By Rachel Adams-Heard
Buena Vista City Council unanimously approved a resolution Monday night that will allow the city to default on the Vista Links Golf Course loan.
“The bottom line is we made a bad investment,” said Buena Vista Mayor Frankie Hogan during the meeting.
According to city officials, the city to date has made debt payments totaling $4.4 million on what was originally a $10 million loan. But City Manager Jay Scudder said after the meeting that paying off the entire debt over the life of the loan, including interest, would have cost the city about $30 million.
The insurer on the loan, ACA Financial Guaranty Corp., will now be responsible for paying the remaining obligation, though the city is seeking a negotiated settlement with ACA.
Without a settlement, ACA would wind up owning the city’s municipal building and the police station, which Buena Vista offered as collateral for ACA’s insurance, as well as the golf course itself.
Scudder declined to comment directly on how likely that was to happen.
“We certainly don’t want to move [from the municipal building],” he said, “but if we do it’s not the end of the world.”
ACA released a statement Thursday responding to the city’s decision.
“I’m disappointed that the City Council decided to act precipitously rather than first enter into good faith discussions with ACA,” said Maria Cheng, head of remediation at ACA. “We worked in good faith with the City several years ago to accommodate the City’s needs, and the City was making progress in following the terms of that deal until this abrupt policy change.”
While City Council’s decision was unanimous, Council Member Tim Petrie raised concerns over the resolution.
“We’re looking to stop a payment, but at the same time we’re negotiating,” Petrie said at Monday night’s meeting. “The process here seems a little illogical.”
The city first defaulted on the loan in 2010. Then the city and ACA worked out terms that allowed Buena Vista to pay only the interest on the loan until 2016.
Had the city not decided to default on the loan again, Buena Vista would have begun paying about $670,000 a year in 2016 – double what the city currently pays.
Former Mayor Mike Clements was not happy about the council’s decision.
“I think it’s a total disaster for the community,” Clements said after the meeting. “I know we’re hurting, but you pay your debts. You don’t just walk away from them.”
Vista Links, which is owned by the Public Recreational Facilities Authority, opened in 2004. City officials at the time hoped it would boost the city’s economy in the face of declining manufacturing jobs.
“We were riding a very optimistic wave of development idea[s],” said Scudder in an interview last week; he was hired by the city in 2011. “But you have to take a close look at what’s here. It’s a golf course with a major Dominion [Virginia] Power line running through it in two locations . . . It has, realistically, very limited development potential.”
Since the golf course came to Buena Vista, taxes have increased to levels not seen before. At 5.85 percent, the city’s personal property tax rate is 38 percent higher than in Rockbridge County and Lexington.
Now the council hopes to move forward.
“Sometimes hopes and dreams aren’t enough, no matter how hard we work to get there,” Hogan said.