Oct. 2 before issuing RFP bids after receiving approval from county leaders. Bids are expected to be submitted by Oct. 20 with Davenport Inc. making a recommendation at the Oct. 28 regular board meeting. After formal approval is granted, Davenport Inc. believes it will be able to close on Dec. 1.

After Rose’s presentation, District 1 Representative Ryan Patterson asked about the cash being used to fund projects in the past. Rose responded, saying that one of the major reasons that cash depleted from the unassigned fund balance was due to Firehouse #2 being over budget by more than $3 million. The financial advisor followed that up by saying Market 5 and food pantry had grants that were used to address that.

County supervisors gave their approval for the RFP bids on the recommendation that the county needed to take initiative to address the DEQ consent orders, with the goal to either have the deadline extended to address the issues or show that the county is taking steps in the right direction to address the situation.