JULY 5, 2000 MINUTESMINUTES
VIRGINIA BEACH CITY COUNCIL
Virginia Beach, Virginia
July 5, 2000
Mayor Oberndorf called to order the CITY MANAGER'S BRIEFING re LASKIN ROAD
COMPREHENSIVE PLAN in the Council Conference Room, City Hall Building, on Tuesday, July 5, 2000,
at 2:00 P.M.
Council Members Present:
Margaret L. Eure, William W. Harrison, Jr., Barbara M. Henley,
Louis R. Jones, Robert C. Mandigo, Jr., Mayor Meyera E. Oberndorf,
Nancy K. Parker, Vice Mayor William D. Sessoms, Jr. and Rosemary
Wilson
Council Members Absent:
Linwood O. Branch, III
Reba S. McClanan
[ENTERED: 10:45 A.M.]
[ENTERED: 11.'00 A.M. (Malting
flight arrangements due to sudden
death of younger brother in Houston)
MA YOR 'S COMMENTS
ITEM # 46823
Mayor Oberndorf introduced the two new City Council Members:
Robert C. Mandigo, Jr. (Kempsville - District 2)
Rosemary Wilson (At-Large).
Mayor Oberndorf advised of the death of Council Lady McClanan's younger brother in Houston, Texas.
Council Lady McClanan will be a little late and will leave after the City Council Session for the services.
ITEM # 46824
The City Manager introduced the new Chief Financial Officer:
Steven T. Thompson.
Steve is the former City Manager of Greenville, South Carolina, and commenced service with the City on
Monday, duly Third. Steve has more than 20years of experience in local and state public service.
-3-
CITY MANAGER'S BRIEFING
RETAIL ESTATE ASSESSMENT- ON LINE
9:30A.M.
ITEM # 46825
Jerald D. Banagan, Real Estate Assessor, advised for the City Council's review, a Web Site has been
designed for On Line Real Estate Assessments. Ninety-five percent (95%) of the telephone calls received
are relative providing assessment information to the real estate and banking communities. Continuously,
throughout the day, two (2) clerks provide real estate information to either citizens, banks, Realtors,
Attorneys, et cetera. Recognizing an individual 's privacy concern and with City Council's consent, the Real
Estate Assessor's office proceeded with an advertising effort through the news media announcing the City's
intent to provide On Line Real Estate Assessments. A provision was created to allow any individual to have
his or her name removed from the On Line Assessments. A special form, "Request to Have Owner's Name
Withheld from Internet Assessment Record"was devised. 0f126,000 houses, approximately 2, 000 requests
have been received to remove the owner's name from the system. In the future, there will be the ability to
add to the assessment notice a statement relative Internet access. Through the utilization of Power Point,
Mr. Banagan displayed a demonstration of the proposed Web Site. The Web Site will be available, subject
to City Council's review and approval. The introductory page reads as follows:
BEFORE ACCESSING ASSESSMENT INFORMATION:
Under Virginia State Law, these records are public information. Display
of this information on the Internet is specifically authorized by the Code of
Virginia 3q58.1-3122.2 (1998)
If you believe any data provided is inaccurate, or if you have any comments
about this site, we would like to hearfrom you. Comments may be made by
telephone at (757) 427-4601 or via e-mail to jburnk(~_~city, virginia-
beach.va, us.
While the Office of Real Estate Assessor has attempted to ensure that the
data contained in this file is accurate and reflects the property's
characteristics, the City of Virginia Beach makes no warranties, expressed
or implied, concerning the accuracy, completeness, reliability or
suitability of this data. The City of Virginia Beach does not assume any
liability associated with the use or misuse of this data.
A second page, provides factual information relative the Office of the Real Estate Assessor and
Assessments.
The management and staff of the Office or Real Estate Assessor for the City
of Virginia Beach are pleased to provide you with on-line access to
property information. We hope you will find this site to be a useful business
and research tool as well as a personal means to assure that your
assessment is fair and equitable.
Other pages include:
The Assessment Process
Reassessing a Residential Neighborhood
Real Estate Tax Relief(Senior Citizens and Elderly)
Land Use Assessment Program
This system has been devised to access through name search, property address or GPIN Number:
General Information
GPIN Number
Property Address
Legal Description
Legal Owner
July First Owner
District
Subdivision
Ownership Transfer Information
July 5, 2000
-4-
CITY MANAGER'S BRIEFING
RETAIL ESTATE ASSESSMENT- ON LINE
ITEM # 46825 (Continued)
Structure Information
Year Built
Remodeled
Foundation type
Roof Type
Construction Type
Building Class
Total Number of Rooms
Number of Baths with Tub
Number of Half Baths
Central Air
Additions
Class Code
Exterior Finish
Story Height
Interior
Condition of Structure
Number of Bedrooms
Number of Baths with Shower Only
Types of Heat
Fireplaces
Land Information
Zoning
Front Footage
Acreage
Depth Footage
City Utilities
Water/Sewer
Waterfront
Topography
Structural Improvements
Item
Size or Number of Units
Rate
% Adjustment
Assessment Value
Current Assessed Value
Land Value
Total bnprovement Value
Total Assessed Value
New Assessed Value
Land Value
Total Improvement Value
Total Assessed Value
Real Estate Assessments are public information and available in the Office of the Real Estate Assessor and
by telephone. The fortn entitled: "Request to Have Owner's Name tFithheld from Internet Assessment
Record" is on-line and can be printed via one's computer and mailed to the Real Estate Assessor. At the
present time, assessment data can be purchased from Information Technology. It was suggested the "Search
By Name" access be deleted on the Web site to eliminate some of the privacy issues. Mr. Banagan advised
the Real Estate Assessor's office has the ability to edit the information placed on the Internet; however, it
can not eliminate the names from the public record.
A PUBLIC HEARING relative Real Estate Assessments - On Line shall be SCHEDULED for the City
Council Session of July 11, 2000.
An ad in THE BEACON was also suggested, under the title "Frequently Asked Questions. "Notices will
be forwarded with assessments relative this new Web Site concept.
duly 5, 2000
-5-
CITY MAN/IGER'S BRIEFING
DISPUTE RESOLUTION PROGRAM
10:12 A.M.
ITEM # 46826
Mr. Fagan Stackhouse, Director of Department of Human Resources, advised the City's Dispute Resolution
Program (DRP) is a comprehensive conflict resolution system which includes a formal, informal and a
mediation alternative method of addressing and.fnding solutions to work related issues and grievances. It
is a series of three collaborative processes designed to allow employees the opportunity to address
disciplinary issues, non-disciplinary issues, a broad range of disputes and other work-related concerns,
formally and informally with management. The emphasis is to resolve employee issues and concerns at the
lowest management level. Managing employees conflict is the largest reducible cost in organizations. Sixty-
,five percent (65%) of performance problems result from strained relationships between employees and,
NOT from de.fcits in individual employees' skill or motivation. The DRP program is administered by the
Department of Human Resources, Employees Relations Division. Members now have the option of choosing
three separate DRP methods all rolled up into one Dispute Resolution system: Grievance procedure,
Mediation Process, Open Door Procedure
The Grievance procedure
Designed to allow employees to address issues resulting in disciplinary
action or alleged violation of policy within their work environment
An employee's right by state and local law
Formal and a matter of record
Designed to review two opposing points of view
Final and binding after the decision at step four (Personnel Board)
The Mediation Process
Broad range of disputes that may or may not be appropriate .for he
grievance procedure
Mutually voluntary process facilitated by a Mediator. Either party may
request it and the other party is free to accept or decline
Informal and off-the-record; however, written agreement is binding.
Results in a mutual search for a resolution
Ensures employees are eligible for mediation
Ensures that any final decisions are made by the parties themselves and
must be acceptable to both
Seeks common understanding and mutual agreement between parties
The Open Door Procedure
Designed as an informal means to discuss work related concerns through
the chain of command
Employee's option
Has no time limits; no forms required
Provides members with an opportunity to discuss their concerns with
management up to the City Manager's level
Allows for any workplace issue to be addressed
The decisions at the City Manager's level is final
July 5, 2ooo
-6-
CITY MANAGER'S BRIEFING
DISPUTE RESOLUTION PROGRAM
ITEM # 46826 (Continued)
Mediation is a mutually voluntary process. Mr. Stackhouse along with approximately 15 others, are now
State Supreme Court Certified Mediators. This number of Mediators will be doubled in the next six to eight
months. Either party, management or employee, can request mediation.
Making the Grievance Process More Effective and Efficient
Reducing from 14 to 10 consecutive days to render determination of
grievability
Clarifying eligibility
Only permanent employees eligible to use all phases of the
grievance procedure
Temporary, probational and seasonal employees are eligible to
use the procedure up to step 3
Reducing the number of review steps from 5 to 4
Discontinuing the simultaneous use of the Grievance Procedure and the
Open Door Process
Managing the Dispute Resolution Program
The Dispute Resolution Program will be administered by Human
Resources/Employee Relations and the Virginia Beach Mediation Service
System
Directing and coordination processes and employee issues.
Continuous and on-going training program additions and enhancements
Adjustments will be made periodically based on feedback.
July .5, 2000
-7-
CITY MANAGER'S BRIEFING
RED MILL - NEW TRAFFIC PATTERNS
10:12 A.M.
ITEM # 4682 7
Charles Hassen, Development Services Center, with the utilization of a map, provided information relative
the projects in the Red Mill area. The Intersection of Princess Anne, Sandbridge and Upton is currently
under review as well as the tie-in of the two lanes. The WaIMart site, or what is known as Red Mill
Commons, has been approved. Out parcels were depicted, which at the present time their development is
unknown as the plans have not been submitted. The Home Depot is at the corner. The existing land uses with
residential (Red Mill and Lagomar) and churches on Newstead with R-20 in the middle and comprised of
existing single family homes. This plat was recorded in 1988 and consists of 20, O00 square foot lots. The
street frontage landscaping consists of B-2 zoning. Newstead Drive will have a one to three foot variable
height sculptured berm, with 20-foot at the base as its widest point. The back (delivery end) and side of the
WalMart building will be located on Newstead. Mr. Hassen advised, as this zoning is not conditional, there
is only minimum requirements for landscaping. The majority of the traffic to this building will be on Ferrell
Parkway and Upton Drive. The Hannaford Store and Home Depot on King Richard are good examples in
the past. The City co-ordinated with the residents as well as Hannaford and Home Depot. They were able
to provide additional screening and rework some of the entrances for the truck traffic. A traffic light
installation at Princess Anne is not scheduled at the present time.
Council Lady Henley advised the residents of Newstead were very concerned relative truck traffic. Mr.
Hassen advised the speed limit on Newstead will be 25 miles per hour. This section is a 36-foot paved
section in a 60-foot right-of-way. On Ferrell Parkway and Upton Drive, there will be an undulating one-
to-two foot berm of variable height, approximately 13-foot wide at the base. Elson Green will have
commercial on both sides with the landscaping treatment at the WalMart site is at-grade shrubs and trees
at ground level. The WalMart building is located over 500feet away from Newstead. The Home Depot
building is over 100feet away from Newstead Drive, over 200feet from Princess Anne, and over 280feet
from Elson Green. The landscape treatment along Elson Green is a four-foot undulating berm with the
landscaping approximately 20foot wide at the base. Information relative the drainage will be provided.
Relative the portion approaching the Nimmo area, which fronts on Princess Anne, there will be the parking
lot, and a four-foot berm with additional landscaping. The number of cars allowed in the parking lot will
be provided. There are no walkways.
John Herzke, City Engineer, advised the main aspects of the development are the signalization. A traffic
signal will be installed at General Booth and Ferrell. The vertical poles were installed a number of years
ago. A traffic signal will be installed at Ferrell and Newstead and at the main entrance on Ferrell to their
parking lot. The other traffic signal programmed will be at Upton and Elson Green. Obviously, when the
intersection is modified, there will be a traffic signal at Princess Anne, Sandbridge and Upton. One other
traffic signal was examined for the Upton Drive entrance as an escrow signal, which will be bonded. If
determined another location will be more appropriate, then the bond is available. It is anticipated that
traffic on this section of Princess Anne Road will be reduced approximately 15%, primarily because the
traffic will have this route to take on the two roadways. A 4-1ane facility is being built on Ferrell from
General Booth to Upton. Four-lanes are being built on Upton from Ferrell to Elson Green and then two
lanes for the remainder down to Sandbridge. This will create more improved streets than currently
available. Mr. Herzke cited the various entrances.
The City does not have the authority to prohibit delivery trucks on Newstead. The 25-mile speed limit will
be stringently enforced. Council Lady Henley referenced the concern of David Hill, property owner on the
southwest corner, relative access to his properties and the future school site. Council Lady Henley requested
the City staff meet with Mr. Hill. Mr. Herzke advised when the intersection is completed, it will impact the
access to Mr. Hill's property. It has been agreed the City will acquire the Catholic Church property. Mr.
Hill will be granted some means of access, but this has not been finalized. Council Lady Henley advised she
will schedule the meeting with City Staff.
Council Lady Wilson advised with the redistricting, the School Board will be requesting construction of
elementary schools for FY2004 rather than 2006, which will affect the traffic patterns. Mr. Herzke advised
appropriate turn lanes will be added and when access is on a main roadway like Princess Anne Road, school
caution lights will be installed, thereby reducing the speed to 25 miles per hour.
July 5, 2000
-8-
B Y CONSENSUS,
AGENDA RE VIEW SESSION
11:10 A.M.
ITEM # 46828
the following items shall compose the CONSENT AGENDA:
ORDINANCES
L. 1. Ordinance to authorize the City Manager to lease spaces
at the Farmers' Market:
a. Kenneth E. & Judy Chapman - t/a Chapman's Flowers Space 3 & 4
b. Mark H. Holland - T/A Holland Produce Space 5 & 6
c. Elsie K Creekmore & Sharon C. Mosley-t/a Creekmore's Place
Space 8
d. Laurie Moser - t/a Reflections of the Heart
e. John T. Hardison & John Ziehinski -
t/a Country Butcher Shop
f David Hare & Robert T. Banes DDS - t/a Hare Farms
g. Leonard E. Bergey - t/a Bergeys Dairy Farm
h. Michelle Shean - t/a Virginia Garden
i. Linda T. Xenakis - t/a Linda's Garden
Space 10
Space 12
Space 13
Space 14
Space 23, 24, 27
Space 36
L.2
Ordinance to ACCEPT and APPROPRIATE a $25,000
grant from the National Fish and Wildlife Foundation to
the FY 2001 Operating Budget of the Depart~nent of
Planning re Elizabeth River watershed restoration and
management work; TRANSFER $25,000 as a grant match
from the FY 2001 General Fund Reserve for
Contingencies, continue a Planning Technician I
position within the Department; and, estimated revenue
from the federal government be increased accordingly.
L.3.
Ordinance to TRANSFER $734,325 within the FY2001
Operating Budget of the Department of Museums and
Cultural Arts re contractual personnel; and, authorize the
creation of 54 part-time positions.
L. 4.
Ordinance re Appointment of Viewers beginning July 1,
2000, to view streets or alleys proposed to be altered or
vacated.
L. 5. License Refunds: $28,02&99
RESOLUTIONS
M. 1. Resolutions re sale and issuance of $40,000,000 Water
and Sewer System Revenue Bonds, Series of 2000:
a. Authorize distribution of A Preliminary Official
Statement (POS) and other necessary documents
Sixth Supplemental Resolution amending the Resolution
adopted February 11, 1992, entitled, "Master Water and
Sewer Revenue Bond Resolution providing for the
issuance from time to time of one or more series of Water
and Sewer System Revenue Bonds of the City of Virginia
Beach ", as previously supplemented and amended, and
providing for the form, details and the financing of the
cost of improvements to the City's water and sanitary
sewer facilities.
Council Lady McClanan will ABSTAIN on Item M. 1. as she has not had the opportunity to completely
review.
July 5, 2000
-9-
AGENDA RE VIEW SESSION
ITEM # 46829
Application of KEITH YEA TES for a Variance to Section
4.4(b) of the Subdivision Ordinance which requires that
all newly created lots must meet all requirements of the
City Zoning Ordinance (CZO) and Section 4.4(d) which
requires that all lots created by subdivision have direct
access to a public street, at 3077 Yeates Lane
(L YNNHA VEN - DISTRICT 5)
Vice Mayor Sessoms referenced correspondence from Robert d. Scott, Director of Planning, requesting
deferral based on new information. Mr. Scott, will contact the applicant.
ITEM # 46830
Application of U. S. FIBERGLASS PRODUCTS, t/a
WAVE RIDING VEHICLES for a Conditional Use
Permit for an off-site parking lot located at the northwest
corner of Cypress Avenue and 19th Street, containing
15,184 square feet (BEACH- DISTRICT 6).
Councilman Branch referenced correspondence from the City Attorney requesting the addition of Condition
~4:
The lot shall be used only by customers and employees of Wave Riding
Vehicles or its successors.
The City Attorney has not spoken with the applicant regarding this condition. The applicant shall be notified
prior to the City Council Session.
ITEM # 46831
Application of TRADEWINDS, L.C. for a Conditional
Use Permit for a temporary parking lot located at the
northeast corner of Atlantic Avenue and ]6th Street,
containing 2 7, 000 square feet (BEACH - DISTRICT 6).
Councilman Branch referenced the correspondence of the City Attorney requesting the revision of Conditions
1 and 9:
The conditional use permit shall be valid until 12.'00 A.M.
on December 31, 2000
The lot shall comply with all requirements of Section 23-
58 of the City Code, relating to commercial parking lots;
provide& however, that if aggregate is used for the
surface material, stone size shall not exceed one inch (1 ")
in diameter.
ITEM # 46832
Council Lady Henley advised Council Lady Eure suggested a modification to Condition Number 3:
Application of LINDA HARVIN for a Conditional Use
Permit for a home occupation (day care) on the north side
of Rock Lake Loop, west of Rippline Rock Drive (1949
Rock Lake Loop), containing 6,519 square feet
(PRINCESS ANNE - DISTRICT 7).
Persons employed by the home daycare will be limited to
relatives who also reside in the home and to one (1) non-
relative who does not reside in the home
July s, 2000
-lO-
AGENDA RE VIEW SESSION
ITEM # 46833
N. 7.
Application ofDONA VON E. BONNEY for a Conditional
Use Permit for automotive detailing at the northeast
corner of Princess Anne Road and Indian River Road
(1800 Princess Anne Road), containing 22, 433 square feet
(PRINCESS ANNE- DISTRICT 7).
Council Lady Henley advised this item will be discussed during the Forrnal Session Mr. Bonney does not
agree to the requirement for a Conditional Use and the restrictions involving the freestanding sign and
display of tires. The sign has been in existence over 25years. Council Lady Henley requested the City staff
confer with Mr. Bonney relative his concerns. Mr. Bonney had not made contact with the Health Department
regarding his septic tank. The City Council needs to clarify this is still an outstanding issue, which must be
resolved.
ITEM # 46834
BY CONSENSUS, the following items shall compose the CONSENT AGENDA:
Application of KEITH YEA TES for a Variance to Section
4. 4(b) of the Subdivision Ordinance which requires that
all newly created lots must meet all requirements of the
City Zoning Ordinance (CZO) and Section 4.4(d) which
requires that all lots created by subdivision have direct
access to a public street, at 3077 Yeates Lane
(L YNNHA VEN - DISTRICT 5)
Application of U. S. FIBERGLASS PRODUCTS, t/a
WAVE RIDING VEHICLES for a Conditional Use
Permit. for an off-site parking lot located at the northwest
corner of Cypress Avenue and 19th Street, containing
]5,184 square feet (BEACH - DISTRICT 6).
Application of TRADEWINDS, L.C. for a Conditional
Use Permit for a temporary parking lot located at the
northeast corner of Atlantic Avenue and 16~ Street,
containing 27,000 square feet (BEACH- DISTRICT 6).
Application of VIRGINIA EQUIPMENT &
DEVELOPMENT INC., for a Conditional Use Permit for
an equipment storage yard with an of_rice warehouse on
the south side of Production Road, beginning at a point
970 feet east of Central Drive, containing 2.5 acres
(BEACH- DISTRICT 6)
Application of FORTUNE ENTERPRISES, INC., a
Virginia Corporation, for a Conditional Use Permit for
motorcycle sales, rental and small engine repair on the
south side of Holland Road, west of South Rosemont Road
(3600 Holland Road), containing 30, 012.84 square feet
(ROSE HALL - DISTRICT 3).
Application of LINDA HARVIN for a Conditional Use
Permit for a home occupation (day care) on the north side
of Rock Lake Loop, west of Rippline Rock Drive (1949
Rock Lake Loop), containing 6,519 square feet
(PRINCESS ANNE - DISTRICT 7).
July 5, 2000
-11 -
AGENDA RE VIEW SESSION
ITEM # 46834 (Continued)
Applications of NICHOLAS and VICKI ROSSE, t/a
NICHOLAS VICTORIA HAIR STUDIO for a hair care
center, including barber shops and beauty parlors at the
northwest corner of Old Great Neck Road and Kenstock
Drive (521 Old Great Neck Road), (BEACH- DISTRICT
6):
Conditional Change of Zoning Classification from
Conditional B-1 Neighborhood Business District to 0-2
Office District Classification, containing 1,008square feet
b. Conditional Use Permit, containing 17, 000 square feet
Application of OCEAN BAY HOMES, L.L.C., for a
Change of Zoning District Class!fication from A-12
Apartment District to R-5S Residential Single Family
District on the south side of Virginia Avenue beginning at
a point 533.44 feet west of Rudee Avenue, containing
8, 522 square feet (BEACH- DISTRICT 6).
N. IO.
Application of BEACH BUILDER'S INC., for a Change
of Zoning District Classification from R- 7. 5 Residential
District to Conditional B-1A Limited Communitv Business
District on the north side of Culver Lane beginning at a
point 350 feet more or less east of General Booth
Boulevard, containing 13,891 square feet (PRINCESS
ANNE- DISTRICT 7).
N. 1I
Application of the CITY for a Change of Zoning District
Classification from A G- 1 and A G-2 Agricultural District
to 0-2 Office District at the west corner of the intersection
of James Madison Boulevard and George Mason Drive
(PRINCESS ANNE- DISTRICT 7).
Item 2 and 3 will be APPROVED, BY CONSENT, with revised conditions.
Item 6 will be APPROVED, BY CONSENT, with revised condition #3.
July 5, 2000
- 12-
CITY COUNCIL COMMENTS
11:18 A.M.
ITEM # 46835
Mayor Oberndorf referenced the Certificate of ,4chievement for Excellence in Financial Reporting, which
will be presented to Patricia Phillips, Director of Finance, in the Formal Session. This Certificate is the
highest form of recognition in governmental accounting and financial reporting and was received in
recognition of the comprehensive annual report (CAFR) for the Fiscal Year ended June 30, 1999.
Marcie Sims, Director of Libraries, will receive the BANGOR LIBRARY "twin "plaque. The plaques were
presented at Sister Cities International in behalf of the President's Millennium program from the Untied
States National Commission on Libraries and Information Science to official Sister Cities Libraries.
ITEM # 46836
Vice Mayor Sessoms requested representatives from HRT (Hampton Roads Transit) present information to
the City Council Session of July 11, 2000. Vice Mayor Sessoms participated in the utilization of the trolley
system at the Oceanfront. The service and professionalism was very poor. The trolleys were utilized to full
capacity.
Vice Mayor Sessoms is supportive of the trolley lanes; however, was disappointed in the reliability of the
system. Councilman Branch also requested HRT present a status report on the boardwalk tram.
ITEM # 4683 7
Councilman Jones referenced concerns relative the sand deplenishment at Chesapeake Beach and Ocean
Park. The City Manager shall review and provide information to City Council.
ITEM # 46838
Council Lady Parker expressed appreciation to the City Staff for the Fourth of July weekend from the
employees who were making sure the streets were spotless at 12:00 Midnight to the Police who were on duty
all hours. Overall, the July 4th weekend was a tremendous success. The businesses enjoyed a profitable
weekend. All citizens were receptive to the Code of Conduct.
Vice Mayor Sessoms expressed appreciation to the City Manager, Chief Operating Officer, the Police Chief
and his deputies being in attendance at the Beach.
Mayor Oberndorf advised Dan Stone, Director of Social Services, his social workers and the Youth
Intervention Team also did a stupendous job. The weather, until last evening, was very comfortable.
Council Lady Eure reiterated the praise for the City regarding this magnificent Holiday weekend.
Councilman Mandigo advised he was only at the Resort Saturday night, but observed it was extremely
crowded and echoed the accolades for the Police Department.
ITEM # 46839
Council Lady Henley referenced the positive article in The Virginian-Pilot, Sunday, July 2, 2000, regarding
the ultimate plans for the Oceanfront. This article was excellent in portraying the City's vision by providing
public comment.
ITEM # 46840
Council Lady Wilson advised she and Councilman Mandigo had the opportunity to attend the administration
of the Oath of Office to the new Council Members in Portsmouth.
Council Lady Wilson advised receipt of correspondence from her neighbor, who was upset regarding the
crabpots and being unable to crab. Council Lady Wilson provided the correspondence to the City Manager
and suggested this might be an issue for the Beaches and Waterways Commission.
July s, 2000
-13-
CITY COUNCIL COMMENTS
ITEM # 46841
Mayor Oberndorf referenced correspondence from a citizen who was very concerned regarding the parking
permits from the airport. The citizen also stated the City Council gave itself a raise. Mayor Oberndorf will
respond and advise the City Council, on May 9, 2000, REMOVED THIS ITEM FROM THE AGENDA:
Ordinance to set the annual salaries of the Mayor and Council
Members
July 5, 2000
- 14-
ITEM # 46842
Mayor Meyera E. Oberndorf called to order the INFORMAL SESSION of the VIRGINIA BEACH CITY
COUNCIL in the City Council Conference Room, City Hall Building, on Tuesday, July 5, 2000, at 12.'33
P.M.
Council Members Present:
Linwood O. Branch, III, Margaret L. Eure, Vgilliam W. Harrison, Jr.,
Barbara M. Henley, Louis R. done& Reba S. McClanan, Mayor
Meyera E. Oberndorf, Nancy K. Parker and Vice Mayor Vgilliam D.
Sessoms, Jr.
Council Members Absent:
Robert C. Mandigo, Jr. and Rosemary Vgilson
July 5, 2000
-15-
ITEM # 46843
Mayor Oberndorf entertained a motion to permit City Council to conduct its CLOSED SESSION, pursuant
to Section 2.1-344(A), Code of Virginia, as amended, for the following purpose:
PERSONNEL MATTERS: Discussion, consideration or interviews of
prospective candidates for employment, assignment, appointment,
promotion, performance, demotion, salaries, disciplining, or resignation
of specific public officers, appointees, or employees pursuant to Section
2.1-344 (A) (1).
Boards and Commissions:
Community Services Board
Hampton Roads Planning District Commission
Review and Allocation Committee
Virginia Beach Health Services Advisory Board
PUBLICLY-HELD PROPERTY: Discussion or consideration of the
acquisition of real property for a public purpose, or of the disposition of
publicly-held real property, where discussion in an open meeting would
adversely affect the bargaining position or negotiating strategy of the
public body pursuant to Section 2.1-344(A)(3).
To-Wit Acquisition of Property - Stumpy Lake
LEGAL MA TTERS: Consultation with legal counsel or briefings by staff'
members, consultants, or attorneys pertaining to actual or probable
litigation, where such consultation or briefing in open meetings would
adversely affect the negotiating or litigatingposition of the public body and
consultation with legal counsel employed or retained by a public body
regarding specific matters requiring the provision of legal advice by such
counsel pursuant to Section 2.1-344(A)(7).
Acquisition of Property - Stumpy Lake
Fala Corporation and Kana Corporation v. City of Virginia Beach
City of Virginia Beach v. Fala Corporation and Kana Corporation
Upon motion by Council Lady Parker, seconded by Councilman Branch, City Council voted to proceed
into CLOSED SESSION.
Voting: 9-0
Council Members Voting Aye:
Linwood O. Branch, III, Margaret L. Eure, William W. Harrison, Jr.,
Barbara M. Henley, Louis R. Jones, Reba S. McClanan, Mayor Meyera E.
Oberndorf, Nancy K. Parker and Vice Mayor William D. Sessoms, Jr. and
Council Members Voting Nay:
None
Council Members Absent:
Robert C. Mandigo, Jr. and Rosemary Wilson
(Time of Closed Session: 12:43 to 12:55 P.M.)
July 5, 2000
-16-
CERTIFICATION OF
CLOSED SESSION
ITEM # 46844
Upon motion by Vice Mayor Sessoms, seconded by Councilman Branch, City Council CERTIFIED THE
CLOSED SESSION TO BE IN ACCORDANCE WITH THE MOTION TO RECESS.
Only public business matters lawfully exempted from Open Meeting
requirements by Virginia law were discussed in Closed Session to which
this certification resolution applies;
AND,
Only such public business matters as were identified in the motion
convening the Closed Session were heard, discussed or considered by
Virginia Beach City Council.
Voting: 11- 0
Council Members Voting Aye:
Linwood O. Branch, III, Margaret L. Eure, William W. Harrison, .Ir.,
Barbara M. Henley, Louis R. clones, Reba S. McClanan, Robert C.
Mandigo, .Ir., Mayor Meyera E. Oberndorf, Nancy K. Parker, Vice Mayor
William D. Sessoms, .Ir. and Rosemary Wilson
Council Members Voting Nay:
None
Council Members Absent:
None
City Council attended the RECEPTION HONORING RETIRING COUNCIL MEMBERS AND
COUNCIL MEMBERS NEWL Y ELECTED from 1:00 P.M. TO 2:00 P.M.
.Iuly 5, 2ooo
CERTIFICATION OF CLOSED SESSION
VIRGINIA BEACH CITY COUNCIL
WHEREAS: The Virginia Beach City Council convened into CLOSED SESSION,
pursuant to the affirmative vote recorded in ITEM # 46843, Page 15, and in accordance with the
provisions of The Virginia Freedom of Information Act; and,
WHEREAS: Section 2.1-344. of the Code of Virginia requires a certification by the
governing body that such Closed Session was conducted in conformity with Virginia law.
NOW, THEREFORE, BE IT RESOLVED: That the Virginia Beach City Council hereby
certifies that, to the best of each member's knowledge, (a) only public business matters lawfully
exempted from Open Meeting requirements by Virginia law were discussed in Closed Session to
which this certification resolution applies; and, (b) only such public business matters as were
identified in the motion convening this Closed Session were heard, discussed or considered by
Virginia Beach City Council.
City Clerk
July 5, 2000
-17-
FORMAL SESSION
VIRGINIA BEACH CITY COUNCIL
July 5, 2000
2:00 P.M.
Mayor Meyera E. Oberndorf called to order the FORMAL SESSION of the VIRGINIA BEACH CITY
COUNCIL in the Council Chamber, City Hall Building, on Tuesday, July 5, 2000, at 2.'00 P.M.
Council Members Present:
Linwood O. Branch, III, Margaret L. Eure, William W. Harrison, Jr.,
Barbara M. Henley, Louis R. Jones, Reba S. McClanan, Robert C.
Mandigo, Jr. Mayor Meyera E. Oberndorf, Nancy K. Parker, Vice
Mayor William D. Sessoms, Jr. and Rosemary Wilson
Council Members Absent:
None
INVOCATION:
Rabbi Benjamin Shull
Temple Emanuel Synagogue
PLEDGE OF ALLEGIANCE TO THE FLAG OF THE UNITED STATES OF AMERICA
Vice Mayor Sessoms, being a Corporate Officer of Wachovia Bank, disclosed he will ABSTAIN on Item N7.
(DONA VON E. BONNEY) and there were no other matters on the agenda in which he has a "personal
interest", as defined in the Act, either individually or in his capacity as an officer of Wachovia Bank. The
Vice Mayor regularly makes this Disclosure as he may not know of the Bank's interest in any application that
may come before City Council. Vice Mayor Sessoms' letter of January 4, 2000, is hereby made apart of the
record.
July 5, 2o00
Item V-F. 1.
- 18-
CEREMONIAL ORGANIZATION OF
CITY COUNCIL
ITEM # 46845
The Honorable J. Curtis Fruit, Clerk- Virginia Beach Circuit Court ADMINISTERED the OATH OF
OFFICE TO MEMBERS OF CITY COUNCIL:
Margaret L. Eure
Centerville - District 1
Reba S. McClanan
Rose Hall - District 3
Robert C. Mandigo, Jr.
Kempsville - District 2
Rosemary Wilson
At Large
All Council Members had previously officially taken their OATH OF OFFICE.
July 5, 2000
- 19-
Item V-F. 1.
CEREMONIAL ORGANIZATION OF
CITY COUNCIL
ITEM # 46846
The Honorable J. Curtis Fruit, Clerk - Virginia Beach Circuit Court ADMINISTERED the OATH OF
OFFICE TO THE MA YOR:
The Honorable Meyera E. Oberndorf
Mayor
City of Virginia Beach
Mayor Oberndorf was the first woman elected to City Council in 1976. She was the first woman elected
Mayor in 1988 and first Mayor elected to a four-year term by direct election of the people. Mayor Oberndorf
has served the longest tenure to-date. The year 2000 being the fourth 4-year term.
July 5, 2ooo
Item V-F. 2.
- 20-
CEREMONIAL OR GANIZA TI ON OF
CITY COUNCIL
ITEM # 4684 7
Upon NOMINATION by Councilman Harrison, City Council ELECTED:
William D. Sessoms, Jr.
Vice Mayor
July 1, 2000 - June 30, 2002
(Fifth 4- Year term)
Vice Mayor Sessoms has served the longest tenure in the City's history as Vice Mayor. Vice Mayor Sessoms
was elected to City Council - At Large on July 1, 1988, and was re-elected continuously to-date thru June
30, 2002. Vice Mayor Sessoms was first elected At Large to City Council as Vice Mayor on July 1, 1992.
Voting: 11-0
Council Members Voting Aye:
Linwood O. Branch, III, Margaret L. Eure, William IV. Harrison, Jr.,
Barbara M. Henley, Louis R. Jones, Reba S. McClanan, Robert C.
Mandigo, Jr., Mayor Meyera E. Oberndorf, Nancy K. Parker, Vice Mayor
William D. Sessoms, Jr. and Rosemary Wilson
Council Members Voting Nay:
None
July 5, 2000
Item V-F. 3.
- 21 -
CEREMONIAL ORGANIZATION OF
CITY COUNCIL
ITEM # 46848
The Honorable J. Curtis Fruit, Clerk- Virginia Beach Circuit Court, ADMINISTERED the OATH OF
OFFICE:
William D. Sessoms, Jr.
Vice Mayor
July 1, 2000 - June 30, 2002
July s, 20o0
Item V-G.
- 22 -
FORMAL SEATING OF VIRGINIA BEACH
CITY COUNCIL ITEM # 46849
Mayor Oberndorf presented the Formal Seating of Virginia Beach City Council:
Louis R. Jones
Nancy K. Parker
Barbara M. Henley
William ~. Harrison, Jr.
Rosemary Wilson
Mayor Meyera E. Oberndorf
Vice Mayor William D. Sessoms, Jr.
Linwood O. Branch, III
Reba S. McClanan
Margaret L. Eure
Robert C. Mandigo, Jr.
Mayor Oberndorf and Members of City Council introduced family members in attendance.
July 5, 2000
- 23 -
Item V-F. 1.
MINUTES
ITEM # 46850
Upon motion by Vice Mayor Sessoms, seconded by Councilman Branch, City Council APPROVED the
Minutes of the INFORMAl. AND FORMAl. SESSIONS of June 27, 2000.
Voting: 10-0
Council Members Voting Aye:
Linwood O. Branch, III, Margaret L. Eure, William IV. Harrison, ,Ir.,
Barbara M. Henley, Louis R. Jones, Reba S. McClanan, Robert C.
Mandigo, Jr. Mayor Meyera E. Oberndorf, Nancy K. Parker and Vice
Mayor William D. Sessoms, Jr.
Council Members Voting Nay:
None
Council Members Abstaining:
Rosemary Wilson
Council Members Absent:
None
Council Lady Wilson ABSTAINED as she was a Council Member-Elect on June 2 7, 2000.
July 5, 2000
- 24 -
Item Vd.
ADOPT AGENDA
FOR FORMAL SESSION
ITEM # 46851
B Y CONSENSUS, City Council ADOPTED:
AGENDA FOR THE FORMAL SESSION
July 5, 2000
- 25 -
V-J. 1.
PRESENTATION
ITEM # 46852
Mayor Oberndorf PRESENTED:
AWARD OF ACHIEVEMENT FOR EXCELLENCE IN FINANCIAL REPORTING
Government Finance Officers Association
Patricia A. Phillips, Director - Department of Finance, accepted the Plaque. This Certificate is the highest
form of recognition in governmental accounting and financial reporting and was received in recognition of
the comprehensive annual report (CAFR) for the Fiscal Year ended June 30, 1999. This is the twenty-first
certificate received by the City. Mrs. Phillips expressed appreciation to Robert Hays - Comptroller, Don
Banrett, Richard Lester, Morris Frelon, Patti Porter, Linda Harris, Judy Rogers, Arlene Ney, Rich Dunford,
Nancy Leavitt, as well as others for their contributions to this report.
July 5, 2000
- 26-
V-J. 2.
PRESENTATION
ITEM# 46853
Mayor Oberndorf PRESENTED:
BANGOR LIBRARY "twin "plaque
Marcie Sims, Director of Libraries, ACCEPTED the award.
The plaques were presented at the Sister Cities International Conference in Denver, Colorado, in behalf
of the President's Millennium program from the Untied States National Commission on Libraries and
Information Science to official Sister Cities Libraries.
Mayor Oberndorf expressed personal appreciation to the City Clerk- Ruth Hodges Smith, MMC, who assists
and provides countless hours of unselfish dedication in the able operation of the Mayor's Sister City
Commission. Mrs. Smith has been an active member of Sister City International since 1990.
Mayor Oberndorf advised Mayor Alan Chambers of Bangor, Northern Ireland, was in attendance at the
Sister Cities International Conference and ACCEPTED the BANGOR LIBRARYplaque. The Mayor met
with Mayor Chambers, Chief Executive Trevor Polley and Alderman Cree while there.
2000
-27-
Item V-K. 1.
PUBLIC HEARING
ITEM # 46854
Mayor Oberndorf DECLARED A PUBLIC HEARING:
Ordinance to authorize the City Manager to lease spaces at the
Farmers' Market:
Kenneth E. & Judy Chapman - t/a Chapman's Flowers Space 3 & 4
Mark H. Holland- T/A Holland Produce Space 5 & 6
Elsie V. Creekmore & Sharon C. Mosley-t/a Creekmore's Place Space 8
Laurie Moser - t/a Reflections of the Heart Space 10
John T. Hardison & John Ziehinski - t/a Country Butcher Shop Space 12
David Hare & Robert T. Banes DDS - t/a Hare Farms Space 13
Leonard E. Bergey - t/a Bergeys Dairy Farm Space 14
Michelle Shean - t/a Virginia Garden Space 23, 24, 27
Linda T. Xenakis - t/a Linda's Garden Space 36
There being no speakers, Mayor Oberndorf CLOSED THE PUBLIC HEARING.
JuU ~, 2000
- 28 -
Item V- L./M.
ORDINANCES/RESOLUTION ITEM # 46855
Upon motion by Vice Mayor Sessoms, seconded by Councilman Jones, City Council APPROVED IN ONE
MOTION, ORDINANCES la/b/c/d/e/f/g/h/i, 2, 3, 4, and 5 and RESOLUTION la/b of the CONSENT
AGENDA.
Voting: 11-0
Council Members Voting Aye:
Linwood O. Branch, III, Margaret L. Eure, William ~ Harrison, Jr.,
Barbara M. Henley, Louis R. Jones, Reba S. McClanan, Robert C.
Mandigo, Jr., Mayor Meyera E. Oberndorf,, Nancy K. Parker, Vice
Mayor William D. Sessoms, Jr. and Rosemary Wilson
Council Members Voting Nay:
None
Council Members Absent:
None
Council Lady McClanan ABSTAINED on Item M. la/b as she has not had the time to completely review.
July 5, 2000
Item V- H. 1.a./b./c./d./e./f/g/h.i.
- 29-
ORDINANCES/RESOL UTION
ITEM 14 46856
Upon motion by Vice Mayor Sessoms, seconded by Councilman Jones, City Council ADOPTED:
Ordinance to authorize the City Manager to lease spaces at the
Farmers' Market:
Kenneth E. & Judy Chapman - t/a Chapman's Flowers Space 3 & 4
Mark H. Holland - T/A Holland Produce Space 5 & 6
Elsie V. Creekmore & Sharon C. Mosley-t/a Creekmore's Place Space 8
Laurie Moser - t/a Reflections of the Heart
John T. Hardison & John Ziehinski - t/a Country Butcher Shop
David Hare & Robert T. Banes DDS - t/a Hare Farms
Leonard E. Bergey - t/a Bergeys Dairy Farm
Michelle Shean - t/a Virginia Garden
Linda T. Xenakis - t/a Linda's Garden
Space 10
Space 12
Space 13
Space 14
Space 23, 24, 27
Space 36
Voting:
11-0 (By ConsenO
Council Members Voting Aye:
Linwood O. Branch, III, Margaret L. Eure, William W. Harrison, Jr.,
Barbara M. Henley, Louis R. Jones, Reba S. McClanan, Robert C.
Mandigo, Jr., Mayor Meyera E. Oberndorf, Nancy K. Parker, Vice
Mayor William D. Sessoms, Jr. and Rosemary Wilson
Council Members Voting Nay:
None
Council Members Absent:
None
July 5, 2000
1
2
3
AN ORDINANCE AUTHORIZING THE CITY
MANAGER TO LEASE SPACES AT THE
VIRGINIA BEACH FARMERS MARKET
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WHEREAS, the City of Virginia Beach has leased spaces in the
Farmers Market located at the intersection of Princess Anne and Dam
Neck Roads for twenty-three years;
WHEREAS, a number of leases for current tenants at the Farmers
Market have expired and the tenants wish to renew them; and
WHEREAS, a public hearing concerning these proposed leases has
been advertised and conducted.
NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF
VIRGINIA BEACH, VIRGINIA:
That the City Manager is hereby authorized on behalf of the
City of Virginia Beach to enter into lease agreements for spaces at
the Farmers Market with the following persons or entities:
Space 3 & 4
Space 5 & 6
Space 8
Space 10
Space 12
Space 13
Space 14
Space 23, 24, & 27
Space 36
Kenneth E. and Judy Chapman
t/a Chapman's Flowers
Mark H. Holland
t/a Holland Produce
Elsie V. Creekmore and Sharon C. Mosley
t/a Creekmore's Place
Laurie Moser
t/a Reflections of the Heart
John T. Hardison & John Ziehinski
t/a County Butcher Shop
David Hare & Robert T. Banes DDS
t/a Hare Farms
Leonard E. Bergey
t/a Bergey's Dairy Farm
Michelle Shean
t/a Virginia Garden
Linda T. Xenakis
t/a Linda's Garden
Adopted by the Council of the City of Virginia Beach,
Virginia, on the 5th day of July , 2000.
CA7773
F:~Data~ATY~Ordin~NONCODE~lease spaces.ord.wpd
June 26, 2000
R-1
APPROVED AS TO CONTENT:
~partment
APPROVED AS TO LEGAL
SUFFICIENCY:
City Attorne~"s Of~ce
SUMMARY OF TERMS
LEASES FOR SPACES AT THE VIRGINIA BEACH FARMERS MARKET
LESSOR:
LESSEES:
TERM:
RENT:
City of Virginia Beach
Space 3 & 4
Space 5 & 6
Space 8
Space 10
Space 12
Space 13
Space 14
Space 23, 24, & 27
Space 36
Kenneth E. and Judy Chapman
t/a Chapman's Flowers
Mark H. Holland
t/a Holland Produce
Elsie V. Creekmore and Sharon C. Mosley
t/a Creekmore's Place
Laurie Moser
t/a Reflections of the Heart
John T. Hardison & John Ziehinski
t/a County Butcher Shop
David Hare & Robert T. Banes DDS
t/a Hare Farms
Leonard E. Bergey
t/a Bergey's Dairy Farm
Michelle Shean
t/a Virginia Garden
Linda T. Xenakis
t/a Linda's Garden
July 1, 2000 - June 30, 2003
Base Rent ranges from $ 242 to $ 647 per month, depending on the amount of space
RIGHTS AND RESPONSIBILITIES OF LESSEES:
Use leased spaces for retail enterprises consistent with the purpose of the Farmers
Market.
Maintain leased spaces, including heating and air conditioning units.
Purchase commercial general liability insurance.
Keep retail spaces open during hours of Farmers Market operation.
RIGHTS AND RESPONSIBILITIES OF CITY:
Maintain common areas of the Farmers Market and structural elements of the leased
spaces.
Pay for water, sewer and, in most cases, electrical service.
TERMINATION: City may terminate by providing Lessee sixty (60) days notice.
- 30-
Item V- H. 2.
ORDINANCES~RES OL UTI ON
ITEM # 46857
Upon motion by Vice Mayor Sessoms, seconded by Councilman clones, City Council ADOPTED:
Ordinance to ACCEPT and APPROPRIATE a $25,000 grant from the
National Fish and Wildlife Foundation to the FY 2001 Operating
Budget of the Department of Planning re Elizabeth River watershed
restoration and management work; TRANSFER $25,000 as a grant
match from the FY2001 General Fund Reserve for Contingencies,
continue a Planning Technician I position within the Department; and,
estimated revenue from the federal government be increased accordingly.
Voting:
11-0 (By Consent)
Council Members Voting Aye:
Linwood O. Branch, III, Margaret L. Eure, William I~. Harrison, dr.,
Barbara M. Henley, Louis R. done& Reba S. McClanan, Robert C.
Mandigo, dr., Mayor Meyera E. Oberndorf Nancy K. Parker, Vice
Mayor William D. Sessoms, dr. and Rosemary Wilson
Council Members Voting Nay:
None
Council Members Absent:
None
July 5, 2000
1
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3
4
5
6
7
8
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AN ORDINANCE TO ACCEPT AND
APPROPRIATE A $25,000 GRANT FROM THE
NATIONAL FISH AND WILDLIFE
FOUNDATION, AND TO TR3tNSFER $25,000
AS A GRANT MATCH FROM THE FY 2001
GENERAL FUND RESERVE FOR
CONTINGENCIES FOR GRANT MATCHES, TO
THE PLANNING DEPARTMENT'S FY 2001
OPERATING BUDGET
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WHEREAS, the National Fish and Wildlife Foundation has
provided the City with a $25,000 federal grant for the purpose of
supporting an Elizabeth River Watershed Management project;
WHEREAS, this grant requires a cash match of $25,000
which is available in the FY 2001 General Fund Reserve for
Contingencies for Grant Matches; and
WHEREAS, the work to be provided through these resources
is considered vital to the continuing environmental restoration and
sound management of natural resources within the Elizabeth River
watershed in Virginia Beach.
NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY
OF VIRGINIA BEACH, VIRGINIA:
1. That a $25,000 federal grant is hereby accepted from
the National Fish and Wildlife Foundation and appropriated to the
Department of Planning's FY 2001 Operating Budget to be used for
Elizabeth River watershed restoration and management work.
2. That $25,000 is hereby transferred from the FY 2001
General Fund Reserve for Contingencies for Grant Matches to the
Department of Planning's FY 2001 Operating Budget to supply the
required cash match for the grant.
3. That a Planning Technician I position is hereby
continued within the Department of Planning through FY 2001 to
carry out the work associated with this grant.
34
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4. That estimated Revenue from the federal government is
hereby increased by $25,000.
Adopted by the Council of the City of Virginia
Beach, Virginia, on the 5th day of 3u1¥ , 2000.
CA-7744
ORDIN~NONCODE~FISH & WILDLIFE.ORD2
R3
JUNE 19, 2000
APPROVED AS TO CONTENT: APPROVED AS TO LEGAL
SUFFICIENCY:
Management City Attorney's Office
1120 CONNECTICUT AVENUE, NW
SUITE 900
WASHINGTON, DC 20036
(202) 857-0166 FAX (202) 857-0162
May 15, 2000
H. Clayton Bernick, III
City of Virginia Beach
Department of Planning
2401 Courthouse Drive
Virginia Beach, VA 23456-9040
Dear Mr. Bernick, III:
We are pleased to advise you that the Board of Directors of the National Fish and Wildlife Foundation has approved
a Chesapeake Bay Small Watershed Grant of up to $25,000 to the City of Virginia Beach. This Grant is awarded
specifically to support the Elizabeth River (VA) Watershed Management project.
Please read the attached Agreement carefully. By signing this Agreement you acknowledge an understanding of,
and compliance with, all of its terms and conditions, including the attachments referenced in Section XIII. Because
this Agreement involves the handling of federal funds, a copy of this Agreement and attachments must be reviewed
by your Chief Financial Officer or Treasurer. If the terms and conditions of the Agreement are acceptable, sign and
return the Agreement to NFWF. If we do not receive the countersigned copy within thirty (30) days of mailing, this
grant may be revoked.
The Foundation's federal funds are being provided to you through an agreement with the Environmental Protection
Agency's Chesapeake Bay Program and are made possible by Section 104 of the Clean Water Act. Appropriate
credit must be given to the Foundation, the EPA Chesapeake Bay Program, and other donors in any and all press
releases, publications, and other public communications.
The Foundation is pleased to be involved in your project. We may be contacting you in order to conduct a site visit
to see, first hand, what is being done. If, as part of this project, you conduct any public gatherings, please contact
the Foundation as we would like to attend.
On behalf of the Board of Directors and the staff of the National Fish and Wildlife Foundation, I wish you the best
of luck with your project. Please contact Malia Somerville should you have any questions.
S incer
Director, Mid-Atlantic Region
Enclosure
p~nted on recycled paper
-31 -
Item V- H. 3.
ORDINANCES~RES OL UTI ON
ITEM # 46858
Upon motion by Vice Mayor Sessoms, seconded by Councilman Jones, City Council ADOPTED:
Ordinance to TRANSFER $734,325 within the FY 2001 Operating
Budget of the Department of Museums and Cultural Arts re contractual
personnel; and, authorize the creation of 54 part-time positions.
Voting:
11-0 (By Consent)
Council Members Voting Aye:
Linwood O. Branch, III, Margaret L. Eure, William W. Harrison, Jr.,
Barbara M. Henley, Louis R. Jones, Reba S. McClanan, Robert C.
Mandigo, Jr., Mayor Meyera E. Oberndorf, Nancy K. Parker, Vice
Mayor William D. Sessoms, Jr. and Rosemary Wilson
Council Members Voting Nay:
None
Council Members Absent:
None
July 5, 2000
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
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AN ORDINANCE TO TRANSFER $734,325
WITHIN THE FY 2001 OPERATING BUDGET OF
THE DEPARTMENT OF MUSEUMS AND CULTURAL
ARTS AND AUTHORIZE THE CREATION OF 54
PART-TIME POSITIONS
WHEREAS, the Department of Museums and Cultural Arts currently
uses temporary services to provide staffing at the Virginia Marine
Science Museum during the tourist season;
WHEREAS, creating part-time positions, instead of relying on
temporary services, will reduce operation costs without further demands
on City resources; and
WHEREAS, to accomplish this, $734,325 in funds previously
appropriated to the Department's FY 2001 Operating Budget must be
transferred within the Department's budget.
NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY
OF VIRGINIA BEACH, VIRGINIA:
1. That $734,325 in funds previously appropriated to the FY 2001
Operating Budget of the Department of Museums and Cultural Arts to be
used for the expenses of contractual personnel are hereby transferred
within the Department's FY 2001 Operating Budget to be made available
for part-time professional, technical, clerical and supervisory
salaries.
2. That, within the FY 2001 Operating Budget of the Department of
Museums and Cultural Arts, 54 part-time positions are hereby created
to perform services previously provided by employees of temporary
services.
3. That this ordinance shall be effective as of July 1, 2000.
Adopted by the Council of the City of Virginia Beach, Virginia,
on the 5th day of July , 2000.
CA-7766
ORDIN~NONCODE~MANPOWER.ORD
JUNE 28, 2000
R5
Approved as to Content: Approved as to Legal
Sufficiency:
Management ~erv~oeA/--~/~/ ~ity Attor~'s Off~ce
- 32 -
Item V- H. 4.
ORDINANCES/RESOL UTION
ITEM # 46859
Upon motion by Vice Mayor Sessoms, seconded by Councilman Jones, City Council ADOPTED:
Ordinance re Appointment of Viewers beginning July 1, 2000, to view
streets or alleys proposed to be altered or vacated.
Director of Planning
Director of Public Works
Director of General Services
(July 1, 2000 thru June 30, 2001)
Voting:
11-0 (By ConsenO
Council Members Voting Aye:
Linwood O. Branch, IIL Margaret L. Eure, William ~. Harrison, ,Ir.,
Barbara M. Henley, Louis R. Jones, Reba S. McClanan, Robert C.
Mandigo, dr., Mayor Meyera E. Oberndorf Nancy K. Parker, Vice
Mayor William D. Sessoms, dr. and Rosemary Wilson
Council Members Voting Nay:
None
Council Members Absent:
None
July 5, 2000
5
6
7
10
11
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AN ORDINANCE APPOINTING THREE (3)
VIEWERS FOR ONE-YEAR TERMS BEGINNING
JULY 1, 2000, TO VIEW EACH STREET OR
ALLEY PROPOSED TO BE CLOSED
WHEREAS, Section 33-111.2 of the City Code provides that
"[t]hree (3) viewers shall be appointed each year to serve terms of
one year beginning July 1 to view each and every street or alley
proposed to be altered or vacated during the term";
ordinance
WHEREAS, pursuant to § 33-111.2, City Council, by
adopted June 22, 1999 (0RD-99-2547I), appointed the
Directors of the Departments of Planning, Public Works and General
Services to serve as viewers for terms of one year, beginning July
1, 1999, and ending June 30, 2000; and
WHEREAS, it is the desire of City Council to re-appoint
the Directors of the Departments of Planning, Public Works and
General Services to serve as viewers for additional one-year terms,
beginning July 1, 2000, and ending June 30, 2001.
NOW, THEREFORE BE IT ORDAINED BY THE COUNCIL OF THE CITY
OF VIRGINIA BEACH, VIRGINIA:
That the Director of Planning, the Director of Public
Works and the Director of General Services of the City of Virginia
Beach are each hereby appointed as a viewer to serve a one-year
term beginning July 1, 2000, and ending June 30, 2001, to view each
and every application to close a street or alley, and to report in
writing whether in their opinion, any, and if any, what
inconvenience would result from discontinuing the street or alley
or portion thereof.
Adopted by the Council of the City of Virginia Beach,
Virginia, on the 5th day of July , 2000.
CA-7779
ODIN~NONCODE~VIEWERS.ORD2
PREPARED: June 28, 2000
R2
Approved as to Content:
Planning ~ ~/p/ar t ment
Approved as to Legal
City Attorney's Office
- 33 -
Item V- H.$.
ORDINANCES/RESOL UTION
ITEM # 46860
Upon motion by Vice Mayor Sessoms, seconded by Councilman Jones, City Council APPROVED:
License Refunds: $2& 02& 99
Voting:
11-0 (By ConsenO
Council Members Voting Aye:
Linwood O. Branch, III, Margaret L. Eure, William W. Harrison, Jr.,
Barbara M. Henley, Louis R. Jones, Reba S. McClanan, Robert C.
Mandigo, Jr., Mayor Meyera E. Oberndorf, Nancy K. Parker, Vice
Mayor William D. Sessoms, Jr. and Rosemary Wilson
Council Members Voting Nay:
None
Council Members Absent:
None
July 5, 2000
FORM NO. C.A. ~ REV. 3/86
AN ORDINANCE AUTHORIZING LICENSE REFUNDS
UPON APPLICATION OF CERTAIN PERSONS AND
UPON CERTIFICATION OF THE COMMISSIONER
OF THE REVENUE
BE IT ORDAINED BY THE COUNCIL OF THE CITY OF VIRGINIA BEACH, VIRGINIA:
That the following applications for license refunds, upon certification
of the Commissioner of the Revenue are hereby approved:
NAME LICENSE DATE
BASE INTEREST TOTAL
YEAR PAID
ACCESSORY BUILDING CONCEPTS INC
BLACKWATER TRADING POST INC
CHESAPEAKE CABINET CRAFTERS INC
COPI Q INC
DESIGN BUILD CONSTRUCTION LLC
E S G ENTERPRISES INC
HOCKADAY MICHAEL L
HORNER CORPORATION (THE)
KERRY ROCKFORD ENTERPRISES INC
KING LANDSCAPES INC
KNI'I-FING CORNER INC (THE)
LIFE CARE SERVICES CORP
NAKANISHI J L DR
NGUYEN LUYEN H
PEMBROKE HAIR GRAPHICS INC
PLATT BIRUTA
POSITIVE CHANGES HYPNOSIS CORP
ROSE UNIFORMS OF VA INC
WHITE EULION J
YATES GEORGE HOLTON
2000 06112/00 21.66 0.00 21.66
06/05/00 -AUDIT 398.72 50.96 449.68
06/05100 AUDIT 9.76 26.25 36.01
06~09/00 AUDIT 618.87 0.00 618.87
05/31/00 AUDIT 10.00 2.08 12.08
05/30/00 AUDIT 1,957.54 315.36 2,272.90
06/01/00 AUDIT 10.00 1.25 11.25
05/22/00 AUDIT 51.42 15.52 66.94
1998-2000 06/05/00 336.57 0.00 336.57
05/30/00 AUDIT 44.79 5.38 50.17
2000 05~25/00 21.20 3.88 25.08
2000 05/31/00 21.78 0.00 21.78
2000 06/15/00 2,529.45 0.00 2,529.45
05/30/00 AUDIT+2000 LIC 190.00 16.24 206.24
05/22/05 06/07/00 21.93 0.00 21.93
2000 06/15/00 40.00 0.00 40.00
1999-2000 05/10100 65.55 0.00 65.55
2000 06/07/00 75.31 0.00 75.31
~,2000 06/12/00 40.00 0.00 40.00
2000 06~07/00 16.31 0.00 16.31
~enue
This ordinance shall be effective from date of
adoption.
The above abatement(s) totaling
City of Virginia Beach on the
6,917.78
Fifth
were approved by the Council of the
day of July ., ,20 O0
Ruth Hodges Smith
City Clerk
AN ORDINANCE AUTHORIZING LICENSE REFUNDS
UPON APPLICATION OF CERTAIN PERSONS AND
UPON CERTIFICATION OF THE COMMISSIONER
OF THE REVENUE
BE IT ORDAINED BY THE COUNCIL OF THE CITY OF VIRGINIA BEACH, VIRGINIA:
That the following applications for license refunds, upon certification
of the Commissioner of the Revenue are hereby approved:
NAME LICENSE DATE
YEAR PAID BASE INTEREST TOTAL
BAYSIDE MOTORS INC
CAPITAL ONE INC
CONTINENTAL CARS INC
DANIEL BARTON N
DAVCON INCORPORATED
DJS AUTO REPAIR INC
DOR O MATIC SERVICES INC
DUTKO KAREN L
FISHER GAP STORES INC (THE)
G C OF VIRGINIA BEACH LLC
GREENWICH SUPPLY CORP
HARKNESS CHARLES E JR
HILLIAN INC
IMPAQ CORPORATION
J L SURPLUS SALES INC
JAMES GROUP INC
JOHNSTON CHARLES C
KELLY JAMES R
KGS PROPERTIES INC
KGS PROPERTIES INC
LAVINGIA S J
LAWSON SELBERT G
LENSCRAFTERS INC
LIM GLORIA E & JOHN J
LOUIS FOREIGN CAR & SON LTD
MAIL DEPOT INC
NAN ONE INC
OCEAN BREEZE FESTIVAL PARK INC
P & P FOOD INC
PERKINS BOBBI L & GERALD A
REHAB STAFFING RESOURCES
SCI VIRGINIA FUNERAL SERVICES
STRIFFLER ENGINEERING ASSOC PC
WILD WATER RAPIDS INC
WRIGHT DOUGLAS J
04/07/00 AUDIT 913.41 0.00 913.41
2000 05/25/00 255.52 0.00 255.52
2000 05/25~00 92.16 0.00 92.16
2000 05/22/00 29.76 0.00 29.76
2000 05/22/00 592.00 0.00 592.00
2000 05/23/00 742.23 0.00 742.23
05/10/00 AUDIT 1,472,47 0,00 1,472.47
2000 05/22/00 10.26 0.00 10.26
2000 05/16/00 3,021.23 0.00 3,021.23
04/05/00 AUDIT 18.65 0.00 18.65
2000 05/22/00 571.44 0.00 571.44
05/09/00 AUDIT 2,342.56 516.64 2,859.20
05/11/00 AUDIT 10.00 0.00 10.00
05/17/00 AUDIT 1,017.82 324.15 1,341.97
05/10/00 AUDIT 81.70 8.82 90.52
05/25/00 AUDIT 90.20 10.53 100.73
05/11/00 AUDIT 174.08 52.20 226.28
2000 05/25/00 100.27 0.00 100.27
2000 05/25/00 162.36 0.00 162.36
2000 05/25/00 288.72 0.00 288.72
2000 05~26/00 10.00 0.00 10.00
2000 04/17/00 40.00 0.00 40.00
04/06/00 AUDIT 1.19 0.35 1.54
05/22/00 AUDIT 13.20 0.00 13.20
05/22/00 AUDIT 50.00 1.25 51.25
05/19/00 AUDIT 635.15 78.93 714.08
2000 05/19/00 29.43 0.00 29.43
05/15/00 AUDIT 2,097.38 296.59 2,393.97
05/15/00 AUDIT 193.65 32.00 225.65
05~26/00 AUDIT 10.00 0.00 10.00
05/19/00 AUDIT 10.00 0.00 10.00
04/06/00 A U D IT 761.06 0.00 761.06
2000 05/22/00 233.74 0.00 233.74
05/18/00 AUDIT 3,309.72 391.85 3,701.57
1999 05~25/00 16.44 0.00 16.44
t:::omr~issio-n~ o~ the Revenue
~City A-ff-0rney's Office
This ordinance shall be effective from date of
adoption.
The above abatement(s) totaling 21,111.11
Fifth
City of Virginia Beach on the
were approved by the
day of July
Council of the
,2000
Ruth Hodges Smith
City Clerk
- 34-
Item V- L l.afo.
ORDINANCES/RESOL UTION
ITEM # 46861
Upon motion by Vice Mayor Sessoms, seconded by Councihnan Jones, City Council ADOPTED:
Resolutions re sale and issuance of $40,000,000 Water and Sewer
System Revenue Bonds, Series of 2000:
Authorize distribution of A Preliminary Official Statement
(POS) and other necessary documents
Sixth Supplemental Resolution amending the Resolution adopted
February l l, 1992, entitled, "Master Water and Sewer Revenue Bond
Resolution providing for the issuance from time to time of one or more
series of Water and Sewer System Revenue Bonds of the City of Virginia
Beach ", as previously supplemented and amended, andprovidingfor the
form, details and the financing of the cost of improvements to the City's
water and sanitary sewer facilities.
Voting:
10-0 (By ConsenO
Council Members Voting Aye:
Linwood O. Branch, III, Margaret L. Eure, William W. Harrison, Jr.,
Barbara M. Henley, Louis R. Jones, Robert C. Mandigo, Jr., Mayor
Meyera E. Oberndorf, Nancy K. Parker, Vice Mayor William D.
Sessoms, Jr. and Rosemary Wilson
Council Members Voting Nay:
None
Council Members Abstaining:
Reba S. McClanan
Council Members Absent:
None
Council Lady McClanan ABSTAINED as she has not had the opportunity to completely review.
JuU ~, 2000
RESOLUTION AUTHORIZING THE
DISTRIBUTION OF A PRELIMINARY
OFFICIAL STATEMENT AND OTHER ACTIONS
IN CONNECTION WITH THE ISSUANCE BY
THE CITY OF VIRGINIA BEACH,
VIRGINIA, OF ITS WATER AND SEWER
SYSTEM REVENUE BONDS, SERIES OF 2000
WHEREAS, the City of Virginia Beach, Virginia (the "City"),
proposes to issue its Water and Sewer System Revenue Bonds, Series
of 2000, in an amount not to exceed $40,000,000 (the "Bonds"); and
WHEREAS, there have been presented to this meeting drafts of
the following documents:
(a) Notice of Sale, draft dated June 22, 2000 the "Notice of
Sale"), of the City relating to the advertmsement of the
public offering of the Bonds;
(b) Preliminary Official Statement, draft dated June 22, 2000
(the "Preliminary Official Statement"), of the City relating
to the public offering of the Bonds; and
(c) Continuing Disclosure Agreement, draft dated June 22,
2000, 2000, pursuant to which the City agrees to undertake
continuing disclosure obligations pursuant to Rule 15c2-12
(the "Rule") promulgated by the Securities and Exchange
Commission (the "SEC") for the benefit of the holders of the
Bonds.
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF
VIRGINIA BEACH, VIRGINIA:
1. The Council of the City (the "City Council") approves the
following terms of the sale of the Bonds. The Bonds shall be sold
by competitive bid, and the City Manager shall receive bids for the
Bonds and award the Bonds to the bidder providing the lowest "true"
or "Canadian" interest cost, subject to the following limitations.
The Bonds (a) shall have a "true" or "Canadian" interest cost not
to exceed 7.50%, taking into account any original issue discount or
premium, (b) shall be sold to the purchaser at a price not less
than 99% of the principal amount thereof and (c) shall mature no
later than the year 2026.
2. The City Manager, in collaboration with Government Finance
Associates, Inc., and Government Finance Group, the City's
financial advisors (the "Financial Advisors"), is authorized and
directed to take all proper steps to advertise the Bonds for sale
substantially in accordance with the form of Notice of Sale
attached hereto, which is hereby approved, provided that the City
Manager, in collaboration with the Financial Advisors, may make
such changes in the Notice of Sale not inconsistent with this
Resolution as he may consider to be in the best interest of the
City.
3. The City authorizes the distribution of the Preliminary
Official Statement in form deemed "near final" as of its date,
within the meaning of the Rule of the SEC, to prospective
purchasers of the Bonds, with such completions, omissions,
insertions and changes as may be approved by the City Manager.
Such distribution shall constitute conclusive evidence of the
approval of the City Manager as to any such completions, omissions,
insertions and changes and that the City has deemed the Preliminary
Official Statement to be near final as of its date.
4. The City Manager, in collaboration with the Financial
Advisors, is hereby authorized and directed to approve such
completions, omissions, insertions and other changes to the
Preliminary Official Statement necessary to reflect the terms of
the sale of the Bonds and the details thereof appropriate to
complete it as an official statement in final form (the "Official
Statement") and to execute and deliver the Official Statement to
the purchasers of the Bonds. Execution of the Official Statement
by the City Manager shall constitute conclusive evidence of his
approval of any such completions, omissions, insertions and changes
and that the Official Statement has been deemed final by the City
as of its date within the meaning of the Rule.
5. The Mayor, the City Manager and such officer or officers
of the City as either may designate are hereby authorized and
directed to execute the Continuing Disclosure Agreement, the form
of which is hereby approved, with such completions, omissions,
insertions and changes that are not inconsistent with this
Resolution.
6. The Mayor is hereby authorized and directed to execute the
Bonds by manual or facsimile signature, the City Clerk is hereby
authorized and directed to countersign the Bonds and affix the seal
of the City thereto or cause a facsimile thereof to be printed
thereon, and the officers of the City are hereby authorized and
directed to deliver the Bonds to the registrar and paying agent for
authentication and delivery to the purchasers of the Bonds.
7. The officers of the City are hereby authorized and
directed to execute, deliver and file all certificates and
documents and to take all such further action as they may consider
necessary or desirable in connection with the issuance and sale of
the Bonds, including without limitation (a) execution and delivery
of a certificate setting forth the expected use and investment of
the proceeds of the Bonds to show that such expected use and
investment will not violate the provisions of Section 148 of the
Internal Revenue Code of 1986, as amended (the "Code"), and
regulations thereunder, applicable to "arbitrage bonds," (b) making
any elections that such officers deem desirable regarding any
provision requiring rebate to the United States of "arbitrage
profits" earned on investment of proceeds of the Bonds, and (c)
filing Internal Revenue Service Form 8038-G. The foregoing shall
be subject to the advice, approval and direction of bond counsel.
8. Any authorization herein to execute a document shall
include authorization to deliver it to the other parties thereto.
9. Ail other acts of the officers of the City that are in
conformity with the purposes and intent of this Resolution and in
furtherance of the issuance and sale of the Bonds are hereby
approved and ratified.
10. This Resolution shall take effect immediately.
Adopted by the Council of the City of Virginia Beach,
Virginia, on the 5th day of July, 2000.
CA7768
F: ~Data~ATY~Ordin~NONCODE~POS Statement. res
June 26, 2000
R-2
APPROVED AS TO CONTENTS:
Department of Finance
APPROVED AS TO LEGAL SUFFICIENCY:
City Attorne~'~' s Of~ce
WATI~
, SE~ES 2000
Authorization summary
Remaining
Authorization Authorization
Authorization Prior to Sale From Sale
1990 $ 2,272,739 $ 1,791,738
1991 3,203,700 1,749,303
1993 4,123,530 1,945,321
1994 12,663,000 6,889,558
1995 2,769,952 1,305,597
1996 6,960,000 5,936,784
1997 12,730,000 11,149,669
1998 11,600,000 6,530,813
1999 9,513,500 2,701,217
2000 7,890,000 --
Total $73,726,421 $40,000,000
Authorization
After Sale
$ 481,001
1,454,397
2,178,209
5,773,442
1,464,355
1,023,216
1,580,331
5,069,187
6,812,283
7,890,000
$33,726,421
F:\Users\LBrown\Rich\water and sewer authorization summary tabel.wpd
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CITY OF VIRGINIA BEACH, VIRGINIA
SIXTH SUPPLEMENTAL RESOLUTION SUPPLEMENTING
AND AMENDING RESOLUTION ADOPTED FEBRUARY 11,
1992, ENTITLED "MASTER WATER AND SEWER
REVENUE BOND RESOLUTION PROVIDING FOR THE
ISSUANCE FROM TIME TO TIME OF ONE OR MORE
SERIES OF WATER AND SEWER SYSTEM REVENUE
BONDS OF THE CITY OF VIRGINIA BEACH," AS
PREVIOUSLY SUPPLEMENTED AND AMENDED, TO
PROVIDE FOR THE ISSUANCE AND SALE OF $40,000,000
WATER AND SEWER SYSTEM REVENUE BONDS, SERIES
OF 2000, AND PROVIDING FOR THE FORM, DETAILS AND
PAYMENT THEREOF AND THE FINANCING OF THE COST
OF IMPROVEMENTS TO THE CITY'S WATER AND
SANITARY SEWER FACILITIES
ADOPTED ON JULY 5, 2000
TABLE OF CONTENTS
Page
Section 6.203. Amendment to Section 101
Section 6.204. Amendment to Section 208
Section 6.205. Amendment to Section 209
Section 6.206. Amendment to Section 301
Section 6.207. Amendment to Section 302
Section 6.208. Amendment to Section 303
Section 6.209. Amendment to Section 304
Section 6.210. Amendment to Section 306
Section 6.211. Amendment to Section 601
Section 6.212. Amendment to Section 602
Section 6.213. Amendment to Section 604
Section 6.214. Amendment to Section 615
Section 6.215. Amendment to Section 708
Section 6.216. Amendment to Section 801
Section 6.217. Amendment to Section 802
Section 6.218. Amendment to Section 803
Section 6.219. Amendment to Section 807
(i)
ARTICLE I
SIXTH SUPPLEMENTAL RESOLUTION
Section 6.101. Sixth Supplemental Resolution ................................. 2
Section 6.102. Meaning of Terms; Definitions ................................. 2
Section 6.103. Reference to Articles and Sections .............................. 3
ARTICLE II
AMENDMENTS TO MASTER RESOLUTION
Section 6.201. Effective Date of Amendments ................................. 3
Section 6.202. Amendment to Table of Contents ............................... 4
Section 6.220. Amendment to Section 901 ................................... 10
Section 6.221. Deletion of Section 904 ...................................... 10
Section 6.222. Amendment to Section 905 ................................... 10
ARTICLE III
2000 PROJECT
Section 6.301. Authorization of 2000 Project ................................. 10
ARTICLE IV
ISSUANCE AND SALE OF SERIES OF 2000 BONDS
Section 6.401. Issuance and Sale of Series of 2000 Bonds ....................... 10
Section 6.402. Details of Series of 2000 Bonds ................................ 11
Section 6.403. Book Entry System ......................................... 11
Section 6.404. Registrar .................................................. 13
Section 6.405. Form of Series of 2000 Bonds ................................. 13
Section 6.406. Security for Series of 2000 Bonds .............................. 13
Section 6.407. Application of Proceeds ...................................... 13
ARTICLE V
REDEMPTION OF SERIES OF 2000 BONDS
Section 6.501. Optional Redemption Provisions ............................... 14
Section 6.502. Mandatory Redemption
Section 6.503. Manner of Redemption
ARTICLE VI
FEDERAL TAX PROVISIONS
Section 6.601. Limitation of Use of Proceeds ................................. 15
Section 6.602. Rebate Requirement ......................................... 16
Section 6.603. Calculation and Payment of Rebate Amount ...................... 16
ARTICLE VII
MISCELLANEOUS
Section 6.701. Limitation of Rights ......................................... 17
Section 6.702. SNAP Investment ........................................... 17
(ii)
Section 6.703. Severability ............................................... 18
Section 6.704. Effective Date ............................................. 18
Appendix A - Description of the 2000 Project .............................. A-1
Appendix B - Form of the Series of 2000 Bonds .............................. B-1
Appendix C - Notice to Bondholders ....................................... C-1
(iii)
SIXTH SUPPLEMENTAL RESOLUTION
SUPPLEMENTING AND AMENDING RESOLUTION
ADOPTED FEBRUARY 11, 1992, ENTITLED "MASTER
WATER AND SEWER REVENUE BOND RESOLUTION
PROVIDING FOR THE ISSUANCE FROM TIME TO
TIME OF ONE OR MORE SERIES OF WATER AND
SEWER SYSTEM REVENUE BONDS OF THE CITY OF
VIRGINIA BEACH," AS PREVIOUSLY SUPPLEMENTED
AND AMENDED, TO PROVIDE FOR THE ISSUANCE
AND SALE OF $40,000,000 WATER AND SEWER
SYSTEM REVENUE BONDS, SERIES OF 2000, AND
PROVIDING FOR THE FORM, DETAILS AND
PAYMENT THEREOF AND THE FINANCING OF THE
COST OF IMPROVEMENTS TO THE CITY'S WATER
AND SANITARY SEWER FACILITIES
WHEREAS, the Council (the "Council") of the City of Virginia Beach, Virginia (the
"City"), adopted a resolution on February 11, 1992 (the "Master Resolution"), providing for
the issuance from time to time of water and sewer revenue bonds to finance the cost of
improvements and extensions to its water and sanitary sewer system;
WHEREAS, the Council desires to issue, pursuant to the Master Resolution,
$1,791,738 of the $14,560,000 water and sewer system revenue bonds authorized by an
ordinance adopted by the Council on December 6, 1990, $1,749,303 of the $13,770,000
water and sewer system revenue bonds authorized by an ordinance adopted by the Council
on November 12, 1991, $1,945,321 of the $7,400,000 water and sewer system revenue bonds
authorized by an ordinance adopted by the Council on November 23, 1993, $6,889,558 of
the $14,080,000 water and sewer system revenue bonds authorized by an ordinance adopted
by the Council on May 10, 1994, $1,305,597 of the $6,593,000 water and sewer system
revenue bonds authorized by an ordinance adopted by the Council on May 9, 1995,
$5,936,784 of the $6,960,000 water and sewer system revenue bonds authorized by an
ordinance adopted by the Council on May 14, 1996, $11,149,669 of the $12,730,000 water
and sewer system revenue bonds authorized by an ordinance adopted by the Council on May
13, 1997, $6,530,813 of the $11,600,000 water and sewer system revenue bonds authorized
by an ordinance adopted by the Council on May 12, 1998, and $2,701,217 of the $9,513,000
water and sewer system revenue bonds authorized by an ordinance adopted by the Council
on May 11, 1999, and to sell such bonds as a single issue in a collective amount equal to
$40,000,000;
WHEREAS, the City is not in default under the Master Resolution or in payment of
the principal of or interest on the Outstanding Bonds (as defined in the Master Resolution);
and
WHEREAS, the City has determined that it is desirable to make certain amendments
to the Master Resolution.
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF TItE CITY
OF VIRGINIA BEACH, VIRGINIA:
ARTICLE I
SIXTH SUPPLEMENTAL RESOLUTION
Section 6.101. Sixth Supplemental Resolution.
This Sixth Supplemental Resolution is adopted pursuant to and in accordance with
Section 1101 (g) of the Master Resolution. All covenants, conditions and agreements of the
Master Resolution shall apply with equal force and effect to the Series of 2000 Bonds (as
hereinafter defined) and to the holders thereof, except as otherwise provided herein.
Section 6.102. Meaning of Terms; Definitions.
Except to the extent modified by Section 6.202 of this Sixth Supplemental
Resolution, all capitalized terms used herein, and not defined either in this Section or
elsewhere in this Sixth Supplemental Resolution (including the recitals hereto), shall have
the meanings ascribed to such terms in the Master Resolution. The following terms shall
have the following meanings in this Sixth Supplemental Resolution.
"2000 Project" shall mean the acquisitions, improvements, extensions, additions and
replacements to the System as described in Article III.
"DTC" shall mean The Depository Trust Company, New York, New York, a
securities depository, as holder of the Series of 2000 Bonds, or its successors or assigns in
such capacity.
"Rebate Amount" shall mean the excess of (a) the future value of all nonpurpose
receipts with respect to the Series of 2000 Bonds over (b) the future value of all nonpurpose
payments with respect to the Series of 2000 Bonds, in each case calculated under Section
6.603 pursuant to the requirements of Section 148 of the Code, or such other amount of
arbitrage required to be rebated to the United States of America under Section 148 of the
Code.
"Rebate Amount Certificate" shall have the meaning set forth in Section 6.603.
"Registrar" shall mean The Bank of New York, New York, New York, as paying
agent and bond registrar for the Series of 2000 Bonds.
"Series of 2000 Bonds" shall mean the Water and Sewer System Revenue Bonds,
Series of 2000, in the amount of $40,000,000 to be issued in accordance with the provisions
of Article IV.
"Sixth Supplemental Resolution" shall mean this Sixth Supplemental Resolution
which supplements the Master Resolution.
Section 6.103. Reference to Articles and Sections
Unless otherwise indicated, all references herein to particular articles or sections are
references to articles or sections of this Sixth Supplemental Resolution.
ARTICLE II
AMENDMENTS TO MASTER RESOLUTION
Section 6.201. Effective Date of Amendments.
Notwithstanding anything herein to the contrary, pursuant to Section 1102 of the
Master Resolution, the amendments provided in this Article shall be effective upon the
consent of the holders of a majority in aggregate principal amount of Bonds then
Outstanding. The original purchasers of the Series of 2000 Bonds by their purchase thereof
shall be deemed to have consented to the amendments provided in this Article.
At such time as the City has received the consent of the holders of not less than a
majority in aggregate principal amount of Outstanding Bonds to the amendments provided
in this Article, the City shall cause the "Notice to Bondholders" attached hereto as Appendix
C to be sent by facsimile or electronic transmission, registered or certified mail or overnight
express delivery to the holders of any then Outstanding (a) Water and Sewer System
Revenue Bonds, Series of 1992, and (b) Water and Sewer System Revenue and Refunding
Bonds, Series of 1993.
3
Section 6.202. Amendment to Table of Contents.
The Table of Contents in the Master Resolution is hereby amended to delete the word
"Acceleration" and insert "[Reserved]" following the words "Section 904."
Section 6.203. Amendment to Section 101.
(a) The definition of "Revenues" is deleted in its entirety from Section 101
of the Master Resolution and the following definitions are added in substitution therefor:
"Pledged Revenues" shall mean (i) System Revenues and (ii) any
other money from other sources pledged by the City to payment of its
obligations hereunder.
"System Revenues" shall mean all moneys received as fees, rates,
charges for the use of and for the services furnished by the System,
including Connection Fees, water resource recovery fees and
investment earnings that are required to be deposited in the Revenue
Fund. System Revenues shall not include customer deposits.
(b) The definition of "Operating Expenses" in Section 101 of the Master
Resolution is hereby amended to read as follows:
"Operating Expenses" shall mean all current expenses directly or indirectly
attributable to the ownership or operation of the System, including, without
intending to limit or restrict any proper definition of such expenses under any
applicable laws or generally accepted accounting principles, reasonable and
necessary usual expenses of administration, operation, maintenance and
repair, costs for billing and collecting the rates, fees and other charges for the
use of or the services furnished by the System, insurance and surety bond
premiums, legal, engineering, auditing and financial advisory expenses,
expenses and compensation of the Registrar and the Fiscal Agent, Operating
Components of Cost of Contracted Services, and deposits into a self
insurance program as described in Section 808. Operating Expenses shall not
include any allowance for depreciation, Debt Service Components or
Remaining Components of Cost of Contracted Services, deposits or transfers
to the Revenue Bond Fund, the Parity Double Barrel Bond Fund, the Parity
Debt Service Component Fund, the Debt Service Reserve Fund, the
Subordinate Debt Fund, the Renewal and Replacement Account, or the
Capital Improvement Account, or expenditures for capital improvements to
and extensions of the System. Notwithstanding the foregoing, Operating
Expenses shall include all payments of Demand Charges, Supplemental
Demand Charges, Commodity Charges, Fixed Capacity Charges and
Termination Payments, if any, to be paid from System Revenues, and all
charges under the Water Sales Contract.
(c) The definition of "Subordinate Debt" in Section 101 of the Master
Resolution is hereby amended to read as follows:
"Subordinate Debt" shall mean any bonds, notes or other obligations of the
City that have pledged to their payment Pledged Revenues as a junior lien
pledge after the pledge of Pledged Revenues to Parity Obligations.
Subordinate Debt may also include, at the option of the City, Subordinate
Debt Service Components, Subordinate Double Barrel Bonds, Remaining
Components of Cost of Contracted Services and debt service reserve funds,
if any, securing such obligations.
(d) The definition of"Subordinate Double Barrel Bonds" in Section 101 of
the Master Resolution is hereby amended to read as follows:
"Subordinate Double Barrel Bonds" shall mean any bonds, notes or other
obligations issued by the City which have pledged to their payment (a)
Pledged Revenues as a junior lien pledge after the pledge of such Pledged
Revenues to the Prior Parity Bonds and the Bonds and (b) the full faith, credit
and taxing power of the City including Prior Subordinate Bonds.
(e) The definition of "Utility Transfers" in Section 101 of the Master
Resolution is hereby amended to read as follows:
"Utility Transfers" shall mean annual transfers from the Residual Account to
the City's general fund, as may be approved by the City Council, in an
5
amount not to exceed 2% of the increase of retained earnings of the System
for the immediately preceding Fiscal Year over the next previous Fiscal Year,
as shown on the City's audited financial statements. Utility Transfers are to
compensate the City's general fund for the loss of System Revenues because
the System is owned by the City and is not a private entity.
Section 6.204. Amendment to Section 208.
Section 208 of the Master Resolution is hereby amended to delete "acceleration,"
from the first sentence thereof.
Section 6.205. Amendment to Section 209.
Section 209(a) of the Master Resolution is hereby amended to delete ", upon
acceleration" from the first sentence thereof.
Section 6.206. Amendment to Section 301.
Section 301 of the Master Resolution is hereby amended to substitute the words
"Pledged Revenues" for the word "Revenues."
Section 6.207. Amendment to Section 302.
Section 302 of the Master Resolution is hereby amended to substitute the words
"Pledged Revenues" for the word "Revenues" in each place where the word "Revenues"
appears.
Section 6.208. Amendment to Section 303.
Section 303 of the Master Resolution is hereby amended to substitute the words
"Pledged Revenues" for the word "Revenues."
Section 6.209. Amendment to Section 304.
The first sentence of Section 304(h)(3)(A) of the Master Resolution is hereby
amended to substitute the words "Pledged Revenues" for the word "Revenues."
Section 304(h)(3)(A)(iii) of the Master Resolution is hereby amended to substitute
the words "System Revenues" for the word "Revenues."
Section 304(h)(3)(B) of the Master Resolution is hereby amended to substitute the
words "System Revenues" for the word "Revenues."
Section 6.210. Amendment to Section 306.
The first sentence of Section 306(a) of the Master Resolution is hereby amended to
substitute the words "Pledged Revenues" for the word "Revenues."
Section 6.211. .Amendment to Section 601.
Section 601 of thc Master Resolution is hereby amended to mad as follows:
Section 601. Revenue Covenant. The City shall fix, charge and collect such rates,
fees and other charges for the use of and for the services furnished by the System, and shall,
from time to time and as often as shall appear necessary, revise such rates, fees and other
charges so as to meet the following two independent requirements:
(a) Pledged Revenues shall be sufficient in each Fiscal Year to equal the sum of
(1) the Operating Expenses shown in the Annual Operating Budget for such Fiscal Year, and
(2) (A) 115% of the sum of Maximum Annual Debt Service and Maximum Annual Prior
Parity Bond Debt Service, and (B) 100% of Maximum Annual Additional Parity Debt
Service.
(b) System Revenues shall be sufficient in each Fiscal Year to equal the sum of
(1) the Operating Expenses payable from System Revenues shown in the Annual Operating
Budget for such Fiscal Year, (2) the amount required to be paid into the Renewal and
Replacement Account in such Fiscal Year, (3) the amount required to be paid into the
Revenue Bond Fund in such Fiscal Year, (4) the amount required to be paid into the Parity
Double Barrel Bond Fund in such Fiscal Year, (5) the amount required to be paid into the
Parity Debt Service Component Fund in such Fiscal Year, (6) the amount required to be paid
into the Subordinate Debt Fund in such Fiscal Year, (7) the amount of any other indebtedness
of the City attributable to the System that is required to be paid in such Fiscal Year, (8) the
amount transferred to the Capital Improvement Account for the immediately preceding
Fiscal Year or such other amount as may be determined by the Director of Public Utilities
to be appropriate for the System, and (9) any amount necessary to be paid into the Debt
Service Reserve Fund to restore the amount on deposit therein to the amount of the Debt
Service Reserve Requirement.
Section 6.212. Amendment to Section 602.
Section 602(b) of the Master Resolution is hereby amended to read as follows:
(b) The Annual Operating Budget shall be prepared in such manner as to show in
reasonable detail (1) all Pledged Revenues, (2) all Operating Expenses and the portion of
such Operating Expenses that are to be paid with System Revenues, (3) the amount required
to be paid into the Renewal and Replacement Account, (4) the amount of principal of and
premium, if any, and interest on the Prior Parity Bonds and the Bonds that will become due
during such Fiscal Year, (5) the amount ofpfincipal of and premium, if any, and interest on
the Parity Double Barrel Bonds that will become due during such Fiscal Year, (6) the amount
of principal of and premium, if any, and interest on the Subordinate Debt that will become
due during such Fiscal Year, (7) any amount necessary to be paid into the Debt Service
Reserve Fund to restore the amount on deposit in each Account therein to the amount of thc
applicable Series Debt Service Reserve Requirement, and (8) the amount of any other
indebtedness attributable to the System that is required to be paid in such Fiscal Year. The
Annual Operating Budget shall be prepared in sufficient detail to show the amounts to be
deposited in the various Funds, Accounts and subaccounts created by or under this
Resolution.
Section 6.213. Amendment to Section 604.
The first sentence of Section 604 of the Master Resolution is hereby amended to read
as follows:
The City shall collect and deposit all Pledged Revenues in the Revenue Account in
the Revenue Fund at least weekly.
Section 6.214. Amendment to Section 615.
The caption and the first sentence of Section 615 of the Master Resolution are hereby
amended to read as follows:
Section 615. Pledge of Pledged Revenues and Certain Funds and Accounts.
Pledged Revenues and moneys in the Revenue Account are hereby pledged equally
and ratably to the payment of principal of and interest on all Parity Obligations, subject only
to the fight of the City to make application thereof to purposes as provided herein.
8
Section 6.215. Amendment to Section 708.
Section 708(a) of the Master Resolution, which section was added to the Master
Resolution by virtue of an amendment to the Second Supplemental Resolution adopted by
Council on December 7, 1993, is hereby amended to substitute the words "Pledged
Revenues" for the word "Revenues" in the third sentence thereof.
Section 6.216. Amendment to Section 801.
Section 801 of thc Master Resolution is hereby amended to read as follows:
Section 801. Payment of Bonds; Limited Obligations. The City shall promptly
pay or cause to be paid when due the principal of (whether at maturity, call for redemption
or otherwise) and premium, if any, and interest on the Bonds at the places, on the dates and
in the manner provided herein and in the Bonds according to the true intent and meaning
thereof; provided, however, that such obligations arc not general obligations of the City but
are limited obligations payable solely from Pledged Revenues, except to the extent payable
from the proceeds of Bonds, the income, if any, derived from the investment thereof, certain
reserves, income from investments pursuant to this Resolution or proceeds of insurance,
which Pledged Revenues and other moneys are hereby specifically pledged to such purposes
in the manner and to the extent provided herein. The Bonds, the premium, if any, and the
interest thereon shall not be deemed to create or constitute an indebtedness or a pledge of the
faith and credit of the Commonwealth or of any county, city, town or other political
subdivision thereof, including the City.
Section 6.217. Amendment to Section 802.
Section 802(a) of the Master Resolution is hereby amended to read as follows:
Section 802. Limitations on Indebtedness. (a) The City shall not issue any bonds,
notes or other obligations that shall be secured by a pledge of Pledged Revenues (1) senior
to the pledge of Pledged Revenues securing the Bonds or (2) on parity with the pledge of
Pledged Revenues securing the Bonds other than Parity Obligations.
Section 6.218. Amendment to Section 803.
The second sentence of Section 803 of the Master Resolution is hereby amended to
substitute the words "Pledged Revenues" for the word "Revenues."
9
Section 6.219. Amendment to Section 807.
The second sentence of Section 807 of the Master Resolution is hereby amended to
substitute the words "Pledged Revenues" for the word "Revenues."
Section 6.220. Amendment to Section 901.
(a) Section 901(a) of the Master Resolution is hereby amended to delete "by
acceleration," from the parenthetical therein.
(b) Section 901(d) of the Master Resolution is hereby amended to substitute the
words "Pledged Revenues" for the word "Revenues."
Section 6.221. Deletion of Section 904.
The Master Resolution is hereby amended to delete the text in Section 904 in its
entirety and to insert "[Reserved]" in substitution therefor.
Section 6.222. Amendment to Section 905.
The second sentence of Section 905 of the Master Resolution is hereby amended to
substitute the words "Pledged Revenues" for the word "Revenues."
ARTICLE III
2000 PROJECT
Section 6.301. Authorization of 2000 Project.
The Council has authorized the acquisitions, improvements, extensions, additions and
replacements to the System described on Appendix A, which are part of the approved capital
improvement program of the City.
ARTICLE IV
ISSUANCE AND SALE OF SERIES OF 2000 BONDS
Section 6.401. Issuance and Sale of Series of 2000 Bonds.
The City hereby provides for the issuance of water and sewer system revenue bonds
in the principal amount of $40,000,000, consisting of $1,791,738 of the $14,560,000 water
and sewer system revenue bonds authorized by an ordinance adopted by the Council on
December 6, 1990, $1,749,303 of the $13,770,000 water and sewer system revenue bonds
authorized by an ordinance adopted by the Council on November 12, 1991, $1,945,321 of
the $7,400,000 water and sewer system revenue bonds authorized by an ordinance adopted
l0
by the Council on November 23, 1993, $6,889,558 of the $14,080,000 water and sewer
system revenue bonds authorized by an ordinance adopted by the Council on May 10, 1994,
$1,305,597 of the $6,593,000 water and sewer system revenue bonds authorized by an
ordinance adopted by the Council on May 9, 1995, $5,936,784 of the $6,960,000 water and
sewer system revenue bonds authorized by an ordinance adopted by the Council on May 14,
1996, $11,149,669 of the $12,730,000 water and sewer system revenue bonds authorized by
an ordinance adopted by the Council on May 13, 1997, $6,530,813 of the $11,600,000 water
and sewer system revenue bonds authorized by an ordinance adopted by the Council on May
12, 1998, and $2,701,217 of the $9,513,000 water and sewer system revenue bonds
authorized by an ordinance adopted by the Council on May 11, 1999, which such bonds shall
be issued and sold. The proceeds thereof shall be used to pay the Cost of the 2000 Project.
All such bonds shall constitute Bonds, as defined in the Master Resolution.
Section 6.402. Details of Series of 2000 Bonds.
(a) The Series of 2000 Bonds shall be designated "Water and Sewer System Revenue
Bonds, Series of 2000," shall be numbered R-1 upward, shall be dated, shall bear interest at
rates, payable semiannually on such dates and shall mature in installments on such dates and
in years and amounts, all as determined by the City Manager to be in the best interest of the
City.
(b) Principal of the Series of 2000 Bonds and the premium, if any, thereon shall be
payable to the holders upon the surrender of such Bonds at the principal corporate trust office
of the Registrar. Interest on the Series of 2000 Bonds shall be payable by check or draft
mailed to the holders as of the 15th day of the month prior to each interest payment date, at
their addresses as they appear on the registration books kept by the Registrar.
(c) Except as other~vise provided herein, the Series of 2000 Bonds shall be payable,
executed, authenticated, registrable, exchangeable and secured, all as set forth in the Master
Resolution.
Section 6.403. Book Entry System.
Initially, one Series of 2000 Bond certificate for each maturity will be issued to DTC,
which is designated as the securities depository for the Series of 2000 Bonds, or its nominee,
and immobilized in its custody. Beneficial owners of the Series of 2000 Bonds will not
receive physical delivery of the Series of 2000 Bonds. So long as DTC is acting as securities
depository for the Series of 2000 Bonds, a book entry system shall be employed, evidencing
ownership of the Series of 2000 Bonds in principal amounts of $5,000 or multiples thereof,
with transfers of beneficial ownership effected on the records of DTC and its participants
pursuant to rules and procedures established by DTC and its participants. Interest on the
Series of 2000 Bonds shall be payable in clearinghouse funds to DTC or its nominee as
registered owner of the Series of 2000 Bonds. Principal, premium, if any, and interest shall
be payable in lawful money of the United States of America by the Registrar.
Transfer of principal and interest payments to participants of DTC shall be the
responsibility of DTC; transfer of principal and interest payments to beneficial owners by
participants of DTC will be the responsibility of such participants and other nominees of
beneficial owners. The City and the Registrar shall not be responsible or liable for
maintaining, supervising or reviewing the records maintained by DTC, its participants or
persons acting through such participants.
In the event that (a) DTC determines not to continue to act as securities depository
for the Series of 2000 Bonds by giving notice to the City and the Registrar discharging its
responsibilities hereunder, (b) the Registrar or the City determines that DTC is incapable of
discharging its duties or that continuation with DTC as securities depository is not in the best
interest of the City, or (c) the Registrar or the City determines that continuation of the book
entry system of evidencing ownership and transfer of ownership of the Series of 2000 Bonds
is not in the best interest of the City or the beneficial owners of the Series of 2000 Bonds,
the Registrar and the City shall discontinue the book entry system with DTC. If the Registrar
or the City fails to identify another qualified securities depository to replace DTC, the
Registrar shall authenticate and deliver replacement bonds in the form of fully registered
certificates to the beneficial owners or to the DTC participants on behalf of beneficial
owners, substantially in the form as set forth in Appendix B with such variations, omissions
or insertions as are necessary or desirable in the delivery of replacement certificates in
printed form. The Series of 2000 Bonds would then be registrable and exchangeable as set
12
after the issuance of the Series of 2000 Bonds shall be paid to the Fiscal Agent and deposited
into the Debt Service Reserve Fund.
(c) The balance of the proceeds shall be paid to the Fiscal Agent and deposited in a
General Account in the Construction Fund to be used to pay the Cost of the 2000 Project and
to pay expenses incident to issuing the Series of 2000 Bonds.
ARTICLE V
REDEMPTION OF SERIES OF 2000 BONDS
Section 6.501. Optional Redemption Provisions.
The Series of 2000 Bonds may be subject to redemption prior to maturity at the
option of the City on or after dates, if any, determined by the City Manager, in whole or in
part at any time at redemption prices equal to the principal amount of the Series of 2000
Bonds, together with any accrued interest to the redemption date, plus redemption premiums
not to exceed 3% of the principal amount of the Series 2000 Bonds, as such redemption
premiums may be determined by the City Manager.
Section 6.502. Mandatory Redemption.
The Series of 2000 Bonds may be subject to mandatory sinking fund redemption
prior to maturity in years and amounts, upon payment of 100% of the principal amount
thereof to be redeemed plus interest accrued to the redemption date, as may be determined
by the City Manager.
Section 6.503. Manner of Redemption.
If less than all the Series of 2000 Bonds are called for redemption, the maturities of
the Series of 2000 Bonds to be redeemed shall be selected in such manner as the City
Manager or the chief financial officer of the City may determine to be in the best interest of
the City. If less than all of the Series of 2000 Bonds of any maturity are called for
redemption, the Series of 2000 Bonds to be redeemed shall be selected by DTC or any
successor securities depository pursuant to its rules and procedures or, if the book entry
system is discontinued, shall be selected by the Registrar by lot in such manner as the
Registrar at its discretion may determine. In either case, (a) the portion of any Series of 2000
Bond to be redeemed shall be in the principal amount of $5,000 or some integral multiple
14
thereof and (b) in selecting Series of 2000 Bonds for redemption, each portion of $5,000
principal amount shall be counted as one bond for this purpose.
ARTICLE VI
FEDERAL TAX PROVISIONS
Section 6.601. Limitation of Use of Proceeds.
The City covenants with the holders of the Series of 2000 Bonds as follows:
(a) The City shall not take or omit to take any action or make any investment or use
of the proceeds of any Series of 2000 Bonds (including failure to spend the same with due
diligence) the taking or omission of which would cause the Series of 2000 Bonds to be
"arbitrage bonds" within the meaning of Section 148 of the Code, including without
limitation participating in any issue of obligations that would cause the Series of 2000 Bonds
to be part of an "issue" of obligations that are arbitrage bonds, within the meaning of
Treasury Regulations Section 1.148-10 or successor regulation, or otherwise cause interest
on the Series of 2000 Bonds to be includable in the gross income of the registered owners
under existing law. Without limiting the generality of the foregoing, the City shall comply
with any provision of law that may require the City at any time to rebate to the United States
of America any part of the earnings derived from the investment of gross proceeds of the
Series of 2000 Bonds.
(b) Barring unforeseen circumstances, the City shall not approve the use of the
proceeds from the sale of any Series of 2000 Bonds otherwise than in accordance with the
City's "non-arbitrage" certificate delivered immediately prior to the issuance of such Bonds.
(c) The City shall not permit the proceeds of the Series of 2000 Bonds to be used in
any manner that would result in either (1) 5 % or more of such proceeds being considered as
having been used in any trade or business carried on by any person other than a
governmental unit as provided in Section 141(b) of the Code, (2) 5% or more of such
proceeds being used with respect to any "output facility" (other than a facility for the
furnishing of water) within the meaning of Section 141(b)(4) of the Code, or (3) 5% or more
of such proceeds being considered as having been used directly or indirectly to make or
finance loans to any person other than a governmental unit, as provided in Section 141(c) of
the Code; provided, however, that if the City receives an opinion of Bond Counsel that
compliance with any such covenant is not required to prevent the interest on the Series of
2000 Bonds from being includable in the gross income of the registered owners thereof under
existing law, the City need not comply with such restriction.
(d) The City shall not take any other action that would adversely affect, and shall
take all action within its power necessary to maintain, the exclusion of interest on all Series
of 2000 Bonds from gross income for federal income taxation purposes.
Section 6.602. Rebate Requirement.
The City shall determine and pay, from any legally available source, the Rebate
Amount, if any, to the United States of America, as and when due, in accordance with the
"rebate requirement" described in Section 148(0 of the Code and retain records of all such
determinations until six years after payment of the Series of 2000 Bonds.
Section 6.603. Calculation and Payment of Rebate Amount.
(a) The City selects August 1 as the end of the bond year with respect to the Series
of 2000 Bonds pursuant to Treasury Regulation Section 1.148-1.
(b) Within 30 days after the initial installment computation date, the last day of the
fifth bond year (August 1, 2005), unless such date is changed by the City prior to the date
that any amount with respect to the Series of 2000 Bonds is paid or required to be paid to the
United States of America as required by Section 148 of the Code, and at least once every five
years thereafter, the City shall cause the Rebate Amount to be computed. Prior to any
payment of the Rebate Amount to the United States of America as required by Section 148
of the Code, such computation (the "Rebate Amount Certificate") setting forth such Rebate
Amount shall be prepared or approved by (1) a person with experience in matters of
governmental accounting for Federal income tax purposes, (2) a bona fide arbitrage rebate
calculation reporting service, or (3) Bond Counsel.
(c) Not later than 60 days after the initial installment computation date, the City shall
pay to the United States of America at least 90% of the Rebate Amount as set forth in the
Rebate Amount Certificate prepared with respect to such installment computation date. At
least once on or before 60 days after the installment computation date that is the fifth
anniversary of the initial installment computation date and on or before 60 days every fifth
anniversary date thereafter until final payment of the Series of 2000 Bonds, the City shall pay
to the United States of America not less than the amount, if any, by which 90% of the Rebate
Amount set forth in the most recent Rebate Amount Certificate exceeds the aggregate of all
such payments theretofore made to the United States of America pursuant to this Section.
On or before 60 days after final payment of the Series of 2000 Bonds, the City shall pay to
the United States of America the amount, if any, by which 100% of the Rebate Amount set
forth in the Rebate Amount Certificate with respect to the date of final payment of the Series
of 2000 Bonds exceeds the aggregate of all payments theretofore made pursuant to this
Section. All such payments shall be made by the City from any legally available source.
(d) Notwithstanding any provision of this Article to the contrary, no such calculation
or payment shall be made if the City receives an opinion of Bond Counsel to the effect that
(1) such payment is not required under the Code in order to prevent the Series of 2000 Bonds
from becoming "arbitrage bonds" within the meaning of Section 148 of the Code or (2) such
payment should be calculated and paid on some alternative basis under the Code, and the
City complies with such alternative basis.
ARTICLE VII
MISCELLANEOUS
Section 6.701. Limitation of Rights.
With the exception of the rights herein expressly conferred, nothing expressed or
mentioned in or to be implied from this Sixth Supplemental Resolution is intended or shall
be construed to give any person other than the parties hereto and the holders of the Series of
2000 Bonds any legal or equitable right, remedy or claim under or in respect to this Sixth
Supplemental Resolution or any covenant, condition or agreement herein contained, this
Sixth Supplemental Resolution and all of the covenants, conditions and agreements hereof
being intended to be and being for the sole and exclusive benefit of the holders of the Series
of 2000 Bonds as herein provided.
Section 6.702. SNAP Investment.
The Council has received and reviewed the Information Statement (the "Information
17
Statement") describing the State Non-Arbitrage Program of the Commonwealth of Virginia
("SNAP") and the Contract Creating the State Non-Arbitrage Program Pool I (the
"Contract"). The Council acknowledges the Treasury Board of the Commonwealth of
Virginia is not, and shall not be, in any way liable to the City in connection with SNAP,
except as otherwise provided in the Contract.
Section 6.703. Severability.
If any provision of this Sixth Supplemental Resolution shall be held invalid by any
court of competent jurisdiction, such holding shall not invalidate any other provision hereof.
Section 6.704. Effective Date.
This Sixth Supplemental Resolution shall take effect immediately.
Adopted by the Council of the City of Virginia Beach, Virginia, on the __ ., 2000.
CA7769
F:kData\ATY\Ordin\NONCODE\Water and Sewer Sup.res
June 28, 2000
R-3
day of
APPROVED AS TO CONTENT:
Department oYf Finance
APPROVED AS TO LEGAL
SUFFICIENCY:
APPENDIX A
Description of the 2000 Project
City of Virginia Beach, Virginia
Water and Sewer System Revenue Bonds
Series of 2000
The 2000 Project consists of extensions, improvements, enlargements, additions and
replacements to the plants, systems, facilities, equipment or property owned, in whole or in
part, acquired, operated or maintained by or on behalf of the City of Virginia Beach,
Virginia, in connection with the collection, treatment or disposal of sanitary sewer and the
supply, treatment, storage or distribution of water. The water system improvements include
but are not limited to replacement of existing water mains, construction of new water mains,
modification of existing pump stations and small line improvements. The sanitary sewer
system improvements include but are not limited to construction of new gravity sanitary
sewers, construction of new force mains, modification of existing pumping stations and
construction of new pumping stations.
A-1
APPENDIX B
FORM OF SERIES OF 2000 BOND
REGISTERED
REGISTERED
R- $
UNITED STATES OF AMERICA
COMMONWEALTH OF VIRGINIA
CITY OF VIRGINIA BEACH
Water and Sewer System Revenue Bond, Series of 2000
INTEREST RATE
MATURITY DATE
DATED DATE CUSIP
% ., __ JULY 15, 2000
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT:
DOLLARS
The City of Virginia Beach, Virginia (the "City"), for value received, hereby
promises to pay upon surrender hereof at the principal corporate trust office of The Bank of
New York, New York, New York (the "Registrar"), solely from the source and as hereinafter
provided, to the registered owner hereof, or registered assigns or legal representative, the
principal sum stated above on the maturity date stated above, subject to prior redemption as
hereinafter provided, and to pay, solely from such source, interest hereon semiannually on
each February 1 and August 1, beginning at the annual rate stated
above, calculated on the basis of a 360-day year of twelve 30-day months. Interest is payable
(a) from ,2000, if this Bond is authenticated prior to ,
or (b) otherwise from the - or that is, or immediately precedes, the
date on which this Bond is authenticated (unless payment of interest hereon is in default, in
which case this Bond shall bear interest from the date to which interest has been paid).
Interest is payable by check or draft mailed to the registered owner hereof at his address as
it appears on the 15th day of the month preceding each interest payment date on registration
books kept by the Registrar. Principal, premium, if any, and interest are payable in lawful
money of the United States of America.
Notwithstanding any other provision hereof, this Bond is subject to a book entry
system maintained by The Depository Trust Company CDTC") and the payment of principal
and interest, the providing of notices and other matters will be made as described in the
City's Letter of Representations to DTC.
This Bond is one of an issue of $40,000,000 Water and Sewer System Revenue
Bonds, Series of 2000 (the "Bonds"), of like date and tenor, except as to number,
denomination, rate of interest, privilege of redemption and maturity, authorized and issued
B-1
pursuant to ordinances and resolutions adopted by the City Council including a resolution
adopted on February 11, 1992, as previously supplemented and as supplemented and
amended by a resolution adopted on ,2000 (collectively, the "Resolution"),
and the Constitution and statutes of the Commonwealth of Virginia, including the City
Charter and the Public Finance Act of 1991, to provide funds, together with other available
funds, to pay the cost of the acquisition and construction of improvements and extensions
to the City's water and sanitary sewer system (the "System"), as more fully described in the
Resolution.
The Bonds and the premium, if any, and the interest thereon are limited obligations
of the City and are payable solely from the revenues to be derived from the ownership or
operation of the System, as the same may from time to time exist, except to the extent
payable from the proceeds of the Bonds, the income, if any, derived from the investment
thereof, certain reserves, income from investments pursuant to the Resolution or proceeds
of insurance, which revenues and other moneys have been pledged as described in the
Resolution to secure payment thereof. The Bonds, the premium, if any, and the interest
thereon are payable solely from the revenues pledged thereto in the Resolution, and nothing
herein or in the Resolution shall be deemed to create or constitute an indebtedness of or a
pledge of the faith and credit of the Commonwealth of Virginia or of any county, city, town
or other political subdivision of the Commonwealth, including the City.
The Bonds are issued under and are equally and ratably secured on a parity with the
unpaid balance of the City's $3,000,000 Revenue Bonds, 1977 (P.A. Corp.), $5,100,000
Water and Sewer Revenue Notes, 1977 (P.A. Corp.), $2,000,000 Drought Relief Revenue
Bond, 1978, $2,200,000 Water and Sewer Revenue Notes, 1982 (County Utilities),
$1,800,000 Water and Sewer Revenue Notes, 1982 (Kempsville Utilities), $19,975,000
Water and Sewer System Revenue Bonds, Series of 1992, $46,440,000 Water and Sewer
System Revenue and Refunding Bonds, Series of 1993, $1,405,031.36 Taxable Water and
Sewer System Revenue Bond, Series of 1994, $7,500,000 Taxable Water and Sewer System
Revenue Bond, Series of 1997, and $6,200,000 Taxable Water and Sewer System Revenue
Bond, Series of 1998 (collectively, the "Parity Bonds"), to the extent set forth in the
Resolution. Reference is hereby made to the Resolution and all amendments and
supplements thereto for a description of the provisions, among others, with respect to the
nature and extent of the security, the rights, duties and obligations of the City, the rights of
the holders of the Bonds and the terms upon which the Bonds are issued and secured.
Additional bonds ranking equally with the Bonds and the Parity Bonds may be issued on the
terms provided in the Resolution.
Bonds maturing on or before .... are not subject to redemption prior
to maturity. Bonds maturing on or after .... are subject to redemption prior
to maturity at the option of the City on or after .... in whole or in part at any
time, upon payment of the following redemption prices (expressed as a percentage of
principal amount of Bonds to be redeemed) plus interest accrued to the redemption date:
Redemption Period
(Both Dates Inclusive)
Redemption
Price
Bonds maturing on , , are required to be redeemed prior to
maturity, in part, in accordance with the sinking fund requirements of Section __ of the
resolution adopted on , 2000, on in years and amounts upon
payment of 100% of the principal amount thereof plus interest accrued to the redemption
date, as follows:
B-2
Year Amount Year Amount
The amount of the Bonds required to be redeemed pursuant to the preceding
paragraph may be reduced in accordance with provisions of the Resolution.
If less than all the Bonds are called for redemption, the maturities of the Bonds to be
redeemed shall be selected in such manner as the City Manager or the chief financial officer
of the City may determine to be in the best interest of the City. If less than all of the Bonds
of any maturity are called for redemption, the Bonds to be redeemed shall be selected by
DTC or any successor securities depository pursuant to its rules and procedures or, if the
book entry system is discontinued, shall be selected by the Registrar by lot in such manner
as the Registrar in its discretion may determine. In either case, (a) the portion of any Bond
to be redeemed shall be in the principal amount of $5,000 or some integral multiple thereof
and (b) in selecting Bonds for redemption, each portion of $5,000 principal amount shall be
counted as one bond for this purpose. If a portion of a Bond is called for redemption, a new
Bond in principal amount equal to the unredeemed portion thereof will be issued to the
registered owner upon the surrender hereof.
The Registrar will cause notice of the call for redemption identifying the Bonds or
portions thereof to be redeemed to be sent by registered or certified mail, not less than 30 nor
more than 60 days prior to the redemption date, to DTC or its nominee as the registered
owner thereof. The City will not be responsible for mailing notice of redemption to anyone
other than DTC or another qualified securities depository or its nominee unless no qualified
securities depository is the registered owner of the Bonds. If no qualified securities
depository is the registered owner of the Bonds, notice of redemption will be mailed to the
registered owners of the Bonds.
Provided funds for their redemption are on deposit at the place of payment on the
redemption date, all Bonds or portions thereof so called for redemption shall cease to bear
interest on such date, shall no longer be secured as set forth in the Resolution and shall not
be deemed to be outstanding under the provisions of the Resolution.
The registered owner of this Bond shall have no right to enforce the provisions of the
Resolution or to institute action to enforce the covenants therein or to take any action with
respect to any Event of Default under the Resolution or to institute, appear in or defend any
suit or other proceedings with respect thereto, except as provided in the Resolution.
Modifications or alterations of the Resolution, or of any supplement thereto, may be made
only to the extent and in the circumstances permitted by the Resolution.
The Registrar shall treat the registered owner as the person exclusively entitled to
payment of principal, premium, if any, and interest and the exercise of all other rights and
powers of the owner, except that interest payments shall be made to the person shown as
owner on the 15th day of the month preceding each interest payment date.
All acts, conditions and things required to happen, exist or be performed precedent
to and in the issuance of this Bond have happened, exist and have been performed.
This Bond shall not be valid or be entitled to any security or benefit under the Resolution
until the Registrar shall have executed the Certificate of Authentication appearing hereon and
inserted the date of authentication hereon.
B-3
IN WITNESS WHEREOF, the City of Virginia Beach, Virginia, has caused this
Bond to be signed by the manual signature of its Mayor, to be countersigned by the manual
signature of its Clerk, its seal to be impressed hereon, and this Bond to be dated ,
2000.
COUNTERSIGNED:
Clerk, City of Virginia Beach, VA
(SEAL)
Mayor, City of Virginia Beach, VA
Date Authenticated:
CERTIFICATE OF AUTHENTICATION
This Bond is one of the Bonds described in the within-mentioned Resolution.
TItE BANK OF NEW YORK,
Registrar
By
Authorized Signature
B-4
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and transfer(s) unto
(please print or typewrite name and address including zip code of Transferee)
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF TRANSFEREE
the within-mentioned Bond and all rights thereunder, hereby irrevocably constituting and
appointing ,
Attorney, to transfer said Bond on the books kept for the registration thereof, with full power
of substitution in the premises.
Dated:
Signature Guaranteed
NOTICE: Signature(s) must be guaranteed
by an Eligible Guarantor Institution such
as a Commercial Bank, Trust Company,
Securities Broker/Dealer, Credit Union
or Savings Association who is a member
of a medallion program approved by The
Securities Transfer Association, Inc.
(Signature of Registered Owner)
NOTICE: the signature above must
correspond with the name of the
registered owner as it appears on the
front of this bond in every particular,
without alteration or enlargement or
any change whatsoever.
B-5
APPENDIX C
NOTICE TO BONDHOLDERS
NOTICE OF AMENDMENT TO MASTER RESOLUTION
CITY OF VIRGINIA BEACH, VIRGINIA
WATER AND SEWER SYSTEM REVENUE BONDS, SERIES OF 1992,
MATURING [FEBRUARY 1, 2001, THROUGH 2002
CUSIP NUMBERS 927749 AQ4, 927749 AR2]
and
WATER AND SEWER SYSTEM REVENUE AND REFUNDING BONDS,
SERIES OF 1993, MATURING [FEBRUARY 1, 2001, THROUGH 2019
CUSIP NUMBERS 927749 BC4, 927749 BD2, 927749 BE0, 927749 BF7,
927749 BG5, 927749 BH3, 927749 B J9, 927749 BK6, 927749 BL4,
927749 BM2, 927749 BP5, 927749 BN01
The Bank of New York is Bond Registrar for the above-captioned bonds (the
"Bonds") which were issued under a Master Resolution adopted by the City Council of the
City of Virginia Beach, Virginia, on February 11, 1992, as previously supplemented and
amended (the "Master Resolution"). The purpose of this Notice is to notify Bondholders that
the Master Resolution has been amended.
The first amendment relates to the scope of revenues that will be included in
determining the City's compliance with the Revenue Covenant (as defined in the Master
Resolution). Prior to the effective date of the amendment, "Revenues" included only rates,
fees and charges for the use of and for the services furnished by the System (as defined in
the Master Resolution) in a current fiscal year. Such definition did not permit the City to
include other monies it might choose to contribute to the System in meeting the Revenue
Covenant. The amendment permits such additional monies to be included in the calculation
used to determine the City's compliance with the Revenue Covenant.
The second amendment relates to the remedy of acceleration of bonds issued under
the Master Resolution. Prior to the effective date of the amendment, the Master Resolution
permitted bonds to be accelerated upon an Event of Default. The amendment deletes the
provisions in the Master Resolution relating to such acceleration.
A copy of the Master Resolution and the amendments may be obtained from the Clerk of the
City upon written request (addressed to the attention of the Department of Finance,
Municipal Center, Virginia Beach, Virginia 23456), together with satisfactory evidence that
the requestor is a holder of a Bond, at any time after August 31, 2000.
No amendments were made to the terms of the Bonds.
CUSIP Numbers are included solely for the convenience of the bondholders. Neither the
City nor The Bank of New York shall be responsible for the selection or use of the CUSIP
Numbers, nor is any representation made as to its correctness on any bond or as indicated in
any notice.
THE BANK OF NEW YORK, as Registrar
Dated:
C-1
- 35 -
Item V-N.
PLANNING
ITEM # 46862
1. KEITH YEATES
VARIANCE
2. U. S. FIBERGLASS PRODUCTS t/a
WA VE RIDING VEHICLES
CONDITIONAL USE PERMIT
3. TRADEWINDS, L.C.
CONDITIONAL USE PERMIT
4. VIRGINIA EQUIPMENT
& DEVELOPMENT INC.
CONDITIONAL USE PERMIT
5. FORTUNE ENTERPRISES, INC.
CONDITIONAL USE PERMIT
6. LINDA HAR VIN
CONDITIONAL USE PERMIT
7. DONAVON E. BONNEY
CONDITIONAL USE PERMIT
& NICHOLAS AND VICKI ROSSE Va
NICHOLAS VICTORIA HAIR STUDIO
CONDITIONAL CHANGE OF ZONING
AND
CONDITIONAL USE PERMIT
9. OCEAN BAY HOMES, L.L. C.
CHANGE OF ZONING
10. BEACH BUILDERS, INC.
CHANGE OF ZONING
11. CITY OF VIRGINIA BEACH
CHANGE OF ZONING
July 5, 200o
Item V-N.
-36-
PLANNING
ITEM # 46863
Upon motion by Vice Mayor Sessoms, seconded by Councilman Jones, City Council APPROVED in ONE
MOTION Items 2, 3, 4, 5, 6, 8, 9, 1 O, and 11 of the PLANNING B Y CONSENT.
Items 2, 3 and 6 were APPROVED, BY CONSENT, with Modified Conditions.
Voting: 11-0
Council Members Voting Aye:
Linwood O. Branch, III, Margaret L. Eure, William W. Harrison, Jr.,
Barbara M. Henley, Louis R. Jones, Reba S. McClanan, Robert C.
Mandigo, Jr., Mayor Meyera E. Oberndorf, Nancy K. Parker, Vice
Mayor William D. Sessoms, Jr. and Rosemary Wilson
Council Members Voting Nay:
None
Council Members Absent:
None
July 5, 2000
Item V-N. 1.
PLANNING
-37-
ITEM # 46864
Attorney Edward Bourdon, Pembroke One, Phone: 499-8971, represented the applicant
Upon motion by Councilman Harrison, seconded by Vice Mayor Sessoms City Council DEFERRED UNTIL
CITY COUNCIL MEETING OF AUGUST 8, 2000. the Application of KEITH YEATES for a Variance
to Section 4.4(b) of the Subdivision Ordinance which requires that all newly created lots must meet all
requirements of the City Zoning Ordinance (CZO) and Section 4.4(d) which requires that all lots created
by subdivision have direct access to a public street.
Appeal to Decisions of Administrative Officers in regard to certain
elements of the Subdivision Ordinance, Subdivision for Keith Yeates.
Property is located at 3077 Yeates Lane (GPIN #1498-15-8061; 1498-
14-9616) L YNNHA VEN - DISTRICT 5
Voting: 11-0
Council Members Voting Aye:
Linwood O. Branch, IIL Margaret L. Eure, William W. Harrison, Jr.,
Barbara M. Henley, Louis R. Jones, Reba S. McClanan, Robert C.
Mandigo, Jr., Mayor Meyera E. Oberndorf, Nancy K. Parker, Vice
Mayor William D. Sessoms, Jr. and Rosemary Wilson
Council Members Voting Nay:
None
Council Members Absent:
None
. uly 5, 2000
Item V-N. 2.
PLANNING
Upon motion by
-38-
ITEM # 46865
Vice Mayor Sessoms, seconded by Councilman Jones, City Council ADOPTED an
Ordinance upon application of U. S. FIBERGLASS PRODUCTS, t/a }VA VE RIDING VEHICLES for a
Conditional Use Permit, with REVISED CONDITIONS:
ORDINANCE UPON APPLICATION OF U.S. FIBERGLASS
PRODUCTS, T/A WA VE RIDING VEHICLES FOR A CONDITIONAL
USE PERMIT FOR AN OFF-SITE PARKING R07003054
BE IT HEREBY ORDAINED BY THE COUNCIL OF THE CITY OF VIRGINIA BEACH, VIRGINIA
Ordinance upon application of U.S. Fiberglass Products, T/A Wave
Riding Vehicles for a Conditional Use Permit for an off-site parking lot
on certain property located at the northwest corner of Cypress Avenue
and 19th Street (GPIN #2417-97-1213; #2417-97-0299). Said parcel
contains 15,184 square feet. BEACH- DISTRICT 6.
The following conditions shall be required:
The site shall be developed in accordance with the site plan titled
"WR V SITE PLAN", prepared by Gallup Surveyors & Engineers,
LTD., dated March 8, 2000.
The site shall be landscaped in accordance with the landscape
plan titled "WR V LANDSCAPE PLAN", designed by Patsy Kerr,
and prepared by Gallup Surveyors & Engineers, LTD., dated
March 8, 2000. Special care shall be taken to insure the
retention of the 30" Elm tree and the 15" elm tree.
The site shall comply with the conditions placed upon the
variance approved by the Board of Zoning Appeals on April 5,
2000.
4__. The lot shall be used only by customers and employees of Wave
Riding Vehicles or its successors.
This Ordinance shall be effective in accordance with Section 107 (JO of the Zoning Ordinance.
Adopted by the Council of the City of Virginia Beach, Virginia, on the Fyth of July, Two Thousand
Voting:
11-0 (By Consent)
Council Members Voting Aye:
Linwood O. Branch, III, Margaret L. Eure, William W. Harrison, Jr.,
Barbara M. Henley, Louis R. Jones, Reba S. McClanan, Robert C.
Mandigo, Jr., Mayor Meyera E. Oberndorf, Nancy K. Parker, Vice
Mayor William D. Sessoms, Jr. and Rosemary Wilson
Council Members Voting Nay:
None
Council Members Absent:
None
July 5, 2o00
- 39-
Item V-N. 3.
PLANNING
ITEM # 46866
Upon motion by Vice Mayor Sessoms, seconded by Councilman Jones, City Council ADOPTED an
Ordinance upon application of TRADEWINDS, L. C. for a Conditional Use Permit:
ORDINANCE UPON APPLICATION OF TRADEWINDS, LC. FOR A
CONDITIONAL USE PERMIT FOR A TEMPORARY PARKING LOT
R07003055
BE IT HEREBY ORDAINED BY THE COUNCIL OF THE CITY OF VIRGINIA BEACH, VIRGINIA
Ordinance upon application of Tradewinds, L.C. for a Conditional Use
Permit for a temporary parking lot located at the northeast corner of
Atlantic Avenue and 16th Street (GPIN #2427-26-1808; #2427-27-
0090; #242 7-26-0985), containing2 7, 000 square feet (B EA CH- DISTRICT
The following conditions shall be required:
app ..... j ................ r ..... ~'J .... y~,, The Conditional Use
Permit shall be valid until 12.'00 a.m. on December 31, 2000.
Hours of operation shall be 8.'00 a.m. to 12.'00 a.m., 7 days per
week. An attendant shall be on duty at all times during hours of
operation.
3. All points of vehicular and pedestrian access shall be secured by
a chain or gate during the hours that theparking lot is closed.
Vehicular access shall be limited to one entrance, in the location
shown on the submitted site plan, entitled, "Preliminary Site
Plan, Tradewinds Hotel Conditional Use Permit for Parking Lot
for Gold Key/PHR, "as revised on May 30, 2000. The existing
22' wide access point shall be widened to a minimum of 24'.
The lot attendant's station shall be located a minimum of 5O feet
east of the eastern right-of-way line of Atlantic Avenue, to
provide for on-site stacking, and shall be situated so as to be on
the driver's side of vehicles entering the parking lot.
The attendant's booth and signage shall be substantially similar
to the submitted photographs on file with the Planning
Department, except that the Planning Director may approve an
alternate design deemed to be of equal or greater quality.
Perimeter landscape screening, as depicted on the above-
referenced site plan, shall be installed and maintained along the
western, southern and eastern property lines, except for depicted
points of vehicular and pedestrian access. Landscape screening,
fencing, or wheelstops, as required by Sec. 23-5800(2) of the City
Code, shall be installed along the northern property line.
The parking lot shall be designed substantially as depicted on the
above-referenced site plan, and all site area not occupied by
parking spaces or drive aisles shall have a vegetative ground
cover or other decorative treatment approved by the Planning
Director or designee.
City' '-'-' .... ' ..................... ' .... ' ..... '-'-
............. ~; ,c, .............. ~, ...... ~ ..... The lot shall
comply with all requirements of Sec. 23-58 of the City Code,
relating to commercial parking lots; provided, however, that if
aggregate is used for the surface material, stone size shall not
exceed one inch (1 ') in diameter.
July 5, 2000
- 40-
Item V-N. 3.
PLANNING
ITEM # 46866 (Continued)
This Ordinance shall be effective in accordance with Section 107 (JO of the Zoning Ordinance.
Adopted by the Council of the City of Virginia Beach, Virginia, on the Fifth of JulY, Two Thousand
Voting:
11-0 (By ConsenO
Council Members Voting Aye:
Linwood O. Branch, III, Margaret L. Eure, William W. Harrison, Jr.,
Barbara M. Henley, Louis R. Jones, Reba S. McClanan, Robert C.
Mandigo, dr., Mayor Meyera E. Oberndorf, Nancy K. Parker, Vice Mayor
William D. Sessoms, Jr. and Rosemary Wilson
Council Members Voting Nay:
None
Council Members Absent:
None
July 5, 2000
- 41 -
Item V-V.N. 4.
PLANNING
ITEM # 46867
Upon motion by Vice Mayor Sessoms, seconded by Councilman Jones, City Council ADOPTED Ordinance
upon application of VIRGINIA EQUIPMENT & DEVELOPMENT INC., for a Conditional Use Permit:
ORDINANCE UPON APPLICATION OF VIRGINIA EQUIPMENT &
DEVELOPMENT, INC., FOR A CONDITIONAL USE PERMIT FOR AN
EQUIPMENT STORAGE YARD WITH AN OFFICE WAREHOUSE
R07003056
BE IT HEREBY ORDAINED B Y THE COUNCIL OF THE CITY OF VIRGINIA BEACH, VIRGINIA
Ordinance upon application of Virginia Equipment & Development, Inc.,
for a Conditional Use Permit for a bulk storage yard on certain property
located on the south side of Production Road beginning at a point 970feet
east of Central Drive (GPIN #1496-88-1063). Said parcel contains 2.5
acres. BEACH - DISTRICT 6
The following conditions shall be required:
The equipment storage yard shall be enclosed with Category VI
screening, as specified in the Landscape, Screening and
Buffering Specifications and Standards of the City of Virginia
Beach.
The proposed landscaping along the front of the site, parallel to
Production Road, shall meet the City of Virginia Beach Parking
Lot and Foundation Landscaping Specifications and Standards
for street frontage landscaping.
The front of the building shall meet the City of Virginia Beach
Parking Lot and Foundation Landscaping Specifications and
Standards for foundation screening.
The equipment storage yard may be gravel, provided a waiver
of on-site improvements is requested and approved by the
Planning Director.
The exterior of the building shall be constructed according to the
submitted elevation titled, "VIRGINIA EQUIPMENT &
DE VELOPMENT". The materials shall be a combination of split
face block and seamed metal siding. The building colors shall be
white and blue, according to the material samples submitted.
This Ordinance shall be effective in accordance with Section 107 (/) of the Zoning Ordinance.
Adopted by the Council of the City of Virginia Beach, Virginia, on the Fifth of July, Two Thousand
Voting:
11-0 (By ConsenO
Council Members Voting Aye:
Linwood O. Branch, III, Margaret L. Eure, William W. Harrison, Jr..
Barbara M. Henley, Louis R. Jones, Reba S. McClanan, Robert C.
Mandigo, Jr., Mayor Meyera E. Oberndorf, Nancy K. Parker, Vice Mayor
William D. Sessoms, Jr. and Rosemary Wilson
Council Members Voting Nay:
None
Council Members Absent:
None
July 5, 2000
- 42 -
Item V-N.$.
PLANNING
ITEM # 46868
Upon motion by Vice Mayor Sessoms, seconded by Councilman Jones, City Council ADOPTED Ordinance
upon application of FORTUNE ENTERPRISES, INC., a Virginia Corporation, for a Conditional Use
Permit:
ORDINANCE UPONAPPLICATION OF FORTUNE ENTERPRISE, INC.,
A VIRGINIA CORPORA TION, FORA CONDITIONAL USE PERMITFOR
MOTORCYCLE SALES, RENTAL AND SMALL ENGINE REPAIR
RO 700305 7
BE IT HEREBY ORDAINED BY THE COUNCIL OF THE CITY OF VIRGINIA BEACH, VIRGINIA
Ordinance upon application of Fortune Enterprise, Inc., a Virginia
Corporation,for a Conditional Use Permit for motorcycle sales, rental and
small engine repair on the south side of Holland Road, west of South
Rosemont Road (GPIN #1486-54-1674) Said parcel is located at 3600
Holland Road and contains 30,012.84 square feet. ROSE HALL -
DISTRICT 3.
The following conditions shall be required:
o
All engine or motorcycle repairs will be performed inside the
building.
All handicap parking spaces must be installed in accordance
with the Americans with Disabilities Act (ADA).
The proposed free-standing monument sign must be substantially
similar to the sign depicted on the elevation entitled "Viscorp -
proposed Brick Monument lnterior Lighted Sign "submitted and
on file with the Planning Department.
All landscaping will be installed as depicted on the plan entitled,
"Conceptual Plan for Bestup Cycles", dated 5-27-00 and
prepared by Gallup Surveyors & Engineers, LTD., submitted
and on file with the Planning Department.
The existing trash dumpster shall be enclosed with a minimum six
(6) foot solid fence or wall, with shrubs installed around the
enclosure, where possible, to screen the enclosure from the
adjoining shopping center and properties.
No outside storage or display of parts, materials, merchandise,
equipment or motorcycles shall be permitted on the site.
The garage bay door must be kept closed during any engine or
motorcycle repairs.
This Ordinance shall be effective in accordance with Section 107 09 of the Zoning Ordinance.
Adopted by the Council of the City of Virginia Beach, Virginia, on the Fifth o£Jul¥, Two Thousand
July 5, 2000
Item V-N.$.
- 43 -
PLANNING
ITEM # 46868 (Continued)
Voting:
11-0 (By ConsenO
Council Members Voting Aye:
Linwood O. Branch, III, Margaret L. Eure, William W. Harrison, Jr.,
Barbara M. Henley, Louis R. Jones, Reba S. McClanan, Robert C.
Mandigo, Jr., Mayor Meyera E. Oberndorf, Nancy K. Parker, Vice Mayor
William D. Sessoms, Jr. and Rosemary Wilson
Council Members Voting Nay:
None
Council Members Absent:
None
July 5, 2000
- 44 -
Item V-N. 6.
PLANNING ITEM # 46869
Upon motion by Vice Mayor Sessoms, seconded by Councilman Jones, City Council ADOPTED, with
Revised Conditions, an Ordinance upon Application of of LINDA HAR VIN for a Conditional Use Permit:
ORDINANCE UPON APPLICATION OF LINDA HARVIN FOR A
CONDITIONAL USE PERMIT FOR A HOME OCCUPATION (DAY
CAR~) R07003058
BE IT HEREBY ORDAINED B Y THE COUNCIL OF THE CITY OF VIRGINIA BEACH, VIRGINIA
Ordinance upon application of Linda Harvin for a Conditional Use Permit
for a home occupation (day care) on the north side of Rock Lane Loop,
west of Rippline Rock Drive. Said parcel is located at 1949 Rock Lake
Loop and contains 6, 519 square feet. PRINCESS ANNE - DISTRICT 7.
The following conditions shall be required:
1. This daycare facility shall be limited to a total of 10 children
during a 24 hour day.
2. The hours of operation will be restricted to Monday through
Saturday, 5:30 am to 6:30pm.
Persons employed by the home daycare will be limited to
relatives who also reside in the home and to one (1) non-relative
who does not reside in the home.
4. No signs advertising the home daycare will be permitted on the
premises at any time.
The applicant must maintain a family day home license with the
Commonwealth of Virginia. Failure to maintain a family day
home license will result in revocation of the home occupation
(day care) permit
This Ordinance shall be effective in accordance with Section 107 09 of the Zoning Ordinance.
Adopted by the Council of the City of Virginia Beach, Virginia, on the Thirteenth of June, Two Thousand
Voting:
11-0 (By ConsenO
Council Members Voting Aye:
Linwood O. Branch, III, Margaret L. Eure, William W. Harrison, Jr..
Barbara M. Henley, Louis R. Jones, Reba S. McClanan, Robert C.
Mandigo, Jr., Mayor Meyera E. Oberndorf Nancy K. Parker, Vice Mayor
William D. Sessoms, Jr. and Rosemary Wilson
Council Members Voting Nay:
None
Council Members Absent:
None
July 5, 2000
- 45 -
Item V-N. 7.
PLANNING
ITEM # 468 70
Donavon Bonney, Post Office Box 7027, Phone: 42 7-3602, the applicant, represented himself and advised
he did not believe this application was necessary. A Ford dealership existed on this location in the 1920's
and 1930's. When he established the automotive repair service station in 1965, the building had two
service bays and one wash bay. The last facility operated in this location was a trailer sales and service.
This facility, has throughout the years, been utilized as a car wash. He believed this was a grandfathered
use and the application fees should be returned to him.
Karen Lasley, Zoning Administrator, had determined the automobile repair was grandfathered, but not the
automotive detailing
Upon motion by Council Lady Henley, seconded by Council Lady Parker, City Council DEFERRED UNTIL
CITY COUNCIL MEETING OF JULY 11, 2000, Application of DONAVON E. BONNEY for a
Conditional Use Permit:
Council Lady Henley advised the Virginia Beach Department of Public Health must review and approve the
existing septic sewage disposal system and water supply before the proposed car wash facility (auto
detailing) can operate from this site. Each of the conditions shall be reviewed during the deferral.
ORDINANCE UPON APPLICA TION OF DONA VON E. BONNEY FOR A
CONDITIONAL USE PERMIT FOR AUTOMOTIVE DETAILING
Ordinance upon application of Donavon E. Bonney for a Conditional Use
Permit for automotive detailing at the northeast corner of Princess Anne
Road and Indian River Road (GPIN #2413-02-5633). Said parcel is
located at 1800 Princess Anne Road and contains 22,433 square feet.
PRINCESS ANNE- DISTRICT 7
Voting: 1 O- 0
Council Members Voting Aye:
Linwood O. Branch, III, Margaret L. Eure, William W. Harrison, dr.,
Barbara M. Henley, Louis R. clones, Reba $. McClanan, Robert C.
Mandigo, dr., Mayor Meyera E. Oberndorf, Nancy K. Parker and
Rosemary Wilson
Council Members Voting Nay:
None
Council Members Abstaining:
Vice Mayor William D. Sessoms, dr.
Council Members Absent:
None
Vice Mayor Sessoms ABSTAINED as he has a banking relationship with the applicant
Council Lady Henley DISCLOSED she and her husband lease and operate the property directly across the
street from this property; however, the City Attorney has advised this does not constitute a Conflict of
Interest and she may participate in this deliberation.
duly 5, 2000
- 46-
Item V-N. 8.
PLANNING
ITEM # 468 71
Upon motion by Vice Mayor Sessoms, seconded by Councilman Jones, City Council ADOPTED Ordinances
upon Application of NICHOLAS and VICKI ROSSE, t/a NICHOLAS VICTORIA HAIR STUDIO for a
Conditional Change of Zoning and a Conditional Use Permit:
ORDINANCE UPON APPLICA TIO N OF NICHOLAS AND VICKI R USSO,
t/a NICHOLAS VICTORIA HAIR STUDIO FOR A CHANGE OF ZONING
FROM CONDITIONAL B-1 TO 0-2 Z07001172
BE IT HEREBY ORDAINED BY THE COUNCIL OF THE CITY OF VIRGINIA BEACH, VIRGINIA
Ordinance upon application of Nicholas and Vicki Russo, t/a Nicholas
Victoria Hair Studio for a Change of Zoning District Classification for
Conditional B-! Neighborhood Business District to 0-2 Office District at
the northwest corner of Old Great Neck Road and Kenstock Drive (GPIN:
a portion of #149 7-98-903 7). The proposed zoning classification change
to 0-2 is for office land use. The Comprehensive Plan recommends use of
this parcel for retail, office and other compatible uses within commercial
centers serving surrounding neighborhoods in accordance with other plan
policies. Said parcel is located at 521 Old Great Neck Road and contains
1,008 square feet. BEACH - DISTRICT 6
AND,
ORDINANCE UPON APPLICA TION OF NICHOLAS AND VICKI R USSO,
T/A NICHOLAS VICTORIA HAIR STUDIO FOR A CONDITIONAL USE
PERMIT FOR A HAIR CARE CENTER R07003059
BE IT HEREBY ORDAINED B Y THE COUNCIL OF THE CITY OF VIRGINIA BEACH, VIRGINIA
Ordinance upon application of Nicholas and Vicki Russo, t/a Nicholas
Victoria Hair Studio for a Conditional Use Permit for a hair care center,
including barber shops and beauty parlors at the northwest corner of Old
Great Neck Road and Kenstock Drive (GPIN #1497-98-903 7). Said parcel
is located at 521 Old Great Neck Road and contains 17,000 square feet.
BEACH- DISTRICT 6.
These Ordinances shall be effective in accordance with Section 107 09 of the Zoning Ordinance.
Adopted by the Council of the City of Virginia Beach, Virginia, on the Fifth of July, Two Thousand
Voting:
11-0 (By ConsenO
Council Members Voting Aye:
Linwood O. Branch, III, Margaret L. Eure, William W. Harrison, Jr.,
Barbara M. Henley, Louis R. Jones, Reba S. McClanan, Robert C.
Mandigo, Jr., Mayor Meyera E. Oberndorf, Nancy K. Parker, Vice Mayor
William D. Sessoms, Jr. and Rosemary Wilson
Council Members Voting Nay:
None
Council Members Absent:
None
July 5, 2000
-47-
Item V-N. 9.
PLANNING
ITEM # 468 72
Upon motion by Vice Mayor Sessoms, seconded by Councilman Jones, City Council ADOPTED an
Ordinance upon application of OCEAN BAY HOMES, L.L.C. for a Change of Zoning:
ORDINANCE UPON APPLICATION OF OCEAN BAY HOMES, L.L.C.
FOR A CHANGE OF ZONING DISTRICT CLASSIFICA TION FR OMA- 12
TO R-SS Z07001173
BE IT HEREBY ORDAINED B Y THE COUNCIL OF THE CITY OF VIRGINIA BEACH, VIRGINIA
Ordinance upon application of Ocean Bay Homes, L.L. C. for a Change of
Zoning District Classification from A-12 Apartment District to R-5S
Residential Single Family District on the south side of Virginia Avenue
beginning at a point 533.44feet west of Rudee Avenue (GPIN # 2417-82-
6664). The proposed zoning classification change to R-SS is for single
family land use on lots no less than 5,000 square feet. The Comprehensive
Plan recommends use of this parcel for suburban residential/medium &
high density at densities that are compatible with single family use in
accordance with other Plan policies. The portion of the parcel requested
for the change of zoning contains 8,522 square feet. BEACH- DISTRICT
6.
This Ordinance shall be effective in accordance with Section 107 (/) of the Zoning Ordinance.
Adopted by the Council of the City of Virginia Beach, Virginia, on the Fifth o_f Jul¥, Two Thousand
Voting:
11-0 (By ConsenO
Council Members Voting Aye:
Linwood O. Branch, III, Margaret L. Eure, William W. Harrison, Jr.,
Barbara M. Henley, Louis R. Jones, Reba S. McClanan, Robert C.
Mandigo, Jr., Mayor Meyera E. Oberndorf Nancy K. Parker, Vice Mayor
William D. Sessoms, Jr. and Rosemary Wilson
Council Members Voting Nay:
None
Council Members Absent:
None
July 5, 2000
- 48-
Item V-N. IO.
PLANNING
ITEM # 46873
Upon motion by Vice Mayor Sessoms, seconded by Councilman Jones, City Council ADOPTED an
Ordinance upon application of BEACH BUILDERS, INC. for a Conditional Change of Zoning:
ORDINANCE UPON APPLICATION OF BEACH BUILDERS, INC. FOR
A CHANGE OF ZONING DISTRICT CLASSIFICATION FROM R-75 TO
CONDITIONAL B-iA Z07001174
BE IT HEREBY ORDAINED BY THE COUNCIL OF THE CITY OF VIRGINIA BEACH, VIRGINIA
Ordinance upon application of Beach Builder's Inc., for a Change of
Zoning District Classification from R-7.5 Residential District to
Conditional B-1A Limited Community Business District on certain property
located on the north side of Culver Lane beginning at a point 350feet more
or less east of General Booth Boulevard (GPIN #2415-31-8158). The
proposed zoning classification change to Conditional B-IA is for limited
commercial land use. The Comprehensive Plan recommends use of this
parcel for suburban residential~low densities that are compatible with
single family use in accordance with other Plan policies. However, the
Comprehensive Plan Policy document contains more specific
recommendations for this parcel as part of the General Booth Boulevard
Guidelines. The Policy document recommends that this parcel is suitable
for neighborhood office uses in certain circumstances consistent with the
Plan's policies of improved land use relationships and preservation of
neighborhood character. Said parcel contains13,89! square feet.
PRINCESS ANNE- DISTRICT 7.
The following conditions shall be required:
Agreement encompassing proffers shall be recorded with the
Clerk of the Circuit Court and is hereby made a part of the
record.
This Ordinance shall be effective in accordance with Section 107 69 of the Zoning Ordinance.
Adopted by the Council of the City of Virginia Beach, Virginia, on the Fifth of duly, Two Thousand
Voting:
11-0 (By ConsenO
Council Members Voting Aye:
Linwood O. Branch, III, Margaret L. Eure, William W. Harrison, Jr.,
Barbara M. Henley, Louis R. Jones, Reba S. McClanan, Robert C.
Mandigo, Jr., Mayor Meyera E. Oberndorf, Nancy K. Parker, Vice Mayor
William D. Sessoms, Jr. and Rosemary Wilson
Council Members Voting Nay:
None
Council Members Absent:
None
July 5, 2000
,. P.S.
City- o£ ¥i~-~ir~ia F~c_.ach
INTER-OFFICE CORRESPONDENCE
In Reply Refer To Our File No. DF-5167 -
DATE: June 14, 2000
TO:
FROM'
Leslie L. Lilley
William M. Macali ~k/"
Conditional Zoning Application
Beach Builders, Inc.
DEPT: City Attorney
DEPT: City Attorney
The above-referenced revised conditional zoning application is scheduled to be heard
by the City Council on July 5, 2000. I have reviewed the subject proffer agreement, dated
March 15, 2000, and have determined it to be legally sufficient and in proper legal form. A
copy of the agreement is attached.
Please feel free to call me if you have any questions or wish to discuss this matter
further.
WMM
Enclosure
AGREEM-F. NT
THIS AGREEMENT, made this, 15th day March, 2000 by and between, Beach
Builders, Inc., the contract purchaser of a certain parcel of property located at 1825 Culver
Quay, Virginia Beach, Virginia, and James Bryan Teabout owner of a certain parcel of
property located at 1825 Culver Quay, Virginia Beach, Virginia, which property is more fully
described on Exhibit A attached hereto: (hereinai~er referred to as "Grantors"): and the,
CITY OF VIRGINIA BEACH, a municipal corporation of the Commonwealth of Virginia
(hereinaRer referred to as "Grantee").
WITNESSETH:
WHEREAS, the Grantors have initiated an amendment to the Zoning Map of the City
of Virginia Beach, Virginia, by petition addressed to the Grantee, so as to change the
classification from R-7.5 to O-1 Conditional on certain property which contains a total of
0.31 acres, more or less, located in the Princess Anne District of the City of Virginia Beach,
Virginia, more particularly described in the attached Exhibit A (hereinai~er the "Property");
and
WHEREAS, the Grantee's policy is to provide only for the orderly development of
land for various purposes, including mixed use purposes, through zoning and other land
development legislation; and
WHEREAS, the Grantors acknowledge that the competing and sometimes
incompatible uses conflict, and that in order to permit differing uses on and in the area of the
subject Property and at the same time to recognize the effects of the change and the need for
various types of uses, certain reasonable conditions governing the use of the Property for the
protection of the community that are not generally applicable to land similarly zoned O-1 are
needed to cope with the situation to which the Grantors' rezoning application gives rise; and
WHEREAS, the Grantors have voluntarily proffered in writing in advance of and
prior to he public hearing before the Grantee. as part of the proposed conditional amendment
to the Zoning Map, in addition to the regulations provided for in the existing O-1 zoning
district by the existing City's Zoning Ordinance (C~O), the following reasonable conditions
related to the, physical development, operation and use of the Property to be adopted as a part
of said amendment to the new Zoning Map relative to the Property, all of which have a
reasonable, relation to the rezoning and the need for which is generated by the rezoning; and
Prepared by James C. Pebworth
401 Atlantic Avenue, Apt 806
. Virginia Beach, VA 23451
WHEREAS, said conditions having been proffered by the Grantors and allowed and
accepted by the Grantee as part of the amendment to the Zoning Ordinance, such conditions
shall continue in full force and effect until a subsequent amendment changes the zoning on
the Property covered by such conditions; provided, however, that such conditions shall
continue despite a subsequent amendment if the subsequent amendment is part of the
comprehensive implementation of a new or substantially revised zoning ordinance, unless,
notwithstanding the foregoing, these conditions are amended or varied by written instrument
recorded in the Clerk's Office of the Circuit Court of the City of Virginia Beach, Virginia and
executed by the record owner of the subject Property at the time of recordation of such
instrument; provided, further, that said instrument is consented to by the Grantee in writing,
as evidenced by a certified copy of ordinance or resolution adopted by the governing body
of the Grantee, after a public hearing before the Grantee advertised pursuant to the provisions
of the Code of Virginia, Section 15.22204, which said ordinance or resolution shall be
recorded along with said instrument as conclusive evidence of such consent.
NOW THEREFORE, the Grantors, for themselves, their successors, assigns,
grantees, and other successors in title or interest, voluntarily and without any requirement by
or exaction from the Grantee or its governing body and without any element of compulsion
of quid pro quo for zoning, rezoning, site plan, building permit or subdivision approval,
hereby make the following declaration of conditions and restrictions which shall restrict and
govern the physical development, operation and use of the Property and hereby covenant and
agree that these Proffers shall constitute covenants running, with the said Property, which
shall be binding upon the Property and upon all parties and persons claiming under or
through the Grantors, their heirs, personal representatives, assigns, grantees and other
successors in interest or title, namely:
1. Construction of any structure on the Property shall substantially conform to those
shown on that certain rendered building, elevation titled Pebworth Office Building dated
March 12, 2000 as was exhibited to the City Council and is on file at the Planning
Department.
2. The development of the Property shall substantially conform to that certain site
plan of January 14, 2000, titled: Rezoning and preliminary subdivision of Lot ! 1, Culver
Woods - Virginia Beach, Virginia," prepared by John E. Sirine and Associates LTD., Civil
Engineering-Land Surveying, which site plan was exhibited to the City Council and is on file
at the Planning Department. ,,
3. Further conditions may be required by the Grantee during detailed Site Plan and/or
subdivision review and administration of applicable City Codes by all cognizant City
agencies and departments to meet all applicable City Code requirements.
2
4. Use of this property shall be restricted and limited to:
A. Business offices of advertising, real estate or insurance.
B. Finance agency offices, banks.
Ce
Medical, optical and dental offices and clinics; legal, engineering,
architectural and similar professional offices, accounting, auditing and
bookkeeping service offices.
All references hereinabove to zoning districts and to regulations applicable thereto,
refer to the City Zoning Ordinance of the City of Virginia Beach, Virginia, in force as of the
date the conditional zoning amendment is approved by the Grantee.
The Grantors covenant and agree that (1) the Zoning Administrator of the City of
Virginia Beach, Virginia shall be vested with all necessary authority on behalf of the
governing body of the City of Virginia Beach, Virginia to administer and enforce the
foregoing conditions, including (I) the ordering in writing of the remedying of any
noncompliance with such conditions, and (ii) the bringing of legal action or suit to ensure
compliance with such conditions, including mandatory or prohibitory injunction, abatement,
damages or other appropriate action, suit or proceedings; (2) the failure to meet all conditions
shall constitute cause to deny the issuance of any of the required building or occupancy,
permits as may be appropriate, (3) if aggrieved by any decision of the Zoning Administrator
made pursuant t° the provisions of the City Code, the CZO or this Agreement, the Grantors
shall petition the governing body for the review thereof prior to instituting proceedings in
court, and (4) the Zoning Map show by an appropriate symbol on the map the existence of
conditions attaching to the zoning of the subject Property on the map and that the ordinance
and the conditions may be made readily available and accessible for public inspection in the
office of the Zoning Administrator and in the Planning Department and that they shall be
recorded in the Clerk's Office of the Circuit Court of the City of Virginia Beach, Virginia and
indexed in the name of the Grantors and Grantee.
BEACH BUILDERS/IN
Name: Dona M. Pebworth
Title: President
COMMONWEALTH OF VIRGINIA
CITY OF VIRGINIA BEACH, to-wit:
The foregoing instrument was acknowledged before me this 3 [ day of
/~cl~ ,2000, on behalf of Beach Builders, Inc., by Dona M. Pebworth, its
President.
Notary Public
My Commission Expires:
GRANTOR:
By: .//~, ---- ~.~
~mes Bryan Teabout
COMMONWEALTH OF VIRGINIA
CITY OF VIRGINIA BEACH, to-wit:
The foregoing instrument was acknowledged before me this3.P_~ktay of
,2000, by James Bryan Teabout.
Notary Public
My Commission Expires: ltV-
4
EXHIBIT A- LEGAL DESCRIPTION
ALL THAT certain lot, piece or parcel of land, with the buildings and improvements thereon,
lying situate and being in the City of Virginia Beach, Virginia, and being known, numbered
and designated as Lot 11, as shown on that certain plat entitled, "Subdivision of CULVER
WOODS, (D.B. 3567 Pg. 699) (M.B. 23 P.83) Princess Anne Borough - Virginia Beach -
Virginia, Scale: 1" = 30', dated May 20, 1996, which is said plat is duly recorded in the
Clerk's Office of the Circuit of the City of Virginia Beach, Virginia, in Map Book 256, at
pages 29, 30, and 31.
It being the same property conveyed to JAM]ES B. TEABOUT by deed from Beach Builders,
Inc., a Virginia corporation, dated January 27, 1999 and recorded January 29, 1999 in Deed
Book at page 1283.
- 49-
Item V-N. 11.
PLANNING
ITEM # 468 74
Upon motion by Vice Mayor Sessoms, seconded by Councilman Jones, City Council ADOPTED an
Ordinance upon application of the CITY for a Change of Zoning:
ORDINANCE UPON APPLICATION OF THE CITY OF VIRGINIA
BEACH, VIRGINIA FOR A CHANGE OF ZONING DISTRICT
CLASSIFICATION FROM AG-1 AND AG-2 TO 0-2 Z07001175
BE IT HEREBY ORDAINED B Y THE COUNCIL OF THE CITY OF VIRGINIA BEACH, VIRGINIA
Ordinance upon application of the City of Virginia Beach, Virginia, for a
Change of Zoning District Classification from A G- I and A G-2 Agricultural
District to 0-2 Office District on certain property located at the west
corner of the intersection of James Madison Boulevard and George Mason
Drive (GPIN #1494-61-6856). The proposed zoning classification change
to 0-2 is for office land use. This site is located within the Transition Area.
As such, the Comprehensive Plan recommends use of this parcel for
appropriate growth opportunities consistent with the economic vitality
policies of Virginia Beach. The Princess Anne Corridor Concept Plan
specifically notes that this site and the adjacent site to the west are to be
used for public purposes. PRINCESS ANNE - DISTRICT 7
This Ordinance shall be effective in accordance with Section 107 09 of the Zoning Ordinance.
Adopted by the Council of the City of Virginia Beach, Virginia, on the Fifth o£Jul¥, Two Thousand
Voting:
11-0 (By ConsenO
Council Members Voting Aye:
Linwood O. Branch, III, Margaret L. Eure, William W Harrison, Jr.,
Barbara M. Henley, Louis R. Jones, Reba S. McClanan, Robert C.
Mandigo, Jr., Mayor Meyera E. Oberndorf, Nancy K. Parker, Vice Mayor
William D. Sessoms, Jr. and Rosemary Wilson
Council Members Voting Nay:
None
Council Members Absent:
None
July 5, 2000
- 50-
Item V-O. 1.
APPOINTMENTS
ITEM # 468 75
BY CONSENSUS, City Council RESCHEDULED:
COMMUNITY SER VICES BOARD
HAMPTON ROADS PLANNING DISTRICT COMMISSION
HAMPTON ROADS TRANSPOR TA TION DISTRICT COMMISSION
REVIEW AND ALLOCATION COMMITTEE (COIG)
VIRGINIA BEA CH HEAL TH SER VICES AD VISOR Y BOARD
July 5, 20o0
- 51 -
ITEM # 46876
Mayor Oberndorf entertained a motion to permit City Council to conduct its CLOSED SESSION, pursuant
to Section 2.1-344(A), Code of Virginia, as amended, for the following purpose:
PERSONNEL MATTERS: Discussion, consideration or interviews of
prospective candidates for employment, assignment, appointment,
promotion, performance, demotion, salaries, disciplining, or resignation
of specific public officers, appointees, or employees pursuant to Section
2.1-344 (A) (1).
Boards and Commissions:
Community Services Board
Hampton Roads Planning District Commission
Review and Allocation Committee
Virginia Beach Health Services Advisory Board
PUBLICLY-HELD PROPERTY: Discussion or consideration of the
acquisition of real property for a public purpose, or of the disposition of
publicly-held real property, where discussion in an open meeting would
adversely affect the bargaining position or negotiating strategy of the
public body pursuant to Section 2.1-344(A)(3).
To- Wit Acquisition of Property - Stumpy Lake
LEGAL MA TTERS: Consultation with legal counsel or briefings by staff
members, consultants, or attorneys pertaining to actual or probable
litigation, where such consultation or briefing in open meetings would
adversely affect the negotiating or litigating position of the public body and
consultation with legal counsel employed or retained by a public body
regarding specific matters requiring the provision of legal advice by such
counsel pursuant to Section 2.1-344(A)(7).
Acquisition of Property- Stumpy Lake
Upon motion by Vice Mayor Sessoms, seconded by Council Lady Eure, City Council voted toproceed into
CLOSED SESSION at 2:50 P.M.
Voting: I 1-0
Council Members Voting Aye:
Linwood O. Branch, III, Margaret L. Eure, William W Harrison, .Ir.,
Barbara M. Henley, Louis R. Jones, Reba S. McClanan, Robert C.
Mandigo, Jr., Mayor Meyera E. Oberndorf, Nancy K. Parker, Vice Mayor
William D. Sessoms, Jr. and Rosemary Wilson
Council Members Voting Nay:
None
Council Members Absent:
None
(Time of Closed Session: 2:50 to 4:07 P.M.)
.Iuly 5, 2000
- 52 -
CER TIFICA TION 0 F
CLOSED SESSION
ITEM # 468 77
Upon motion by Councilman Harrison, seconded by Councilman Branch, City Council CERTIFIED THE
CLOSED SESSION TO BE IN ACCORDANCE WITH THE MOTION TO RECESS.
Only public business matters lawfully exempted from Open Meeting
requirements by Virginia law were discussed in Closed Session to which
this certification resolution applies;
AND,
Only such public business matters as were identified in the motion
convening the Closed Session were heard, discussed or considered by
Virginia Beach City Council.
Voting: 11-0
Council Members Voting Aye:
Linwood O. Branch, III, Margaret L. Eure, William W Harrison, Jr.,
Barbara M. Henley, Louis R. Jones, Reba S. McClanan, Robert C.
Mandigo, Jr., Mayor Meyera E. Oberndorf, Nancy K. Parker, Vice Mayor
William D. Sessoms, Jr. and Rosemary Wilson
Council Members Voting Nay:
None
Council Members Absent:
None
July 2000
CERTIFICATION OF CLOSED SESSION
VIRGINIA BEACH CITY COUNCIL
WHEREAS: The Virginia Beach City Council convened into CLOSED SESSION,
pursuant to the affirmative vote recorded in ITEM # 46876, Page 51, and in accordance with the
provisions of The Virginia Freedom of Information Act; and,
WHEREAS: Section 2.1-344. of the Code of Virginia requires a certification by the
governing body that such Closed Session was conducted in conformity with Virginia law.
NOW, THEREFORE, BE IT RESOLVED: That the Virginia Beach City Council hereby
certifies that, to the best of each member's knowledge, (a) only public business matters lawfully
exempted from Open Meeting requirements by Virginia law were discussed in Closed Session to
which this certification resolution applies; and, (b) only such public business matters as were
identified in the motion convening this Closed Session were heard, discussed or considered by
Virginia Beach City Council.
K~uth Hodges Smith, MMC
City Clerk
July 5, 2000
Item V-R. 1.
- 53 -
AD JO URNMENT
ITEM # 468 78
Mayor Meyera E. Oberndorf DECLARED the City Council Meeting ADJOURNED at 4:09 P.M.
Beverly O. Hooks, CMC
Chief Deputy City Clerk
City Cleric
Meyera E. Oberndorf
Mayor
City of Virginia Beach
Virginia
2000
City of Virginia
OFFICE OF THE CITY MANAGER
(757) 427-4242
FAX (757) 427-4135
TDO 1757) 427-4305
July 7, 2000
MUNICIPAL CENTER
VIRGINIA BEACH, VIRGINIA 23456-9001
Honorable Mayor and
Members of City Council
RE: Ocean Park and Chesapeake Beaches
Dear Mayor and Members of City Council:
The following is provided in response to Council Member Jones' July 5 request for an
update on beach replenishment activities for Ocean Park and Chesapeake Beaches.
As you may recall, Ocean Park Beach, from Lynnhaven Inlet to the west side of Aries on
the Bay, is a public beach and has been replenished on three occasions in recent years. Two of the
replenishments were accomplished in conjunction with the federal dredging project at Lynnhaven
Inlet. The other replenishment was a City funded project which took advantage of the 'sand of
opportunity' generated from the lake excavations during the construction of the Bayville Farms
golf course.
Lynnhaven Inlet is scheduled to be dredged this coming winter. Given that the resort
beach is to undergo a major beach restoration project as the final phase of the Beach Erosion
Control and Hurricane Protection project, thereby eliminating the need to store the inlet's dredged
sand on the Lynnhaven Inlet Sand Stockpile for use at the resort beach, we intend to place all of
the dredged sand on Ocean Park Bea,ch during this inlet maintenance cycle.
There is, however, a concern related to the continuance of the federal program of
maintenance at Lynnhaven Inlet; an issue larger than the replenishment of Ocean Park Beach.
You may recall my report that the President's proposed budget for FY 2001 failed to include the
scheduled dredging for Lynnhaven Inlet. We believe this is a result of the Administration's stated
goal. of eliminating Small Craft Navigation Projects as a federal program. With the Mayor's
assistance, we have urged our Congressional Delegation to seek the required funding for
Lynnhaven Inlet. Unfortunately, the House mark-up of the Energy and Water Appropriations Bill
failed to include Lynnhaven Inlet. It is hoped that the Senate Energy and Water Appropriations
Subcommittee will add the project to their bill, prompting its inclusion in the conferenced bill.
Failing this, our last hope would be that the Corps of Engineers would be successful in
reprogramming funding within the navigation budget for this project.
Honorable Mayor and
Members of City Council
July 7, 2000
Page 2
Given Lynnhaven Inlet's critical role as the home port for both the Norfolk Harbor and
Baltimore Channel Pilots, and given the large number of commercial fisherman who utilize the
Lynnhaven as a home port, the merits of federal participation are rock solid. In addition to the
Mayor' s request to our delegation, Council Member Branch, accompanied by Bob Matthais and
Phill Koehrs, met with the staff of the Senate Energy and Water Appropriations Subcommittee to
plead for inclusion of the project in their bill. Their request appeared to be well received. The
Senate should complete their mark-up of the appropriations bill by the end of July. Final action
on the appropriations bill should occur before the end of September, I will be able update you
then on the fate of the inlet maintenance program.
Please be aware that we are not prepared at this time to accept Lynnhaven Inlet
maintenance dredging as a fully City funded project. Given the 35-year history of federal
management of the inlet, we have not programmed full City funding of this project, nor do we
possess the required environmental permits for the activity. The inlet is in need of maintenance
dredging this year. If the Corps of Engineers is not able to perform, it may be necessary to
consider accepting the inlet in our waterway program, at least on an interim basis. This would
require consideration of a mid-year appropriation to the CIP of nearly $1 million.
As to Chesapeake Beach, you may recall that the majority of the bayfront property owners
assert ownership of the beach, thereby precluding a public beach replenishment program. Staff
has been working with the bayfront owners, seeking voluntary dedication of a public recreation
and construction easement. To date, approximately one-third of these owners have stated varying
degrees of willingness to dedicate. However, the majority of the owners have rejected the notion.
Chesapeake Beach is in dire need of replenishment. Long term erosion has severely damaged
most of this beach: property damage from storm attack is steadily on the rise and a valuable
recreational resource has been depleted.
Staff will continue to work with these owners, as they are with the bayfront property
owners at Cape Henry (Lynnhaven) Beach for similar dedications. However success may require
the influence of City Council. You may wish to consider referring this issue to the newly formed
Beaches and Waterway Commission for public dialogue and the development of recommendations
for a more formal course of action.
· Sincerely, /ff.
,..//City Manager
CCi
Leslie L. Lilley
C. Oral Lambert, Jr.
E. Dean Block
DEPARTMENT OF PLANNING
DEVELOPMENT SERVICES CENTER
(757) 427-4621
(757) 426-5789 FAX
July 7, 2000
City of Virginia Beach
MUNICIPAL CENTER
BUILDING 2
2405 COURTtIOUSE DRIVE
VIRGINIA BEACtl, VIRGINIA 23456-9040
Mayor Oberndorf
Members of Council
RE: Responses to Questions Asked at July 5, 2000 Informal Meeting
Dear Madam Mayor and Members of Council:
The following answers are provided in response to the questions asked during your July 5, 2000
informal briefing on the Red Mill Commons area.
How many parking spaces are shown on the Home Depot site plan? There are 562 ~paces
required and 621 spaces provided Oncluding 12 handicapped spaces).
Are there any walkways or extra amenities shown on the Red Mill Commons or Home Depot
site plans? There is extra landscaping (above the minimum requiremenO shown on the sites.
There are no wallcways or seating areas shown and labeled on the plan at this time. I met
with Mrs. Reasor and Mr. Anderson and discussed their plans for the shopping center. They
shared the most recent architectural renderings of the Wal-Mart and adjacent shops. These
preliminary drawings are very impressive. The shopping center is being designed on a
village theme and the developers indicated that they are following the new guidelines for
commercial developments. They said that there would be seating or common areas as the
buildings and tenants are finalized With each lease, minor plan adjustments are being made
to satisfy the tenant's needs. The developers are basically staying with their original
proposal. In att effort to keep the quality of the development high, the developers have
worked with Home Depot to upgrade the exterior of the Home Depot building and fencing.
These upgrades will be paid for by the developer, Mrs. Reasor and Mr. Anderson, of Red
Mill Commons (the Wal-Mart site).
Where is the stormwater management facility located? The stormwater runoff from the
commercial acreage was included in the Red Mill residential subdivision stormwater
Responses to Questions Asked at July 5, 2000 Informal Meeting
July 7, 2000
Page 2
management system design. The facility to be used is located to the north of Ferrell Parkway
and east of Upton Drive. The facility (lake) was previously a borrow pit.
Is the height of the landscape berm measured from the street or the parking lot? The
inspection of landscape berms is handled by the Permits and Inspections staff. The
inspectors determine the height of the berm by comparing the elevations of the base of the
berm and the top of the berm. If the berm area is not level or flat, the highest base elevation
(toe of the slope of the berm) will be compared to the elevation of the top of the berm.
Is the landscaping provided along Princess Anne Road greater than the minimum code
requirement? This area meets the minimum requirements and possibly a little more. The
design does, however, use a variety of landscape materials instead of only one type of shrub
and tree.
Street Front Landscaping
In addition to the information provided during the presentation on July 5, 2000, the following
information is offered to give you a better understanding of the landscaping along the four streets
bordering this development.
Newstead Drive
The Home Depot site is heavily landscaped with a three (3) to four (4) foot high berm along
Newstead Drive. There are eleven (11) different varieties of plant material used on and around the
berm. The area set aside for the landscaping between the parking lot curb and the right-of-way line
varies fi.om thirty (30) to sixty-three (63) feet with an additional ten (10) feet of open right-of-way
to the curb of Newstead Drive.
The Red Mill Commons site plan shows a thirty (30) to forty-five (45) foot landscape area between
the Newstead Drive right-of-way and the parking lot curb. An additional ten (10) feet of open right-
of-way also exists to the curb of Newstead Drive. The landscape material provided on the one (1)
to three (3) foot high berm will be Southern Wax Myrtle and Leyland Cypress. These plantings
should provide a thick buffer between the commercial site and the residential houses on the west side
of Newstead Drive.
Ferrell Parkway, Upton Drive and Elson Green Avenue
The Red Mill Commons site plan identifies a one (1) to two (2) foot berm within a thirteen (13) foot
area located on the site along Ferrell Parkway, most of Upton Drive and a portion of Elson Green
Avenue. There is an additional ten (10) feet of open area between the property line and the edge of
the sidewalk. There is a section of Upton Drive that will use Southern Wax Myrtle and Leyland
Cypress to screen the rear of one of the buildings. The landscape area between the right-of-way and
the parking lot curb along Elson Green Avenue, past the comer out parcel, increases to a width of
thirty (30) to fffiy (50) feet. A combination of Bloodgood London Planetrees and Compact Japanese
Hollies will be used along the three roadways, except for the limited use of Wax Myrtle and Cypress
for screening.
Responses to Questions Asked at July 5, 2000 Informal Meeting
July 7, 2000
Page 3
The Home Depot site plan reflects a ten (10) foot wide landscaping area along Elson Green Avenue,
which widens to fit~y (50) feet at its intersection with Princess Anne Road. The design meets the
minimum standard requirement for trees and shrubs. The designer did, however, use a variety of
plant materials.
Princess Anne Road
The Home Depot site plan calls for a ten (10) foot wide landscaping area along the parking lot as
shown on Elson Green Avenue. There is a variable width open area between the landscaping and the
edge of the pavement in Princess Anne Road.
Hopefully, I have answered your questions. Should you need additional information please do
hesitate in calling either Barbara Duke, the project manager for these projects (427-4901), or me
(427-4900). I will be out of the office until July 24, 2000.
Sincerely,
Charles G. Hassen
Development Services Coordinator
CGH:bcg
C~
James K. Spore
Steven T. Thompson
Robert J. Scott
John Herzke
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Virginia Beach,,
Virginia
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
June 30, 1999
A Certificate of Achievement for Excellence in Financial
Reporting is presented by the Government Finance Officers
Association of the United States and Canada to
government units and public employee retirement
systems whose comprehensive annual financial
reports (CAFRs) achieve the highest
standards in government accounting
and financial reporting.
President
Executive Director
PRELIMINARY OFFICIAL STATEMENT DATED
NEW ISSUE
BOOK-ENTRY ONLY
,2000
Ratings: Fitch:
Moody's:
Standard & Poor's
(See "Ratings" herein)
In the opinion of Bond Counsel, under existing law and subject to conditions described in the section herein
"Tax Exemption," interest on the Series 2000 Bonds (1) will not be included in gross income for Federal income tax
purposes, (2) will not be an item of tax preference for purposes of the Federal altemative minimum income tax
imposed on individuals and corporations and (3) will be exempt from income taxation by the Commonwealth of
Virginia. Such interest may be included in the calculation of a corporation's alternative minimum income tax, and a
holder may be subject to other Federal tax consequences as described in the section herein "Tax Exemption."
$40,000,000
City of Virginia Beach, Virginia
Water and Sewer System Revenue Bonds
Series of 2000
Dated: July 15, 2000 Due: August 1, as shown on the inside cover
The Series 2000 Bonds will be issued in denominations of $5,000 and multiples thereof, in registered form,
registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York
("DTC"), which will act as securities depository for the Series 2000 Bonds. Individual purchases of beneficial
ownership interest in the Series 2000 Bonds will be made in book-entry form only and individual purchasers will not
receive physical delivery of bond certificates. The Series 2000 Bonds will bear interest from their date, payable
semi-annually on each February 1 and August 1, commencing February 1, 2001. So long as DTC or its nominee is
the registered owner of the Series 2000 Bonds, payments of principal of and interest on the Series 2000 Bonds will
be made to Cede & Co., as nominee for DTC, for disbursement to DTC participants, to be disbursed subsequently
to the beneficial owners of the Series 2000 Bonds.
THE SERIES 2000 BONDS WILL CONSTITUTE LIMITED OBLIGATIONS OF THE CITY OF VIRGINIA
BEACH, VIRGINIA, PAYABLE SOLELY FROM REVENUES OF ITS WATER AND SEWER SYSTEM, SUBJECT
TO THE PRIOR APPLICATION THEREOF TO THE PAYMENT OF OPERATING EXPENSES, AND RESERVES
PROVED IN THE RESOLUTION (AS DEFINED HEREIN). THE SERIES 2000 BONDS SHALL NOT BE
DEEMED TO CONSTITUTE INDEBTEDNESS OF, OR A PLEDGE OF THE FAITH AND CREDIT OF, THE
COMMONWEALTH OF VIRGINIA OR OF ANY COUNTY, CITY, TOWN OR OTHER POLITICAL SUBDIVISION
OF THE COMMONWEALTH, INCLUDING THE CITY. THE ISSUANCE OF THE SERIES 2000 BONDS DO NOT
DIRECTLY, INDIRECTLY OR CONTINGENTLY OBLIGATE THE COMMONWEALTH OR ANY OTHER
POLITICAL SUBDIVISION OF THE COMMONWEALTH, INCLUDING THE CITY, TO LEVY AND COLLECT ANY
TAXES WHATSOEVER OR MAKE ANY APPROPRIATION THEREFOR EXCEPT FROM THE PLEDGED
REVENUES TO THE PAYMENT OF THE PRINCIPAL OF AND PREMIUM, IF ANY, AND INTEREST ON THE
SERIES 2000 BONDS.
The Series 2000 Bonds are subject to redemption prior to maturity at the option of the City as more fully set
forth herein.
This cover page contains certain information for quick reference only. It is not a summary of this issue. Investors must read the entire
Official Statement to obtain information essential to the making of an informed investment decision.
The Sedes 2000 Bonds are offered when, as and if issued by the City of Virginia Beach, Virginia, subject to approval of their validity
by Hunton & Williams, Richmond, Virginia, Bond Counsel, as described herein, and cerlain other conditions. Certain matters will be passed
upon for the City by the City Attorney Leslie L. Lilley, Esquire. It is expected that delivery of the Sedes 2000 Bonds will be made through the
facilities of The Depository Trust Company, New York, New York, on or about August 9, 2000.
Official Statement Dated
,2000
$40,000,000
City of Virginia Beach, Virginia
Water and Sewer System Revenue Bonds
Series of 2000
Year
MATURITIES, AMOUNTS, INTEREST RATES AND YIELDS
$, Serial Bonds
Principal Interest Price/ Principal
Amount Rate Yield Year Amount
Interest
Rate
Price/
Yield
$
$
__% Term Bonds due August 1, , priced at % to yield
__ % Term Bonds due August 1, ~, priced at % to yield
(plus accrued interest on the Series 2000 Bonds from their dated date)
%
%
CiTY OF VIRGINIA BEACH
THE CITY COUNCIL
Meyera E. Oberndorf, Mayor
William D. Sessoms, Jr., Vice Mayor
Linwood O. Branch, III
Margaret L. Eure
William W. Harrison, Jr.
Barbara M. Henley
Louis R. Jones
Robert C. Mandigo, Jr.
Reba S. McClanan
Nancy K. Parker
Rosemary Wilson
CERTAIN CITY OFFICIALS
James K. Spore, City Manager
Leslie L. Lilley, City Attorney
Ruth Hodges Smith, City Clerk
Steven T. Thompson, Chief Financial Officer
Patricia A. Phillips, Director of Finance
Clarence O. Warnstaff, Director of Public Uti#ties
John T. Atkinson, City Treasurer
BONDCOUNSEL
Hunton & Williams
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, VA 23219
FINANCIAL ADVISORS
Government Finance Group
1601 N. Kent Street, Suite 800
Arlington, VA 22209
Government Finance Associates, Inc.
63 Wall Street, 16th Floor
New York, NY 10005
The Official Statement does not constitute an offer to sell or the solicitation of an offer to buy the
Series 2000 Bonds in any jurisdiction to any person to whom it is unlawful to make such offer in such
jurisdiction. No dealer, salesperson or any other person has been authorized to give any information or make
any representation, other than those contained herein, in connection with the offering of the Series 2000
Bonds, and if given or made, such information or representation must not be relied upon.
The information set forth herein has been obtained from the City and other sources which are
believed to be reliable, but such information is not guaranteed as to accuracy or completeness and is not to
be construed as a representation by any of such sources as to information provided by any other source.
The information and expressions of opinion herein are subject to change without notice, and neither the
delivery of this Official Statement nor any sale made hereunder shall under any circumstances create any
implication that there has been no change in affairs of the City or in any other matters described herein since
the date hereof or, as in the case of certain information incorporated herein by reference to certain publicly
· available documents, since the date of such documents.
TABLE OF CONTENTS
SECTION ONE: INTRODUCTION ................... 1
The Issuer ............................................. 1
The System ........................................... 1
The Series 2000 Bonds ........................ 1
Security for the Series 2000 Bonds ...... 2
Use of Proceeds ................................... 2
Redemption ........................................... 2
Tax Exemption ...................................... 2
Bond Counsel ....................................... 2
Consulting Engineers ............................ 3
Financial Advisors ................................. 3
Auditors ................................................. 3
Fiscal Agent .......................................... 3
Registrar ............................................... 3
Ratings .................................................. 3
Delivery ................................................. 3
Official Statement .................................. 4
Continuing Disclosure ........................... 4
Additional Information ........................... 4
SECTION TWO: THE SERIES 2000
BONDS ................................................. 5
AUTHORIZATION AND PURPOSE
OF THE SERIES 2000 BONDS ............ 5
Sources and Uses of Funds ................. 5
DESCRIPTION OF THE SERIES
2000 BONDS ........................................ 5
General ................................................. 5
Redemption ........................................... 6
Manner of Redemption ......................... 6
Notice of Redemption ........................... 6
Book-Entry System ............................... 7
SECURITY FOR AND SOURCES
OF PAYMENT OF THE SERIES
2000 BONDS ........................................ 7
General ................................................. 7
Revenue Covenant ............................... 8
Debt Service Reserve Fund .................. 8
Rate Regulation ..................................... 9
BONDHOLDERS REMEDIES IN
THE EVENT OF DEFAULT ................... 9
ADDITIONAL SERIES OF BONDS ........... 10
AMENDMENTS TO RESOLUTION ........... 10
SUMMARY OF FINANCIAL
FEASIBILITY STUDY .......................... 10
SECTION THREE: THE WATER AND
SEWER SYSTEM ................................12
DEPARTMENT OF PUBLIC
UTILITIES ............................................ 12
THE WATER DISTRIBUTION
SYSTEM .............................................. 12
WATER SALES AND SERVICES
CONTRACTS ...................................... 15
THE SANITARY SEWER SYSTEM ........... 15
RATES AND BILLINGS ............................. 16
Rate History ......................................... 16
Typical Water and Sewer Bills ............. 17
Water Resource Recovery Fees ......... 17
SECTION FOUR: THE WATER AND
SEWER SYSTEM ................................20
INDEBTEDNESS AND CAPITAL
IMPROVEMENT PROGRAM .............. 20
DEBT INFORMATION ............................... 20
Water and Sewer Debt ........................20
Debt History ......................................... 23
WATER AND SEWER CAPITAL
IMPROVEMENT PROGRAM .............. 23
The Lake Gaston Project ........................... 24
Background ......................................... 24
Lake Gaston Financing Plan ............... 25
Current Operations .............................. 26
FERC Relicensing Process for Lake
Gaston ................................................. 26
SECTION FIVE: FINANCIAL
INFORMATION -. ............................... 28
WATER AND SEWER FUND .......................... 28
Operating Results--Water and Sewer
System ................................................ 28
Asset Evaluation ................................. 30
SECTION SlX: MISCELLANEOUS ................. 32
LEGAL MATTERS ..................................... 32
TAX EXEMPTION ..................................... 32
Opinion of Bond Counsel ....................32
Original Issue Discount ....................... 32
Other Tax Matters ............................... 33
RATINGS .................................................. 33
LITIGATION .............................................. 34
General Fund ...................................... 34
Water and Sewer Enterprise Fund ..... 34
COMMITMENTS AND
CONTINGENCIES .............................. 34
CERTIFICATES OF CITY
OFFICIALS ......................................... 34
SALE AT COMPETITIVE BIDDING .......... 35
CONTINUING DISCLOSURE ................... 35
APPROVAL OF OFFICIAL
STATEMENT ...................................... 36
APPENDIX A - CERTAIN INFORMATION
CONCERNING THE CITY OF VIRGINIA
BEACH, VIRGINIA .......................................... A-1
APPENDIX B - FINANCIAL FEASIBILITY
STUDY ............................................................ B-1
APPENDIX C - AUDITED FINANCIAL
STATEMENTS OF THE WATER AND
SEWER ENTERPRISE FUND FOR THE
FISCAL YEARS ENDED JUNE 30, 1998
AND 1999 ....................................................... C-1
APPENDIX D - INFORMATION
REGARDING THE DEPOSITORY TRUST
COMPANY AND ITS BOOK-ENTRY
SYSTEM ......................................................... D-1
APPENDIX E - SUMMARY OF
RESOLUTION ................................................ E-1
APPENDIX F - FORM OF BOND
COUNSEL OPINION ...................................... F-1
APPENDIX G - FORM OF CONTINUING
DISCLOSURE AGREEMENT ........................ G-1
APPENDIX H - OFFICIAL NOTICE OF
SALE ............................................................... H-1
SECTION ONE: INTRODUCTION
The purpose of this Official Statement, including the cover page and Appendices hereto, is to furnish
information in connection with the sale by the City of Virginia Beach, Virginia (the "City" or '¥irginia Beach"),
of its $40,000,000 Water and Sewer System Revenue Bonds, Series of 2000 (the "Series 2000 Bonds"),
dated July 15, 2000. This information speaks as of its date and is not intended to indicate future or
continuing trends in the financial or economic position of the City. The following material is qualified in its
entirety by the detailed information and financial statements appearing elsewhere in this Official Statement,
reference to which is hereby made for all purposes.
The Series 2000 Bonds will be offered for sale through electronic public bidding on July 25, 2000.
An Official Notice of Sale dated July m, 2000, relating to the Series 2000 Bonds and describing the electronic
bidding process, is included herein as Appendix H.
Unless otherwise defined in this Official Statement, all capitalized terms shall have the meanings as
set forth in Appendix E - "Summary of Master Resolution - Definitions."
The Issuer
The issuer of the Series 2000 Bonds is the City of Virginia Beach located in the southeastern portion
of the Commonwealth of Virginia with an area of 310 square miles. Virginia Beach is the most populous city
in the Commonwealth, with a 2000 estimated population of 451,991. Additional information with respect to
the City is set forth in Appendix A hereto.
The System
The City's Water and Sewer System (the "System") serves a 160 square mile area with a customer
base of approximately 420,000 people. The System is administered and managed by the City's Department
of Public Utilities.
The physical property of the City water system as of June 30, 1999, included approximately 1,400
miles of distribution pipe, 7,200 fire hydrants, 13 water storage facilities, and nine water pumping stations.
The City water system is fully metered, with tap sizes ranging from 3/4-inch to 12 inches. As of June 30,
1999, the water system had approximately 120,000 connections.
The sanitary sewer system includes collector lines, force mains, and pump stations to collect and
transport wastewater to the treatment facilities operated by the Hampton Roads Sanitation District ("HRSD"),
the regional treatment agency. Virginia Beach citizens pay to the City a fee for sanitary sewer service (the
collection and transport of wastewater) and wastewater treatment charges to HRSD. The City's sanitary
sewer system consists of 380 sewer pump stations and over 1,451 miles of pipeline ranging in size from 4
inches to 36 inches in diameter. As of June 30, 1999, the number of City sewer connections was 119,540. A
more complete description of the System is provided in Section Three.
The Series 2000 Bonds
The Series 2000 Bonds consist of $40,000,000 Water and Sewer System Revenue Bonds, Series of
2000, dated July 15, 2000, and maturing annually on August 1 from 2001 through 2025. The Series 2000
Bonds will be issued in authorized denominations of $5,000 and multiples thereof and will be held by The
Depository Trust Company ("DTC"), or its nominee, as securities depository with respect to the Series 2000
Bonds. See "The Series 2000 Bonds -- Book-Entry System" in Section Two.
Interest on the Series 2000 Bonds will be payable on February 1 and August 1, commencing
February 1, 2001, until maturity. As long as the Series 2000 Bonds are held be the DTC or its nominee,
interest will be paid to Cede & Co., as nominee of DTC, in same day funds on each interest payment date.
The Series 2000 Bonds will be issued pursuant to Master Water and Sewer Revenue Bond
Resolution adopted by the City Council on February 11, 1992 (the "Master Resolution"), as previously
supplemented and amended and as supplemented and amended by a Sixth Supplemental Resolution
adopted by the City Council on July 5, 2000 (the "Sixth Supplemental"). The Master Resolution, all previous
supplements and the Sixth Supplemental are collectively referred to herein as the "Resolution."
Security for the Series 2000 Bonds
The Series 2000 Bonds will be limited obligations of the City, payable solely from Pledged Revenues
of the System, subject to the prior application thereof to the payment of Operating Expenses, and reserves
therefor, as provided in the Resolution. Neither the faith and credit of the Commonwealth of Virginia nor the
faith and credit of any county, city, town or other subdivision of the Commonwealth of Virginia, including the
City, are pledged to the payment of principal of or premium, if any, or interest on the Series 2000 Bonds.
In the Resolution, the City covenants to fix, charge, collect and revise its fees, rates and other
charges for the use of and for the services furnished by the System in each Fiscal Year so as to produce
revenues sufficient to pay the cost of operation and maintenance, the cost of necessary replacements and
improvements and debt service on the Series 2000 Bonds and on any other indebtedness of the City
secured by such revenues, and to provide certain reserves therefor. A more complete description of the
security for the Series 2000 Bonds is provided in Section Two.
Use of Proceeds
Proceeds of the Series 2000 Bonds will be used for the purpose of providing funds to finance
acquisitions, improvements, extensions, additions and replacements to the System and to pay the costs of
issuance related to the Series 2000 Bonds. See "Authorization and Purpose of the Series 2000 Bonds" in
Section Two for a more complete description of the purpose of the Series 2000 Bonds.
Redemption
The Series 2000 Bonds maturing on or after August 1,2011, will be subject to redemption beginning
August 1,2010, in whole or in part at any time, at the option of the City. The Series 2000 Bonds maturing on
August 1, and , are required to be redeemed prior to maturity in part upon payment of 100% of the
principal amount thereof plus interest accrued to the redemption date. See "Redemption" in Section Two for
a more complete description of the redemption provisions of the Series 2000 Bonds.
Tax Exemption
Under existing law, interest on the Series 2000 Bonds will be exempt from income taxation by the
Commonwealth of Virginia and the United States of America. See "Tax Exemption" in Section Six for a more
complete description of the significant elements of the Federal and state income tax status of interest on the
Series 2000 Bonds.
Bond Counsel
Hunton & Williams, Richmond, Virginia, serves as Bond Counsel ("Bond Counsel") to the City in
connection with the issuance of the Series 2000 Bonds. The opinion of Bond Counsel will be dated and
given on, and will speak only as of, the date of issuance and delivery of the Series 2000 Bonds.
The scope of engagement of Bond Counsel does not extend to passing upon or assuming
responsibility for the accuracy or adequacy of any statements made in this Official Statement other than
matters expressly set forth in their opinion, and Bond Counsel makes no representation that they have
independently verified the same.
Consulting Engineers
Alvord, Burdick & Howson ("AB&H") are the independent consulting engineers to the City with
respect to the System. AB&H has prepared a financial feasibility study, included as Appendix B to this
Official Statement. The financial feasibility study includes a review of the projects, a forecast of revenues and
expenses, calculations showing the effect that the Series 2000 Bonds will have on future revenue
requirements and a table of historical and projected debt service coverage.
Financial Advisors
Government Finance Group, a division of ARD Incorporated, and Government Finance Associates,
Inc., serve as financial advisors to the City in connection with the issuance of the Series 2000 Bonds. The
financial advisors' fee for services rendered with respect to the sale of the Series 2000 Bonds is not
contingent upon the issuance and delivery of the Series 2000 Bonds.
Auditors
Audited financial statements for the fiscal year ended June 30, 1999, for the Water and Sewer
Enterprise Fund are included as Appendix C to this Official Statement and have been audited by the
independent public accounting firm of KPMG Peat Marwick L.L.P. Such financial statements have been
included in reliance upon the report of KPMG Peat Marwick L.L.P., who will not be reviewing any matters in
connection with the issuance of the Series 2000 Bonds.
Fiscal Agent
The Bank of New York, New York, New York, has been appointed Fiscal Agent with respect to the
Series 2000 Bonds.
Registrar
The Bank of New York, New York, New York, has been appointed registrar and paying agent with
respect to the Series 2000 Bonds.
Ratings
The Series 2000 Bonds have been rated as shown on the cover page hereto by Fitch IBCA, Inc.,
One State Street Plaza, New York, New York 10004, Moody's Investors Service, 99 Church Street, New
York, New York 10007, and Standard & Poor's Public Finance Ratings, 55 Water Street, New York, New
York 10041. See "Ratings" in Section Six for a more complete description of the ratings.
Delivery
The Series 2000 Bonds are offered for delivery, when, as, and if issued, subject to the approval of
validity by Bond Counsel, and to certain other conditions referred to herein. It is expected that the Series
2000 Bonds will be available for delivery at the expense of the City through the facilities of The Depository
Trust Company, New York, New York on or about August 9, 2000.
· Official Statement
This Official Statement has been approved and authorized by the City for use in connection with the
Sale of the Series 2000 Bonds. Its purpose is to supply information to prospective buyers of the Series 2000
Bonds. Financial and other information contained in this Official Statement have been prepared by the City
from its records, except where other sources are noted. The information is not intended to indicate future or
continuing trends in the financial or economic position of the City.
All quotations from and summaries and explanations of laws contained in this Official Statement do
not purport to be complete, and reference is made to said laws for full and complete statements of their
provisions.
Continuing Disclosure
The City has agreed to execute a continuing disclosure agreement at closing to assist the
Underwriters in complying with the provisions of Rule 15c2-12 (the "Rule"), promulgated by the Securities
and Exchange Commission (the "SEC") and as in effect on the date hereof, by providing annual financial
information and material event notices required by the Rule. See "Continuing Disclosure" in Section Six.
Additional Information
Any questions conceming the contents of this Official Statement should be directed to the following:
Department of Finance, Municipal Center, Virginia, Virginia, 23456, (757) 427-4681; or the City's financial
advisors, Government Finance Group, a division of ARD Incorporated (703) 807-5700, or Govemment
Finance Associates, Inc. (212) 635-5900.
· SECTION TVVO: THE SERIES 2000 BONDS
AUTHORIZATION AND PURPOSE OF THE SERIES 2000 BONDS
The Series 2000 Bonds will be issued pursuant to the Sixth Supplemental Resolution, which
resolution amends and supplements the Master Resolution, the Master Resolution and the Constitution and
statues of the Commonwealth of Virginia, including the Charter of the City of Virginia Beach (Chapter 147,
Acts of Assembly of 1962, as amended) and the Public Finance Act of 1991 (Chapter 26, Title 15.2, Code of
Virginia of 1950, as amended) (the "Act"). Of the $40,000,000 par amount of the Series 2000 Bonds,
$1,791,738 were authorized by an ordinance adopted by the City Council on December 6, 1990, $1,749,303
were authorized by an ordinance adopted by the City Council on November 12, 1991, $1,945,321 were
authorized by an ordinance adopted by the City Council on November 23, 1993, $6,889,558 were authorized
by an ordinance adopted by the City Council on May 10, 1994, $1,305,597 were authorized by an ordinance
adopted by the City Council on May 9, 1995, $5,936,784 were authorized by an ordinance adopted by the
City Council on May 14, 1996, $11,149,669 were authorized by an ordinance adopted by the City Council on
May 13, 1997, $6,530,813 were authorized by an ordinance adopted by the City Council on May 12, 1998,
and $2,701,217 were authorized by an ordinance adopted by the City Council on May 11, 1999, all without
being submitted to the qualified voters of the City. After the issuance of the Series 2000 Bonds, the City will
have $33,726,421 authorized but unissued water and sewer system revenue bonds.
The proceeds of the Series 2000 Bonds will be used to finance acquisitions, improvements,
extensions, additions and replacements to the System and to pay costs related to issuance of the Series
2000 Bonds.
Sources and Uses of Funds
The proceeds of the Series 2000 Bonds, exclusive of accrued interest, and other available funds of
the City, are to be used as follows:
Sources:
Bond Proceeds
Less Original Issue Discount
Total Sources
Uses:
Project Costs
Deposit to Debt Service Reserve Fund
Issuance Expenses
Underwriters' Discount
Total Uses
DESCRIPTION OF THE SERIES 2000 BONDS
General
The Series 2000 Bonds will be issued in the aggregate principal amount of $40,000,000, will be
dated July 15, 2000, and will mature on August 1 from 2001 through 2025, as shown on the inside cover
page hereof. The Series 2000 Bonds will be registered as to principal and interest in the name of Cede &
Co., as nominee for DTC, or otherwise as hereinafter described. Purchases of beneficial ownership interests
in the Series 2000 Bonds will be made only in book-entry form and purchasers will not receive physical
certificates representing their interests in Series 2000 Bonds so purchased. If the book-entry system is
discontinued, bond certificates will be delivered as described in the Resolution, and Beneficial Owners (as
hereinafter defined) will become the registered owners. As long as the Series 2000 Bonds are held by DTC
or its nominee, interest will be paid to Cede & Co., as nominee of DTC, in same day funds on each interest
payment date. Interest on the Series 2000 Bonds will be payable on February 1, 2001, and on each August
I and February I thereafter until maturity. Interest will be computed on the basis of a 360-day year of twelve
30-day months.
Redemption
Optional Redemption. Sedes 2000 Bonds maturing on or before August 1, 2010, are not subject to
redemption prior to maturity. Series 2000 Bonds maturing on or after August 1, 2011, are subject to
redemption prior to maturity at the option of the City on or after August 1,2010, in whole or in part at any time
(in any multiple of $5,000), upon payment of the following redemption prices (expressed as a percentage of
the principal amount of the Series 2000 Bonds to be redeemed) plus accrued interest to the redemption date:
Redemption Period
(both dates inclusive)
Redemption
Price
August 1,2010, to July 31,2011
August 1,2011, and thereafter
101.0%
100.0
Mandatory Redemption. Series 2000 Bonds maturing on August 1, , are required to be
redeemed prior to maturity in part upon payment of 100% of the principal amount thereof plus interest
accrued to the redemption date on August 1 in years and amounts, as follows:
Year Amount
Manner of Redemption
If less than all of the Series 2000 Bonds are called for redemption, the Series 2000 Bonds to be
redeemed shall be selected by the City Manager or the City's chief financial officer in such manner as
determined to be in the best interest of the City. If less than all of the Series 2000 Bonds of a particular
maturity are called for redemption, the Series 2000 Bonds to be redeemed shall be selected by DTC or any
successor securities depository pursuant to its rules and procedures or, if the book-entry system is
discontinued, by lot in such manner as the Registrar in its discretion may determine. In either case, (a) the
portion of any Bond to be redeemed shall be in the principal amount of $5,000 or some multiple thereof and
(b) in selecting Series 2000 Bonds for redemption, each Bond shall be considered as representing that
number of Series 2000 Bonds which is obtained by dividing the principal amount of such Bond by $5,000.
Notice of Redemption
The City will cause notice to be given of the call for redemption, identifying the Series 2000 Bonds or
portions thereof to be redeemed, to be sent by registered or certified mail not less than 30 nor more than 60
days prior to the redemption date, to the registered owner thereof. The City shall not be responsible for
mailing notice of redemption to anyone other than DTC or another qualified securities depository or its
nominee unless no qualified securities depository is the registered owner of the Series 2000 Bonds. If no
qualified securities depository is the registered owner of the Sedes 2000 Bonds, notice of redemption shall be
mailed to the registered owners of the Series 2000 Bonds.
Book-Entry System
DTC will act as security depository for the Series 2000 Bonds pursuant to a book-entry system.
Information regarding DTC and its book-entry system, provided by DTC, appears as Appendix D. Such
information has been provided by DTC, and the City does not assume any responsibility for the accuracy or
completeness of such information. The City may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depository). In that event Series 2000 Bond certificates will
be printed and delivered.
So long as Cede & Co. is the registered owner of the Series 2000 Bonds, as nominee of DTC,
references in this Official Statement to the Owners of the Series 2000 Bonds shall mean Cede & Co. and
shall not mean the Beneficial Owners (as defined in Appendix D) and Cede & Co. will be treated as the only
Series 2000 Bondholder of Series 2000 Bonds for all purposes under the Resolution.
Neither City nor the Registrar has any responsibility or obligation to the Participants (as defined in
Appendix D) or the Beneficial Owners with respect to (A) the accuracy of any records maintained by DTC or
any Participant; (B) the payment by any Participant of any amount due to any Beneficial Owner in respect of
the principal of and interest on the Series 2000 Bonds; (C) the delivery or timeliness of delivery by any
Participant of any notice to any Beneficial Owner which is required or permitted under the terms of the
Resolution to be given to Series 2000 Bondholders; or (D) any other action taken by DTC, or its nominee,
Cede & Co., as the Series 2000 Bondholder, including the effectiveness of any action taken pursuant to an
Omnibus Proxy.
SECURITY FOR AND SOURCES OF PAYMENT OF THE SERIES 2000 BONDS
General
The Series 2000 Bonds will be issued under and, together with each Series of Bonds, will be equally
and ratably secured by the Resolution. The Series 2000 Bonds will be limited obligations of the City payable
(except to the extent payable from the proceeds of the Series 2000 Bonds or the income, if any derived from
the investment thereof) solely from Pledged Revenues, subject to the application thereof to the payment of
Operating Expenses, and reserves therefor. The Series 2000 Bonds are on a parity as to Pledged Revenues
with the outstanding balance of the City's $5,100,000 Water and Sewer Revenue Notes, 1977 (P.A. Corp.),
$2,000,000 Drought Relief Revenue Bond, 1978, $2,200,000 Water and Sewer Revenue Notes, 1982
(County Utilities), $1,800,000 Water and Sewer Revenue Notes, 1982 (Kempsville Utilities), $19,975,000
Water and Sewer System Revenue Bonds, Series of 1992 (the "Series 1992 Bonds"), $46,440,000 Water
and Sewer System Revenue and Refunding Bonds, Series of 1993 (the "Series 1993 Bonds"), $1,405,031.36
Taxable Water and Sewer System Revenue Bond, Series of 1994 (the "Series 1994 Bonds"), $7,500,000
Taxable Water and Sewer System Revenue Bond, Series of 1997 (the "Series 1997 Bonds"), and
$6,200,000 Taxable Water and Sewer System Revenue Bond, Series of 1998 (the "Series 1998 Bonds," and
collectively, the "Parity Bonds"). Only the Series 1992 Bonds, the Series 1993 Bonds, the Series 1994
Bonds, the Series 1997 Bonds and the Series 1998 Bonds have been issued pursuant to the Resolution.
Under the Resolution, the City may issue Additional Bonds on a parity as to the pledge of Pledged
Revenues with the Series 2000 Bonds and the Parity Bonds. The Series 2000 Bonds, the Parity Bonds and
any Additional Bonds issued under the Resolution are sometimes referred to herein as "Bonds." The
Resolution also permits general obligation bonds to be issued which include as additional security a pledge of
Pledged Revenues on a parity with the Bonds and permits the issuance of Parity Debt Service Components
for purposes of the System, but each only upon compliance with the Resolution.
Under the Resolution, the City pledges for the payment of the principal of and interest on the Series
2000 Bonds the Pledged Revenues and all amounts held under the Resolution in the Revenue Fund, the
Revenue Bond Fund (except for the Parity Bond Account), the General Account in the Construction Fund
7
and the Debt Service Reserve Fund, subject only to the City's right to make application of the Pledged
Revenues to other purposes, as set forth in the Resolution.
The Resolution does not convey or mortgage the System. The City has covenanted not to
encumber the System except in the limited circumstances provided in the Resolution. See "Particular
Covenants" in Appendix E - "Summary of the Resolution."
THE PRINCIPAL OF AND THE PREMIUM, IF ANY, AND THE INTEREST ON THE SERIES 2000
BONDS WILL NOT BE DEEMED TO CONSTITUTE A PLEDGE OF THE FAITH AND CREDIT OF THE
COMMONWEALTH OF VIRGINIA OR ANY OTHER POLITICAL SUBDIVISION, INCLUDING THE CITY.
NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE COMMONWEALTH OF
VIRGINIA OR ANY CITY, COUNTY, TOWN OR OTHER SUBDIVISION OF THE COMMONWEALTH,
INCLUDING THE CITY, ARE PLEDGED TO THE PAYMENT OF PRINCIPAL OF OR PREMIUM, IF ANY,
OR INTEREST ON THE SERIES 2000 BONDS.
Revenue Covenant
The Resolution* provides that the City will fix, charge and collect such rates, fees and other charges
for the use of and for the services furnished by the System, and shall, from time to time and as often as shall
appear necessary, revised such rates, fees and other charges to meet the following two independent
requirements:
(a) Pledged Revenues will be sufficient in each Fiscal Year to equal the sum of (1) the
Operating Expenses shown in the Annual Operating Budget for such Fiscal Year and (2) (a) 115% of the
sum of Maximum Annual Debt Service on the Bonds and Maximum Annual Additional Prior Parity Bond Debt
Service, and (B) 100% of Maximum Annual Additional Parity Debt Service, in each case, in the current or any
future Fiscal Year; and
(b) System Revenues will be sufficient in each Fiscal Year to equal the sum of (1) the Operating
Expenses payable from System Revenues shown in the Annual Operating Budget for such Fiscal Year, (2)
the amount required to be paid into the Renewal and Replacement Account in such Fiscal Year, (3) the
amount required to be paid in to the Revenue Bond Fund in such Fiscal Year, (4) the amount required to be
paid into the Parity Double Barrel Bond Fund in such Fiscal Year, (5) the amount required to be paid into the
Parity Debt Service Component Fund in such Fiscal Year, (6) the amount required to be paid into the
Subordinate Debt Fund in such Fiscal Year, (7) the amount of any other indebtedness of the City attributable
to the System required to be paid from Pledged Revenues in such Fiscal Year, (8) the amount transferred to
the Capital Improvement Account for the immediately preceding Fiscal Year or such other amount as may be
determined by the Director of Public Utilities to be appropriate for the System, and (9) any amount necessary
to be paid into any Debt Service Reserve Fund to restore the amount on deposit therein to the amount of the
Debt Service Reserve Requirement.
Debt Service Reserve Fund
The Resolution requires the City to maintain in the Debt Service Reserve Fund an amount (the "Debt
Service Reserve Requirement") equal to Maximum Annual Debt Service. The Debt Service Reserve
Requirement for the Bonds is $ , of which $ is attributable to the Series 2000
Bonds, which will be provided from the proceeds of the Series 2000 Bonds.
* See "Amendments to Resolution" herein for additional
provisions of the Resolution.
8
information concerning the revenue covenant
Rate Regulation
The power of the City to fix, charge and collect rates, fees and other charges for the use of and for
the services furnished by the System is not subject to the regulatory jurisdiction of the State Corporation
Commission of Virginia or any other federal, regional, state or local regulatory body. The City has sole and
exclusive authority over such rates, fees and other charges.
BONDHOLDERS REMEDIES IN THE EVENT OF DEFAULT
Upon the occurrence and continuation of an Event of Default, the holders of 25% in aggregate
principal amount of Bonds then Outstanding may call a meeting of the Bondholders for the purpose of
appointing a Trustee (if a trustee has not been appointed previously for all holders of Bonds then Outstanding
pursuant to a Supplemental Resolution adopted by the City Council in accordance with the provisions of the
Master Resolution) (the "Trustee"). At such meeting, the holders of not less than a majority in aggregate
principal amount of Bonds then Outstanding must be present in person or by proxy in order to constitute a
quorum for the transaction of business, less than a quorum, however, having power to adjourn from time to
time without any other notice than the announcement thereof at the meeting. A quorum being present at
such meeting, the Bondholders present in person or by proxy may, by a majority of the votes cast, appoint a
corporate bank or trust company having an office in the Commonwealth, as Trustee for the Bondholders.
Upon such appointment, the Trustee shall be the trustee for the holders of all Bonds then Outstanding and
shall be empowered to exercise in the name of the Bondholders all the rights and powers conferred in the
Resolution on Bondholders; provided, however, that whenever any provision of the Resolution requires the
consent, approval or concurrence of the holders of a specified percentage in principal amount of Bond then
Outstanding in order to exercise the right or power conferred in the Resolution on the Bondholders to which
such percentage obtains, the Trustee shall thereby represent the holders of such specified percentage in
principal amount of the Bonds. A certificate as to the appointment of the Trustee shall be filed with the City
Clerk.
Upon the occurrence and continuation of an Event of Default for a period of 60 days and, if there is
no Trustee, the holders of not less than 25% in aggregate principal amount of Outstanding Bonds shall be
entitled to the appointment of a receiver upon application to the Circuit Court of the City of Virginia Beach or
to any other court of competent jurisdiction in the Commonwealth. Any receiver so appointed may enter and
take possession of the System, operate and maintain and repair the same, to the extent permitted by law
impose and prescribe rates, fees and other charges, and receive and apply all System Revenues in the
same manner as the City itself might do. No bond shall be required of such receiver.
Upon the occurrence and continuation of an Event of Default, the Trustee may (and if requested by
the holders of not less than 25% in aggregate principal amount of Outstanding Bonds and if indemnified in
accordance with prevailing industry stands shall) or if there is no Trustee, the Bondholders may proceed to
protect and enforce their rights by instituting a mandamus or other suit, action or proceeding at law or in
equity, including an action for specific performance of any covenant or agreement contained in the
Resolution. The mandamus remedy, however, may be impracticable and difficult to enforce. Furthermore,
the right to enforce payment of the Series 2000 Bonds may be limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws and equitable principles, which may limit the specific
enforcement of certain remedies. Further, there shall be no rights of acceleration with respect to any
Bonds, including the Series 2000 Bonds,*
Chapter 9 of the United States Bankruptcy Code (the "Bankruptcy Code") permits a municipality
such as the City, if insolvent or otherwise unable to pay its debts as they become due, to file a voluntary
* See "Amendments to Resolution" herein for additional information concerning the revenue covenant
provisions of the Resolution.
petition for the adjustment of debts provided that such municipality is "specifically author[zed, in its capacity
as a municipality or by name, to be a debtor...." Bankruptcy Code, § 109(c)(2). Current Virginia statutes do
not expressly authorize the City or municipalities generally to file for bankruptcy under Chapter 9. Chapter 9
does not authorize the filing of involuntary petitions against municipalities such as the City.
Bankruptcy proceedings by the City could have adverse effects on registered owners of the Series
2000 Bonds, including, (a) delay in the enforcement of their remedies, (b) subordination of their claims to
claims of those supplying goods and services to the City after the initiation of bankruptcy proceedings and to
the administrative expenses of bankruptcy proceedings, and (c) imposition without their consent of a
reorganization plan reducing or delaying payment of the Series 2000 Bonds. The Bankruptcy Code contains
provisions intended to ensure that, in any reorganization plan not accepted by at least a majority of a class of
creditors such as the registered owners of the Series 2000 Bonds, such creditors will have the benefit of their
original claims or the "indubitable equivalent" thereof, although such plan may not provide for payment of the
Series 2000 Bonds in full. The effect of these and other provisions of the Bankruptcy Code cannot be
predicted and may be significantly affected by judicial interpretations.
ADDITIONAL SERIES OF BONDS
As set forth in the Resolution, the City may issue, subject to certain restrictions, one or more Series
of Bonds or Parity Obligations, equally and ratably secured with the Series 2000 Bonds, to pay the cost of
acquiring, constructing, improving, extending, expanding or equipping the System, to pay the cost of planning
or investigating the feasibility of acquiring, constructing, improving, extending, expanding or equipping the
System or to refund any Sedes of Bonds or other City obligations secured by or payable from Pledged
Revenues. In addition, the City may at any time issue one or more series of bonds having a lien on revenues
of the System that are subordinate to the lien securing the Series 2000 Bonds and the Parity Bonds, so long
as the City remains in compliance with the Revenue Covenant under the Resolution. See "Issuance of
Additional Indebtedness" in Appendix E -"Summary of the Resolution."
AMENDMENTS TO RESOLUTION
The Sixth Supplemental Resolution includes amendments to the Master Resolution that will require
the consent of the owners of at least a majority in aggregate principal amount of Bonds outstanding and
which will be effective upon receipt of that consent. The original purchasers of the Series 2000 Bonds by
their purchase thereof shall be deemed to have consented to the amendments.
The first amendment relates to the scope of revenues that will be included in determining the City's
compliance with the Revenue Covenant. Prior to the effective date of the amendment, "Revenues" includes
only rates, fees and charges for the use of and for the services furnished by the System in a current Fiscal
Year. Such definition does not permit the City to include other monies it might choose to contribute to the
System in meeting the Revenue Covenant. The amendment permits such additional monies to be included
in the calculation used to determine the City's compliance with the Revenue Covenant.
The second amendment relates to the remedy of acceleration of the Bonds. Prior to the effective
date of the amendment, the Resolution permits the Bonds to be accelerated upon an Event of Default. The
amendment deletes the provisions in the Resolution relating to such acceleration.
SUMMARY OF FINANCIAL FEASIBILITY STUDY
AB&H has concluded that the System is in very good condition with equipment of high quality and
benefits from experienced and capable management. The water supply is high quality and complies with the
requirements of all federal and state agencies.
10
Based on the examination of the books, records, forecasts of demands and the structure of rates of
the System, AB&H has concluded that the existing rates and charges are appropriate for the proposed bond
sale. The System capacity is adequate at current and projected demands to generate sufficient revenues for
the Series 2000 Bonds.
Based upon the preliminary cost of service study, existing water rates do not require an adjustment
during the forecast period through Fiscal Year 2005. However, existing sanitary sewer charges will not be
adequate for the period of Fiscal Year 2000 through Fiscal Year 2005. An increase in sanitary sewer rates
will be needed effective July 1, 2001. The amount of the sanitary sewer rate increase has not finalized at this
time, but it is anticipated that the City Council will consider recommendations in the fall of 2000.
The entire Financial Feasibility Study is included as Appendix B to this Official Statement.
11
SECTION THREE: THE WATER AND SEWER SYSTEM
DEPARTMENT OF PUBLIC UTILITIES
The City, through its Department of Public Utilities, owns and operates the water and sewer system.
The mission of the Department is "to provide public water, including water for fire protection, and public
sanitary sewer service to the urban areas of Virginia Beach." The goals are: "to provide quality public
service at reasonable costs and to plan, build, operate and maintain its facilities to meet community needs,
environmental responsibilities and regulatory requirements."
Alvord, Burdick & Howson continues to be used as the City's water and sewer rate consultant and
has been used each year since 1986 to perform various studies and analyses for the System. In the opinion
of AB&H, the City's water and sewer facilities are operated and maintained in good working order including
repairing, rebuilding or replacing of equipment and structures when required. In addition, the City has an
ongoing training program to develop a staff of personnel in sufficient numbers to promote safe and technically
competent operation of the System.
THE WATER DISTRIBUTION SYSTEM
The physical property of the City water system as of June 30, 1999, included approximately 149
miles of transmission mains, 1,222 miles of distribution mains, 7,188 fire hydrants, 13 water storage facilities,
and nine pumping stations. The City water system is fully metered, with tap sizes ranging from %-inch to 12
inches. As of June 30, 1999, the water system had approximately 120,646 connections, representing a 1%
increase over the number reported in 1998, and an approximate service area of over 400,000 people.
The following table lists average annual daily water demands during the last four Fiscal Years:
AVERAGE ANNUAL DALLY DEMAND
Fiscal Estimated Total Number of Average Total Total Per Capita
Year Po_oulation Served Connections Demand (MGD) Demand (Gallons)
1996 395,813 117,177 32.6 84
1997 400,351 117,403 31.7 82
1998 405,062 119,414 32.4 82
1999 409,097 120,646 33.8 85
12
TEN LARGEST UTILITY (WATER) CUSTOMERS
Fiscal Year 2000
Customer
Annual Consumption
in 1,000 Gallons
Type
of Customer
Wedgewood Mobile Homes
Virginia Beach General Hospital
Countyview Mobile Home Park
Lynnhaven Mall
Regent University/Founders Inn
Virginia Beach Correction Center
Crater Land Development Corp.
Cavalier Motel
BT Venture Partners
Beach-Oxford Associates
58,953
49,351
42,757
34,027
32,543
32,137
23,582
22,892
20,772
20,228
Mobile Home Park
Hospital
Mobile Home Park
Shopping Mall
School/Conference Center
City Correction Center
Apartments
Hotel
Apartments
Apartments
Source: Department of Public Utilities
13
PUBLIC UTILITIES
ORGANIZATIONAL CHART
Citizens of Virginia Beach
Office of thc City Manager
James K. Spore
Director
Clarence O. Warnstaff
FTE 3.00
Water l~es ource S
Thomas M. Leahy
FTE 5.00
Operations
Maintenance
James W. Sarver
FTE 245,00
Business
Joseph P. Martin
(Acting)
FTE 58.70
Engineering
Gary L. Jones
FTE 64.00
14
WATER SALES AND SERVICES CONTRACTS
Until the Lake Gaston project was completed in late 1997, the City had no independent water supply.
In 1973, the City entered into a 20 year agreement with the City of Norfolk to purchase surplus treated water.
That contract expired June 30, 1993. The City and Norfolk signed a new Water Sales Contract effective July '
1, 1993 (the "Water Sales Contract"), to provide an interim water supply to the City until the Lake Gaston
Project was operational. The Lake Gaston Project was put into service on January 1, 1998, at which point
the Water Sales Contract was terminated, except for certain provisions which survived until June 30, 1999.
The City and Norfolk also entered into a Water Services Contract effective July 1, 1993 (the "Water
Services Contract"). The Water Services Contract runs through the year 2030. The Water Services Contract
established engineering, water quality, and operational standards for Norfolk to receive, convey, treat, and
deliver Lake Gaston water to the City, which is currently an annual average of 50 MGD as raw water and 45
MGD as treated water. In essence, the City contracted for water system facilities and services related to the
storage, transmission and treatment of Lake Gaston water. The facilities are owned by Norfolk, but
dedicated to serving the City through the life of the Water Services Contract. Those facilities include:
2.
3.
4.
Raw water storage (lakes);
Raw water pumping stations and transmission lines;
Water treatment plant capacity; and
Treated water storage, pumping and transmission.
A "Cost of Service" methodology based on traditional utility rate making standards is used to
determine the cost of the facilities and services provided by Norfolk including a reasonable rate of retum on
facilities dedicated to serving the City. Both the Water Sales Contract and the Water Services Contract
include the Cost of Service charges. However, the Water Sales Contract (and not the Water Services
Contract) included a Water Charge which applied to any Norfolk surplus water used by the City.
The Lake Gaston Project was put into service on January 1, 1998, and the City switched from the
Water Sales Contract to the Water Services Contract on that date. Effective July 1, 1999, the current
computed effective rate to the City for delivery of treated water is $2.00 per 1,000 gallons. There are
provisions which allow for water rate increases based upon:
Increased cost of labor, materials and supplies, power and chemicals;
Renewal and replacement of water system facilities;
Design and construction of new facilities to accommodate the City's future water demand;
and
Design and construction of new facilities to comply with new federal laws and regulations,
including the Safe Water Drinking Act and the Clean Water Act.
Norfolk is required to reset rates every two years based upon a cost of services study performed by
an independent consulting firm which compares projected versus actual water expense. On a biennial basis
an adjustment is made based upon the actual costs incurred in the previous two years. This "true-up"
provision will result in a rebate from Norfolk to the City in Fiscal Year 2000 of approximately $5.4 million to be
credited during the twelve month period of Fiscal Year 2001. This amount represents actual payments in
excess of costs incurred during Fiscal Years 1998 and 1999.
The $5.4 million will be used to support water projects identified in the Fiscal Year 2001-2006 CIP.
THE SANITARY SEWER SYSTEM
The City Sanitary Sewer Utility includes collector lines, force mains, and pump stations to collect and
transport wastewater to the treatment facilities operated by the Hampton Roads Sanitation District ("HRSD"),
15
the regional treatment agency. Virginia Beach citizens pay to the City a fee for sanitary sewer service (the
collection and transport of wastewater) and wastewater treatment charges to HRSD. The City's Sanitary
Sewer Utility system consists of more than 380 sewer pump stations and over 1,451 miles of pipeline ranging
in size from 4 inches to 36 inches in diameter. As of June 30, 1999, the number of City sewer connections
was 119,540, representing a 1.5% increase over the number reported in 1998.
The following table shows the increase in sanitary sewer connections over the last five Fiscal Years.
Sanitary Sewer Connections
FISCAL YEARS
1995 1996 1997 1998 1999
111,806 113,916 116,433 117,749 119,540
The HRSD, established in 1940, provides wastewater treatment services for 16 cities and counties in
southeastern Virginia. The HRSD operates nine major treatment facilities in Hampton Roads and four
smaller treatment facilities on the Middle Peninsula, with a total treatment capacity of over 200 million gallons
per day ("MGD"). Two HRSD plants are located in the City. The Chesapeake-Elizabeth Plant, in operation
since 1968, has an operating capacity of 24 MGD, with average annual flow estimated at 20 MGD. The
Atlantic Plant has an operating capacity of 36 MGD and average annual flow estimated at 29 MGD. The
Plant was designed with the capability to be expanded to 72 MGD. As of June 30, 1999, the HRSD had a
service population of 1.5 million. According to the HRSD, the HRSD is meeting all its discharge permit
requirements established by the U.S. Environmental Protection Agency and the Virginia Department of
Environmental Quality.
RATES AND BILLINGS
Rate History
Since 1986, AB&H has been used as the City's water and sewer rate consultant to perform various
studies and analyses for the water and sewer system. AB&H regularly examines the books and records of
the Department of Public Utilities and conducts a physical inspection of the operating facilities in order to
develop recommendations for adequate water and sewer rates. The terms of AB&H's contracts with the City
have called for AB&H to conduct a cost of service study and to develop recommended rates that would be
adequate for the succeeding five fiscal years. The analyses have included a projection of revenues and
expenditures for these five fiscal year pedods.
In the aggregate, the studies have resulted in a program of regular rate adjustments as shown
below:
Effective Date
Water Commodity Rate
(per 1.000 _~allons)
Sanitary Sewer Service
Charge Single Family
Residence (_oer month)
July 1,1983
August1,1987
O~ober1,1987
July 1,1988
July1,1989
July 1,1990
O~ober1,1990
July 1,1991
July 1,1992
July 1,1993
July 1,1994
$1.62
1.81
1.99
2.18
2.51
2.69
2.77
2.96
3.11
3.38
3.65
$ 9.46
9.46
9.46
9.46
9.46
9.46
9.65
10.58
11.38
11.38
11.38
16
July 1, 1999 3.55 11.38
Typical Water and Sewer Bills
Under the City's current rate structure, a single family residence consuming 6,000 gallons for 31
days would receive a bill as follows:
Current Projected Projected Projected
Rates 7-1-2001 7-1-2002 7-1-2003
Water Usage; 6 x $3.55 per 1,000 gallons
Minimum Service Availability Charge
Sanitary Sewer Service
Total Due for Water and Sanitary Sewer Service
$21.30 $21.30 $21.30 21.30
3.40 3.40 3.40 3.40
$24.70 24.70 24.70 24.70
11.38 12.06 12.79 13.55
$36.08 $36.76 $37.49 $38.25
In addition, the HRSD would charge the same residence approximately $10.00 for wastewater
treatment of 6,000 gallons during the same time period. The last HRSD rate increase was in Fiscal Year
1999.
The following data provides a five-city comparison of a residential customer's water and sanitary
sewer charges when consuming 6,000 gallons of water in a 30 day period. The comparison is made
between the Southeastern Virginia cities of Virginia Beach, Chesapeake, Suffolk, Norfolk and Portsmouth.
CITY OF VIRGINIA BEACH
COMPARATIVE WATER AND SEWER RATES
As of July 1, 2000
Virginia
Beach Chesa_oeake Norfolk Portsmouth Suffolk
Water Consumption $21.30 $10.60 $20.16 $15.60 $ 9.73
Water Service Availability 3.40 9.00* 1.00 5.00 5.34**
Water Maintenance Charge N/A N/A N/A N/A 1.50
TOTAL WATER SERVICES $24.70 19.60 21.16 15.60 $16.57
Sanitary Sewer Service 11.38(~) $9.58(2) 11.04(3) 11.70(4) 12.64(5)
TOTAL MONTHLY BILLING $36.08 29.18 32.20 32.30 $29.21
*Chesapeake's water service availability charge includes a minimum of 300 cubic feet of water.
**Suffolk's water service availability charge includes a minimum of 400 cubic feet of water.
(~)Virginia Beach charges a fixed rate of $11.38 for residential service.
(2)Chesapeake's sanitary sewer service charge is $5.95 for the first 300 cubic feet and 72.5¢ for each additional cubic foot.
(3)Norfolk charges a minimum monthly rate of $5.95, which includes up to 300 cubic feet of consumption. Consumption beyond that
is billed at 72.5¢ per 100 cubic feet of consumption.
(4)Portsmouth charges $1.95 per 1,000 gallons of consumption.
(5)Suffolk charges a minimum monthly rate of $6.84 plus $1.58 per 100 cubic feet of consumption.
Water Resource Recovery Fees
During the 1980's, rapid growth and new water connections created the need for the City and Norfolk
(on behalf of the City) to make large capital expenditures related to water supply, transmission and treatment.
The City concluded that it was appropriate that new water connections should be assessed a connection
charge to partially offset the financial impact of these expenditures on the existing customer base. As a
17
result, the Water Resource Recovery Fee ("WRRF") was established in 1986 to recover a portion of the
capital cost of new connections to the public water system.
The WRRF included three cost categories: (i) A portion of the water distribution system in the City,
(ii) the Lake Gaston Project and (iii) capital expenditures that Norfolk would have to make on behalf of the
City to convey and treat the Lake Gaston water. A water connection charge already existed prior to
enactment of the WRRF. However, that charge recovered only a portion of the cost of the water distribution
system within the City and was eliminated when the WRRF was enacted. A portion of the WRRF revenue
was dedicated to replace the revenues from the former connection charge.
In addition to the WRRF, the City also increased water rates in 1987, 1988, 1989 and 1990 to help
pay for the Lake Gaston Project. Through Fiscal Year 1999, the WRRF and water rate increases have each
generated approximately 50% of the total revenue from the two sources. However, revenues from the
WRRF have declined while revenues from the water rate increases have risen. Currently, WRRF revenues
average about $3.6 million per year while the water rate increase revenues average about $8.4 million per
year. This can be attributed to the fact that the number of new connections to the City's public water and
sanitary sewer systems moderated in the 1990's when the City returned to a state of normalcy after
experiencing rapid growth in the 1980's.
Although the WRRF and the water rate increases were implemented between 1986 and 1990, legal
and regulatory delays prevented construction of most of the Lake Gaston Project until late 1995. During that
time, the City escrowed the funds from both the WRRF and the water rate increases. That decision,
combined with the City of Chesapeake's contribution to the project and a total project cost below planning
estimates, resulted in the accumulation of sufficient funds to cash finance the Lake Gaston Project.
The WRRF was implemented to address three categories of capital projects, only one of which was
the Lake Gaston Project. These were projects and investments that would provide capacity for new
connections long past the year 2000. Both the Lake Gaston Project and Norfolk's capital expenditures on
behalf of Virginia Beach provide capacity for new connections through 2015-2020, and beyond. Payments to
Norfolk for its capital expenditures will be made through the year 2030.
Now that the Lake Gaston Project has been paid for, the WRRF will be used for new capital projects
involving the water distribution system and future additional water supplies. The following tables provide the
recent history of receipts and disbursements for the WRRF and water resource rate increases:
WATER RESOURCE RECOVERY FEES
HISTORY OF RECEIPTS AND DISBURSEMENTS
(in thousands)
FISCAL YEARS
1994-95 1995-96 1996-97 1997-98 1998-99
Balance - July 1
Receipts:
Fees
Interest Income
Total Receipts
$ 51,332 $55,437 $60,553 $65,701 $72,791
2,845 4,259 3,191 3,836 4,579
2,334 2,912 2.316 3.600 1
5,179 7,171 5,507 7,436 4,580
Disbursements
1,074 2.055 359 346 77,371
Balance - June 30
$55.437 $60.553 $65.701 $72,791 $ -
18
Balance - July 1
Receipts:
Net Billings
Disbursements
Balance - June 30
WATER RESOURCE RATE INCREASES
HISTORY OF RECEIPTS AND DISBURSEMENTS
(in thousands)
FISCAL YEARS
1994-95 1995-96 1996-97 1997-98
$36,753 $44,844 $52,810 $60,567
8,494 8,371 8,116 8,299
403 405 359 346
$44,844 $52.810 $60,567 $68.520
1998-99
$68,520
68.520
$ -
19
SECTION FOUR: THE WATER AND SEWER SYSTEM
INDEBTEDNESS AND CAPITAL IMPROVEMENT PROGRAM
DEBT INFORMATION
After the issuance of the Series 2000 Bonds, the City will have $33,726,421 authorized but unissued
water and sewer revenue bonds, as shown below:
Year
Authorized Amount
1990 $ 481,001
1991 1,454,397
1993 2,178,209
1994 5,773,442
1995 1,464,355
1996 1,023,216
1997 1,580,331
1998 5,069,187
1999 6,812,283
2000 7,890,000
TOTAL $33.726.421
Water and Sewer Debt
The City has issued three types of securities to finance capital improvements to its water and sewer
system:
(1) Pdor to 1977 and in 1982, the City issued general obligation public improvement
bonds that were not secured by a pledge of the net revenues of the water and sewer system. As of
June 30, 2000, $8,700,000 of these bonds were outstanding.
(2) Pursuant to Article VII, Section 10(a)(2) of the Constitution, the City has issued
general obligation water and sewer bonds, which are secured by both a pledge of the net revenues
of the water and sewer system and a pledge of the City's full faith and credit and unlimited taxing
power. As of June 30, 2000, $6,360,000 of these bonds were outstanding.
(3) Pursuant to Article VII, Section 10(a)(3) of the Constitution, the City has issued
water and sewer revenue bonds which are secured solely by the net revenues of the water and
sewer system. As of June 30, 2000, $59,701,431 of these bonds were outstanding. After the
issuance of the Series 2000 Bonds, the City will have $99,701,431 of bonds outstanding that are
secured solely by the net revenues of the water and sewer system.
20
It is the City's policy to service all debt issued for water and sewer purposes by revenues from the
System.
WATER AND SEWER FUND
OUTSTANDING DEBT BY ISSUE
at June 30, 2000
PARITY DEBT:
1998 Taxable Water and Sewer System Revenue Bond*
1997
1994
1993
1992
1982
1982
1978
1977
Taxable Water and Sewer System Revenue Bond
Taxable Water and Sewer System Revenue Bond
Water and Sewer System Revenue and Refunding Bonds
Water and Sewer System Revenue Bonds
Water and Sewer Revenue Notes
Water and Sewer Revenue Notes
Drought Relief Revenue Bond
Water and Sewer Revenue Notes
6,096,861.11
6,717,513.61
1,179,556.79
39,355,000.00
1,160,000.00
576,000.00
704,000.00
2,000,000.00
1,912,500.00
Total Parity Debt
$59,701,431.51
NON-PARITY DEBT:
1998 General Obligation Public Improvement and Refunding Bonds
1993 General Obligation Refunding Bonds
1977-B Water and Sewer Bonds
1977-A Water and Sewer Bonds
$ 3,500,000.00
5,200,000.00
2,190,000.00
4,170,000.00
Total Non-Parity Debt
$15.060.000.00
Total Water and Sewer Debt Outstanding
$74.761.431.51
*Estimated based on final disbursements.
Note: Private placement issues through the Commonwealth of Virginia Revolving Loan Fund administered by Virginia Resources
Authority.
21
RAPIDITY OF PRINCIPAL RETIREMENT
ALL WATER AND SEWER BONDS
June 30, 2000
Maturing Amount
Within Maturin_o
Percent of Total
Debt Outstandinq
Note:
5 years $32,058,664
10 years 49,651,379
15 years 64,527,774
20 years 74,761,432
Does not include the Series 2000 Bonds
42.88%
66.41
86.31
100.00
Debt History
The City has never defaulted in the payment of either principal of or interest on any indebtedness.
WATER AND SEWER CAPITAL IMPROVEMENT PROGRAM
The Department of Public Utilities annually prepares the portion of the City's Capital Improvement
Plan (the "CIP") concerning the improvement and extension of the System. According to the City's Fiscal
Years 2001-2006 Capital Improvement Program, the water and sewer utility projects amount to $349.2
million, a 5.3% increase from the Fiscal Year 2000-2005 CIP. Previous appropriations total $252 million,
leaving future funding needs of $96.9 million for the water and sewer system.
The primary components of the water and sewer CIP are new facilities, neighborhood extensions
and rehabilitation of aging infrastructure. New construction, increased capacity and system expansion
account for about half of the approved CIP projects, while the remaining projects are dedicated to
rehabilitation and replacement of existing infrastructure. Annual reviews and updates to the water and sewer
ClP assure that only cost effective projects are included, that new or updated federal and state regulations
are incorporated in the projects, and that budgets are revised to reflect market trends.
With the recent decision to cash finance the Lake Gaston Project (as discussed later in this section),
the System continues to maintain a Iow debt burden. Approximately 60% of all water projects and 30% of all
sewer projects are provided for with pay-as-you-go funding. For the proposed Fiscal Year 2001 capital
budget of $16.6 million, pay-as-you-go funding represents 51% of the total means of financing. Future capital
needs for the System for the six-year period range between $14 to $19 million annually with $3 million
committed in each year for pay-as-you-go funding.
The following table presents the financing sources expected to meet the six-year Capital
Improvement Plan for the water and sewer utility projects:
23
WATER AND SEWER SYSTEM
CAPITAL IMPROVEMENT PROGRAM
Fiscal Year 2001 To Fiscal Year 2006
Financing Plan
Utility_
Sources of Balance To Be Funded
Water and Hampton
Total Balance Sewer Roads
Estimated Previously To Be Revenue Water and Sanitation
Costs Authorized Funded Bonds Sewer Fund District
Water $213,782,000 $179,687,000 $34,095,000 $21,412,000 $12,683,000 $
Sewer 135.441.000 72.683.000 62.758.000 48.783.000 10.765.000 3,210.000
Total $349.223.000 $252.370.000 $96.853.000 $70.195.000 $23.448.000 $3,210.000
Source: Capital Improvement Program for Fiscal Years 2001-2006.
The Lake Gaston Project
A major element of the Water and Sewer Capital Improvement Plan over a decade has been the
Lake Gaston Water Supply Project (the "Lake Gaston Project"). The project was completed in late 1997 and
was placed into formal operation on January 1, 1998. The Lake Gaston Project consists of a 76-mile, 60-
inch pipeline from the Pea Hill Creek Tributary of Lake Gaston in Brunswick County, Virginia, to the City of
Norfolk's raw water facilities in Isle of Wight, Virginia. The Lake Gaston water is being treated at the Norfolk
Moores Bridges Water Treatment Plant. The cost of the Lake Gaston Project, as specified in the City's CIP
for Fiscal Years 2001-2006, is currently estimated at $154,600,000. The City of Chesapeake has contracted
for a one-sixth share in the Lake Gaston Project, and the City of Suffolk and Isle of Wight County may
participate as well. As of June 30, 1999, the City had incurred expenditures of approximately $149,789,336
for the Lake Gaston Project, of which the City of Chesapeake has paid approximately $24,159,794.
Background
South Hampton Roads, Virginia, is a major population center located on the mid-Atlantic coast of the
United States. It is bounded by the estuary waters of the Atlantic Ocean, Chesapeake Bay and James River
which combine to form a deep, warm-water seaport. The region includes one of the largest port facilities in
the country and is home to the largest military complex in the world. As a result, South Hampton Roads has
experienced rapid and steady population growth which has strained local water supplies. The same
geological features which gave rise to the massive port and military facilities, and in turn the population
growth, also had limited the availability of fresh water supplies in the region.
Because of the rapid population growth and the difficulty in developing new water sources locally,
water shortages in the region had become commonplace since 1976. Water restrictions or water quality
impairments resulting from water shortages have occurred in every dry period from 1976 to 1997. South
Hampton Road does not have a regional water system; the individual cities operate their own respective
water systems. Older cities like Portsmouth and Norfolk long ago developed the limited surface water
supplies before the newer cities of Chesapeake, Suffolk, and Virginia Beach even existed. Portsmouth and
Norfolk have sufficient water supplies to meet their own needs, including small, limited surpluses which they
sold to Suffolk, Chesapeake and Virginia Beach. However, the surpluses were not sufficient to meet the
water needs of these three cities where much of the population growth was occurring.
Virginia Beach, with twice the population of Chesapeake and Suffolk combined, had the largest
existing and projected water demands, but the fewest options. At 33-36 MGD and growing, the City's
existing water needs are six times greater than Suffolk's and three times greater than Chesapeake's. Until
January 1, 1998, Virginia Beach had obtained all of its water from Norfolk, pursuant to a surplus only water
24
contract. Over the years, Norfolk had been unable to provide Virginia Beach adequate quantities of water
during any dry period. The City had to restrict or ration water in every dry period since 1976, and it had been
under continuing water use restrictions and a moratorium on extensions of the water system since 1992.
In 1983, after many years of evaluation, Virginia Beach decided to build a pipeline to an existing
system of hydroelectric and flood control impoundments on the Roanoke River, which straddles the North
Carolina and Virginia border. The project can transfer 60 MGD of water from Lake Gaston to existing
reservoirs in southeast Virginia. Chesapeake is a partner in the project and has the right to receive 10 MGD
to augment its supply. Because of the extensive hydroelectric and flood control development in the Roanoke
Basin, the drought capacity of the lower Roanoke River dwarfs all other river systems in either Virginia or
North Carolina. The maximum withdrawal is about one percent of the average discharge from the
impoundments and about three percent during a major drought. The project will use storage in an upstream
impoundment so that Iow flows downstream will not be impacted during droughts.
The Roanoke River originates in Virginia but ultimately flows to North Carolina. Water withdrawn by
Virginia Beach from the Roanoke River reduces the amount of water that would otherwise flow to North
Carolina. As a result, North Carolina vigorously opposed the Lake Gaston Project in each of the numerous
environmental permit and approval proceedings required by multiple federal statues. North Carolina also
filed several lawsuits in various federal courts challenging the validity of those permits and approvals after
they had been issued. The Lake Gaston Project was the subject of six environmental reviews by three
federal agencies, followed by six lawsuits in five federal courts challenging the validity of those environmental
reviews. The City has prevailed in all 12 proceedings and none of the environmental reviews, administrative
or judicial, have indicated that the Lake Gaston Project would have any significant impact.
The City sought to begin construction of the Lake Gaston pipeline in December 1990. However, an
injunction permitted construction only of the critical path items while awaiting the approval of the Federal
Energy Regulatory Commission ("FERC"). Construction of the six river crossings and the below ground
portion of the pump station at Lake Gaston began in 1992 and were completed in 1994. The final federal
approval was granted in September 1995, and by December 1995, the City had awarded contracts for all
remaining construction work. Pipe fabrication, clearing, and other preconstruction activities were undertaken
in eady 1996. Actual on-site construction was initiated in March 1996.
The project was declared substantially complete on November 26, 1997, and put into formal
operation on January 1, 1998. The project is operating exactly as designed and planned. The water use
restrictions and waterline extension moratorium have both been rescinded, and the City projects that the
water from Lake Gaston will meet all of its municipal water needs through the period 2015-2020.
Lake Gaston Financing Plan
A resolution passed by City Council on August 13, 1984, expressed its intent to finance the Lake
Gaston Project primarily with the City's general obligation bonds additionally secured by a pledge of net
revenues of the water and sewer system. In addition, the resolution directed City staff to examine secondary
sources of financing if it was determined that such sources of financing would: (1) reduce user charges; (2)
be in the best interest of the City; and (3) not adversely affect the City's credit rating. The financing plan
developed over time as a result of City Council's direction has included a Water Resource Recovery Fee
adopted by City Council in 1986 to charge all new connections to the water system and a series of water rate
increases instituted in the late 1980's. Revenues from these sources were preliminarily earmarked to support
debt service for the Lake Gaston Project and pay for Lake Gaston Project costs. The general obligation
double barrel bonds approved by City Council required voter approval and were placed on a referendum on
November 8, 1988. The referendum for $200,000,000 for the Lake Gaston Project was approved by voters
by a margin of approximately three to one. In November 1987, the City executed a cost participation
agreement with the City of Chesapeake for one-sixth of the project and for one-sixth ownership of the Lake
Gaston Project.
25
Present estimates prepared by the City put the total project cost (excluding financing costs) at
$154,600,000. The City's share of the cost of the system is expected to be approximately $128,800,000 with
the City of Chesapeake providing $25,800,000. The City has financed $10,394,940 from double barrel bonds
from a previous referendum conducted in 1980 with a net remaining funding requirement of $118,438,394.
Due to the Lake Gaston project having been delayed by litigation, the City accumulated substantial funds
from Water Resource Recovery Fees and revenues from increases in water rates. In the City's most recent
CIP, funding sources for the Lake Gaston Project are as follows:
1980 Utility Reference Bonds
City of Chesapeake
Water Resources Funding (Cash)
Total Project Costs
$ 10,394,940
25,766,666
118,438,394
$154,600,000
Current Operations
The Lake Gaston Project was dedicated in November 1997 and formally placed into service on
January 1, 1998. Coincidentally, a major drought struck the Roanoke River Basin beginning in July 1998 and
continued until Hurricane Floyd struck in September 1999. During that same time, the project operated at up
to 50 MGD for continuous periods, as Norfolk's water system was also impacted by the drought. As
predicted, the transfer of water from Lake Gaston to Virginia Beach did not have any significant
environmental impact to the region. Downstream flows were reduced by about 2% (exactly within the range
of reductions that had been predicted during droughts) and no impacts attributed to the project occurred
downstream.
The Lake Gaston pipeline experienced a direct hit from Hurricane Floyd on September 16, 1999.
Rainfall and water levels equal to a 500-year-storm pounded the pipeline between the Blackwater and
Nottoway River crossings. Impacts amounted to several hundred downed trees on the pipeline route, a log
jam behind one of the river crossings and serious erosion of several areas of the pipeline washed away by
record water flows and velocities. However, none of the project was threatened structurally, and except for
the fact that electricity was out at the pump station for four days, the project could have delivered its full
capacity of 60 MGD before, during and after Hurricane Floyd.
The total cost of repairs is estimated to be about $200,000 to $250,000, mostly for the cost of fill and
rock to replace the eroded and washout areas. This will not cause a short-fall in the $1.7 million annual
operation and maintenance budget for the pipeline for two reasons: 1 ) The City expects most or all of this to
be reimbursed by FEMA, and 2) Fiscal Year 2000 has been a very wet year. The savings related to electrical
purchases budgeted for pumping, but not used because reservoirs were full, will exceed the impacts caused
by Hurricane Floyd.
FERC Relicensing Process for Lake Gaston
The Lake Gaston and Roanoke Reservoir hydroelectric projects are owned by Virginia Power but
operated subject to a 50-year license issued by the FERC. The license expires on January 31, 2001. This is
the same license which FERC amended in 1995 when it approved the Lake Gaston Project.
Virginia Power has been conducting relicensing studies since 1995 and engaging all the
stakeholders in a voluntary settlement process, with the goal of reaching a major consensus on the terms
and conditions of a new license without adversarial proceedings. Virginia Power filed an application for a
new license and a draft environmental assessment with FERC in January 1999, as it was required to do by
FERC regulations. However, the application was not complete because the reconstruction of the 1-95 bridge
over the Roanoke River delayed instream flow studies and certain resource agencies requested additional
studies after the application was filed. Virginia Power plans to supplement the application and draft
environmental assessment in January 2001.
26
In the event that the relicensing proceedings have not been concluded by the license expiration date
of January 31, 2001, it is anticipated that FERC, in accordance with its customary practice, will issue a one-
year license extension.
27
SECTION FIVE: FINANCIAL INFORMATION
WATER AND SEWER FUND
The City's water and sewer system is operated as a self-sustaining entity, accounted for on an
enterprise fund accounting basis. All Proprietary Funds are reported under the accrual basis of accounting;
revenues are recognized when earned and expenses are recognized when incurred. Unbilled Water and
Sewer Enterprise Fund accounts receivables for utility services provided through June 30 are included in the
financial statements included as Appendix C to this Official Statement
Enterprise Funds are used to account for operations (a) that are financed and operated in a manner
similar to private business enterprises where the intent of the governing body is that costs (expenses,
including depreciation) of providing goods or services to the general public on a continuing basis be financed
or recovered primarily through user charges or (b) where periodic determination of revenues eamed,
expenses incurred and/or net income is deemed appropriate for capital maintenance, public policy,
management control, accountability or other purposes.
Operating Results--Water and Sewer System
The City Council fixes water and sewer rates and charges such that estimated income generated by
such rates and charges will cover operating expenses and debt service relating to the water system. Funds
and accounts relating to the Department of Public Utilities are kept separate from other funds and accounts of
the City.
The Department of Public Utilities has financed the construction and acquisition of water and sewer
facilities through Federal and State grant proceeds, pay-as-you-go funding and the issuance of City general
obligation water and sewer bonds, double barrel water and sewer bonds (secured both by water and sewer
revenues and the City's general obligation pledge) and water and sewer revenue bonds.
The Department is required by the City's bond resolutions, among other provisions, to establish rates
sufficient to cover operations and maintenance and debt service on the general obligation water and sewer
bonds and the water and sewer revenue bonds. Certain general obligation bonds issued prior to 1977 for
water and sewer purposes are not subject to such covenant. However, it is City Council policy to pay debt
service on those general obligation bonds issued for the water and sewer purposes from revenues of the
Water and Sewer Enterprise Fund, and to set water and sewer rates accordingly.
Fiscal Year 1999 operating revenues were $71,026,894. This represents a 4% increase over Fiscal
Year 1998. The majority of this increase is due to an increase in water consumption from the pdor fiscal
year. The Water and Sewer Enterprise Fund had positive unreserved retained earnings of $193,139,849 at
the end of Fiscal Year 1999.
The following table presents the operating results of the Water and Sewer Enterprise Fund, exclusive
of depreciation, as used in computing coverage of debt service, for Fiscal Year 1995 through Fiscal Year
1999. Coverage of debt service on the water and sewer revenue bonds and the general obligation bonds
issued for water and sewer purposes is shown separately from the coverage of debt service on all bonds
issued for water and sewer purposes.
28
SYSTEM OPERATING REVENUES, EXPENSES AND COVERAGE
(in thousands of dollars)
Operating Revenues
Service Charges
Water Usage
Miscellaneous
Total Operating Revenues
1995 1996 1997 1998 1999
$25,847 $27,244 $26,786 $28,822 $28,237
38,650 40,649 39,286 39,983 41,307
682 321 904 339 1,483
$65.179 $6~,214 $66.976 $68.144 $71,027
Operating Expenses
Water Acquisition
Water Distribution
Sewer Collection
Administration and Engineering
Customer Services
Total Operating Expenses
Net Operating Income
$26,152 $24,118 $26,879 28,875 32,325
3,933 3,940 3,996 4,775 5,857
5,778 6,071 6,920 6,539 7,398
8,834 9,226 10,353 11,034 10,660
4,907 4,814 4,707 4,927 5,264
$49,604 $48.169 $52,855 $56,150 $61.504
$15,575 $20,045 $14,121 $11.994 $ 9,523
Non-Operating Revenues
Interest
Water Resource Recovery Fee
Sewer Connection Fees
Norfolk Water True-Up
Total Non-Operating Income
$ 7,340 $ 8,442 $ 5,113 $ 3,969 $ 3,359
2,815 4,246 3,188 3,835 4,579
1,596 2,028 1,533 1,645 2,415
0 11,078 0 4,466 0
$11,751 $25.794 $ 9,834 $13,915 $10.353
$19,876
Income Available For Debt Service $27.326 $45.839 $23.955 $25.909
Annual Debt Service
Water and Sewer Revenue Bonds $ 5,304 $ 5,458
Total Water and Sewer Debt Service* $11,866 $11,925
Coverage of Debt Service on Water and
Sewer Revenue Bonds 5.15x 8A0x
Coverage of Debt Service on All Debt
Supported by Water and Sewer 2.30x 3.84x
Revenues
* Includes Capital Leases
$ 5,470 $ 5,689 $ 6,000
$11,477 $11,658 $11,930
4.38X 4.55X 3.31X
2.09X 2.22X 1.67X
Source: Department of Finance and Department of Public Utilities.
29
· Based upon the Financial Feasibility Study, AB&H projects the following coverage ratios:
WATER AND SEWER ENTERPRISE FUND
PROJECTED SYSTEM COVERAGE16)
(in thousands of dollars)
2000 2001 2002 2003 2004
Total Revenues(1)
Total Operating Expenses(2)
Revenues Available for Debt
Service
Annual Debt Service & Coverage
Water and Sewer Revenue
Bonds & Notes(3)
Coverage of Debt Service on
Water & Sewer Bonds & Notes
G.O. Water & Sewer Bonds(4) &
G.O. Pub. Imp. & Water & Sewer
Bonds(x)
$85,124 $77,926 $78,705 $79,436 $80,199
57,844 59,703 61.854 63.292 64,760
$27,280 $18,223 $16,851 $16,144 $15,439
$ 6,412 $ 9,589 $ 9,565 $ 9,799 $8,985
4.25 1.90 1.76 1.65 1.72
5.975 3,987 3,980 3,567 3,683
Total Debt Service
$12,387 $13,576 $13,545 $13,366 $12,668
Coverage of Total Debt Service
2.20 1.34 1.24 1.21 1.22
Total Revenues includes service charges, water usage, miscellaneous, interest, Norl:olk water service contract true-up, water
resource recovery fee, sewer main extensions.
Not including depreciation. Including fixed capacity charge, demand charge and commodity charge.
Revenue bonds and notes secured solely by pledge of water and sanitary sewer system revenues.
General obligation bonds secured by both a pledge of water and sanitary sewer system revenues and a pledged of the City's full
faith and credit.
General obligation bonds that are not secured by a pledge of water and sanitary sewer system revenues.
Assumed Growth Scenario: 1999-00 2000-01 2001-02 2002-03 2003-04
Water Accounts: 2,910 1,541 1,544 1,500 1,500
Sewer Accounts 3,010 1,740 1,536 1,512 1,500
Norfolk Water Service Contract in MDG: 34.2 34.8 35.2 35.7 36.1
Source: Financial Feasibility Study
Asset Evaluation
The estimated depreciated value of the water and sewage property, plant and equipment was
$432,038,729 as of June 30, 1999, including land. The following table sets forth the asset evaluation of the
System for each of the last five Fiscal Years.
30
WATER AND SEWER SYSTEM
ASSET EVALUATION
FOR FISCAL YEARS ENDING JUNE 30
1995
Millions of Gallons of
Water Storage 30.25
Miles of Water Lines 1,268
Miles of Sewer Lines 1,334
Number of Water Pump Stations 8
Number of Sewer
Pump Stations 363
Number of Water Connections 115,955
Number of Sewer
Connections
Total Value of Utility
Plant in Service
111,956
$374,$94,743
1996 1997 1998
30.25 30.25 30.25
1,279 1,329 1,343
1,365 1,394 1,410
8 8 9
368 368 372
117,117 117,290 119,414
113,916 115,175 117,749
$388.556.927 $400.686.209 $545.233.776
Source: City Department of Public Utilities.
1999
30.25
1,371
1,451
9
380
120,381
119,540
$566.825.390
31
· SECTION SiX: MISCELLANEOUS
LEGAL MA'I-FERS
Certain legal matters relating to the authorization and validity of the Series 2000 Bonds will be
subject to the approving opinion of Hunton & Williams, Richmond, Virginia, Bond Counsel, which will be
fumished at the expense of the City upon delivery of the Series 2000 Bonds, in substantially the form set forth
as Appendix F (the "Bond Opinion"). The Bond Opinion will be limited to matters relating to authorization and
validity of the Series 2000 Bonds and to the tax-exempt status of interest thereon as described in the section
Tax Exemption." Bond Counsel has not been engaged to investigate the financial resources of the City or its
ability to provide for payment of the Series 2000 Bonds, and the Bond Opinion will make no statement as to
such matters or as to the accuracy or completeness of this Official Statement or any other information that
may have been relied on by anyone in making the decision to purchase Series 2000 Bonds.
TAX EXEMPTION
Opinion of Bond Counsel
In the opinion of Bond Counsel, under existing law, interest, including accrued original issue discount
("OLD"), on the Series 2000 Bonds (a) will not be included in gross income for Federal income tax purposes,
(b) will not be an item of tax preference for purposes of the Federal alternative minimum income tax imposed
on individuals and corporations; however, with respect to corporations (as defined for Federal income tax
purposes) subject to the alternative minimum income tax, such interest is taken into account in determining
adjusted current earnings for purposes of computing such tax, and (c) will be exempt from income taxation by
the Commonwealth of Virginia. Except as described below regarding OlD, no other opinion is expressed by
Bond Counsel regarding the tax consequences of the ownership of or the receipt or accrual of interest on the
Series 2000 Bonds.
Bond Counsel's opinion will be given in reliance upon certifications by representatives of the City as
to certain facts relevant to both the opinion and requirements of the Internal Revenue Code of 1986, as
amended (the "Code"). The City has covenanted to comply with the provisions of the Code regarding,
among other matters, certain tax-exempt obligations and the use, expenditure and investment of the
proceeds of the Series 2000 Bonds. Failure by the City to comply with such covenants could cause interest,
including accrued OlD, on the Bonds to be included in gross income for Federal income tax purposes
retroactively to their date of issue.
Original Issue Discount
The initial public offering prices for each maturity of the Bonds maturing in the years ~ through
~ (the "OlD Bonds"), will be less than their stated principal amount. In the opinion of Bond Counsel,
under existing law, the difference between the stated principal amount and the initial public offedng price of
each maturity of the Bonds to the public (excluding bond houses, brokers and intermediaries) at which a
substantial amount of each maturity of such Bonds is sold will constitute OlD. The offering prices set forth on
the cover of this Official Statement are expected to be the initial offering prices to be public at which a
substantial amount of each maturity of such Bonds is sold.
Under the Code, for purposes of determining a holder's adjusted basis in an OlD Bond, OlD treated
as having accrued while the holder holds the Bond will be added to the holder's basis. OlD will accrue on a
constant yield-to-maturity method. The adjusted basis will be used to determine taxable gain or loss upon
the sale or other disposition (including payment at maturity) of an OlD Bond.
Prospective purchasers of OlD Bonds should consult their own tax advisors as to the calculation of
accrued OlD and the state and local tax consequences of owning or disposing of such Bonds.
32
Other Tax Matters
In addition to the matters addressed above, prospective purchasers of the Series 2000 Bonds should
be aware that the ownership of tax-exempt obligations may result in collateral Federal income tax
consequences to certain taxpayers, including without limitation financial institutions, property and casualty
insurance companies, S corporations, foreign corporations subject to the branch profits tax, recipients of
Social Security or Railroad Retirement benefits and taxpayers who may be deemed to have incurred or
continued indebtedness to purchase or carry tax-exempt obligations. ProSpective purchasers of the Series
2000 Bonds should consult their tax advisors as to the applicability and impact of such consequences.
Prospective purchasers of the Series 2000 Bonds also should consult their own tax advisors as to
the status of interest on the Series 2000 Bonds under the tax laws of any state other than Virginia.
RATINGS
Fitch IBCA, Inc., One State Street Plaza, New York, New York 10004, Moody's Investors Service, 99
Church Street, New York, New York 10007, and Standard & Poor's Public Finance Ratings, 55 Water Street,
New York, New York 10041, have given the Series 2000 Bonds the ratings of" , ...... and" ,"
respectively. The City requested that the Series 2000 Bonds be rated and furnished certain information to
Moody's, Standard & Poor's and Fitch, including certain information that may not be included in this Official
Statement.
Fitch ratings range from AAA to D to designate the relative investment qualities of bonds. The"
rating is [within] the highest classification of twelve such ratings. Fitch describes its"
rating as follows:
Moody's issues ratings ranging from Aaa to C to designate the relative investment qualities of bonds.
The .... rating is [within] the highest classification of nine such ratings. Moody's describes its
" "rating as follows:
Standard & Poor's issues ratings ranging from AAA to D designate the relative investment qualities
of bonds. The" "rating is [within] the highest classification of ten such ratings. Standard &
Poor's describes its .... rating as follows:
Reference should be made to the individual rating agency for a fuller description of the meaning of
the rating assigned by such rating agency. These ratings are not a recommendation to buy, sell or hold the
Series 2000 Bonds. The ratings are subject to review and change or withdrawal at any time if, in the
judgment of the respective rating agency, circumstances so warrant. There is no assurance that any such
ratings will continue for any period of time or that it will not be revised or withdrawn. A downward revision or
withdrawal of a rating may have an adverse effect on the market price of the Series 2000 Bonds.
33
LITIGATION
According to the City Attomey, there is no litigation of any kind now pending or, to the best of his
information, knowledge and belief, threatened against the City to restrain or enjoin the issuance or delivery of
the Series 2000 Bonds or the collection and application of Pledged Revenues under the Resolution or, in any
manner questioning the proceedings and authority under which the Series 2000 Bonds are issued or the
validity of the Series 2000 Bonds or the ability of the City to own and operate the System.
General Fund
The City is a named defendant in various litigation matters filed by parties concerning alleged
personal injuries, property damage and other causes of action which are being vigorously defended by the
City. In the opinion of the City Attomey, none of the pending litigation, if decided adversely to the City, would
materially affect the City's financial position.
Water and Sewer Enterprise Fund
The City has prevailed in all litigation concerning the Lake Gaston Water Supply Project, which
became operational in January, 1998, except for the following pending matter:
In January, 1984, the City filed suit in the United States District Court for the Eastem District of
Virginia, later transferred to the United States District Court for the Eastern District of North Carolina, seeking
a declaratory judgment that its withdrawals from Lake Gaston will not violate the riparian rights of certain
owners of property on the Roanoke River. The suit has been certified as a class action, and all riparian
owners of property on the Roanoke River below Roanoke Rapids Dam, except for the United States and the
State of North Carolina, have been enjoined from initiating any action alleging or seeking to establish that
their riparian rights are or will be violated by the operation of the Lake Gaston Project. The suit was originally
stayed until one year from the date the Lake Gaston Project became operational. The Project became
operational in January, 1998. In light of the fact that the Federal Energy Regulatory Commission (FERC) is
in the process of relicensing the Gaston-Roanoke Rapids hydroelectric facilities, the stay has been extended
until one year after the effective date of a new FERC license for such facilities, or further order of the court.
The aforesaid injunction remains in effect.
COMMITMENTS AND CONTINGENCIES
The City participates in a number of Federal and State grants, entitlement, and shared revenue
programs. The programs are subject to program compliance audits by the applicable Federal or State
agency or its representatives. Furthermore, the U.S. Office of Management and Budget, in Circular A-128,
established audit requirements for an annual independent organization-wide audit for local govemments
receiving Federal assistance. The amounts, if any, of expenditures which may be disallowed by these audits
cannot be determined at this time although the City expects such amount, if any, to be immaterial.
CERTIFICATES OF CITY OFFICIALS
Concurrently with the delivery of the Series 2000 Bonds, the City will furnish to the successful bidder
(a) a certificate dated the date of delivery of the Series 2000 Bonds, signed by the appropriate City officials
and stating that no litigation of any kind is then pending or, to the best of their information, knowledge and
belief, threatened against the City to restrain or enjoin the issuance or delivery of the Series 2000 Bonds or
the ability of the City to pledge Pledged Revenues to pay when due the principal of or premium, if any, or
interest on the Series 2000 Bonds or in any manner questioning the proceedings and authority under which
the Series 2000 Bonds are issued, and (b) a certificate dated the date of delivery of the Series 2000 Bonds,
stating that the descriptions and statements in this Official Statement (except in the subsection "Book-Entry
System" and the section "Litigation" and the information as to yields on the cover page) on the date of this
34
Official Statement and on the date of delivery of the Series 2000 Bonds were and are true and correct in all
material respects, did not and do not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make such descriptions and statements, in light of the
circumstances under which they were made, not misleading, and that no material adverse change has
occurred in the financial condition of the City between the date of this Official Statement and the date of
delivery of the Series 2000 Bonds other than as contemplated in this Official Statement. Such certificate will
also state, however, that such City officials did not independently verify the information indicated in this
Official Statement as having been obtained or derived from sources other than the City and its officers but
that they have no reason to believe that such information is not accurate.
The City Attomey also will furnish to the successful bidder concurrently with the delivery of the Series
2000 Bonds a certificate dated the date of delivery of the Series 2000 Bonds, stating that the statements in
the section herein "Litigation" on the date of this Official Statement and on the date of delivery of the Series
2000 Bonds were and are true and correct in all material respects and did not and do not contain an untrue
statement of a material fact or omit to state a material fact required to be stated therein or necessary to make
such statements, in light of the circumstances under which they were made, not misleading.
SALE AT COMPETITIVE BIDDING
The Series 2000 Bonds will be offered for sale at competitive bidding on July 25, 2000. After the
Bonds have been awarded, the City will issue an Official Statement in final form to be dated July 25, 2000.
The City will deem the Official Statement final as of its date, and the Official Statement in final form will be a
"Final Official Statement" within the meaning of the Rule. The Official Statement in final form will include,
among other matters, the identity of the winning bidder, the expected selling compensation to such
underwriters and other information on the interest rates and offering prices or yields of Series 2000 Bonds all
as supplied by the successful bidder.
CONTINUING DISCLOSURE
The City desires to assist the successful bidder in complying with the provisions of the Rule and has
agreed to execute a continuing disclosure agreement to provide certain annual financial information and
material event notices required by the Rule (collectively, "Continuing Disclosure"). As set forth in Appendix
G, such undertaking requires the City to provide only limited information at specified times and does not
require it to disclose all information that may affect the value of the Series 2000 Bonds. The City may choose
to make additional information available from time to time, but has no obligation to do so. The City has never
failed to comply in all material respects with any previous undertakings with regard to the Rule to provide
certain annual financial information and material event notices.
The City is required to file its annual Continuing Disclosure with each nationally recognized municipal
securities information repository ("NRMSlRs") and to any state information depository ("SID") created in
Virginia. No SiD has been created for Virginia. The City is required to file any material event notice with (1)
each NRMSIR or the Municipal Securities Rulemaking Board and (2) any Virginia SID. As of the date of this
Official Statement, the SEC has recognized the following entities as NRMSIRs:
Bloomberg Municipal Repositories
P. O. Box 840
Princeton, New Jersey 08542-0840
Telephone: (609) 279-3225
Facsimile: (609) 279-5962
E-Maih Munis@Bloomberg.com
Standard & Poor's J. J. Kenny Repository
55 Water Street
45th Floor
New York, New York 10041
Telephone: (212) 438-4595
Facsimile: (212) 438-3975
Interactive Data
Attn: Repository
DPC Data Inc.
One Executive Drive
35
100 Williams Street
New York, New York 10038
Telephone: (212) 771-6899
Facsimile: (212) 771-7390
E-Mail: N RMSlR@interactivedata.com
Fort Lee, New Jersey 07024
Telephone: (201) 346-0701
Facsimile: (201) 947-0107
E-Maih nrmsir@dpcdata.com
As described more fully in Appendix G, any Series 2000 Bondholder may take steps to enforce the
obligation of the City to provide Continuing Disclosure, but any failure by the City under its obligation will not
result in an event of default under the Series 2000 Bonds or the Resolution.
Investors and other interested parties may contact any NRMSIR for additional information
concerning its services. The City makes no representation as to the scope of the services provided to the
secondary market by any NRMSlR or as to the costs for the provision of such services by any NRMSlR.
APPROVAL OF OFFICIAL STATEMENT
Any statements in this Official Statement involving matters of opinion or estimates, whether or not
expressly so stated, are intended as such and not representations of fact. No representation is made that
any of the estimates will be realized. Neither this Official Statement nor any statement which may have been
made verbally or in writing is to be construed as a contract with the holder of the Series 2000 Bonds.
The attached Appendices are an integral part of this Official Statement and must be read together
with the balance of this Official Statement.
The distribution of this Preliminary Official Statement has been duly authorized by the City Council.
The City Council has deemed this Preliminary Official Statement final as of its date within the meaning of the
Rule except for the omission of certain pricing and other information permitted to be omitted by the Rule.
CITY OF VIRGINIA BEACH, VIRGINIA
By:.
City Manager
36
APPENDIX A
THE CITY OF VIRGINIA BEACH, VIRGINIA
THE CITY OF VIRGINIA BEACH
INTRODUCTION
The present City of Virginia Beach was formed on January 1, 1963, by the merger of Princess Anne
County and the former smaller City of Virginia Beach. This merger created one of the largest cities in the
Commonwealth of Virginia with an area of 310 square miles and 38 miles of shore line on the Atlantic Ocean
and the Chesapeake Bay. The City covers the entire eastern border of Virginia south of the Delmarva
Peninsula and includes a~l of the area from the Chesapeake Bay to the North Carolina border.
The City of Virginia Beach now has the largest population of any city in Virginia, estimated to be
451,991. As a city on the eastern seaboard, Virginia Beach has always been known as a resort community.
However, the strength of the City's economy lies in its diversification. Construction/real estate, light industry,
"high-tech" services, wholesale and retail sales, agriculture, four major military bases, and resort and
convention trade are the major aspects of the economy. The City encourages and supports this
diversification.
Virginia Beach is an independent, full-service city with sole local governmental taxing power within its
boundaries. It derives its governing authority from a charter granted by the General Assembly of the
Commonwealth of Virginia. The governing body of the City is the City Council, which formulates policies for
the administration of the City. The current charter provides for a Council-Manager form of government.
There is no overlapping debt or taxing powers with other political subdivisions. The water and
sewage systems are operated on a self-supporting basis.
The Executive Offices are located at the Municipal Center, Virginia Beach, Virginia 23456 (757) 427-
4242. The telephone number for the Finance Department is (757) 427-4681.
Certain Elected Officials
The City operates under the Council-Manager form of govemment as established by its Charter.
There is an 11-member City Council vested with local legislative powers. Each member of the City Council is
elected on an "at large" basis; however, seven seats must be filled by individuals who reside in the seven
residence districts of the City. The City's Charter was amended in 1995 to provide that the City's seven
boroughs would be replaced by these approximately equally populated residence districts. There is no
district residency requirement for the remaining four seats. The Mayor is elected by the voters and occupies
one of these four seats. The 1998 elections were the first in which members of City Council were elected
from the new residence districts. In May of 1998, nine of the eleven seats were up for election. Of these
nine seats, six were for four-year terms, and three were for two-year terms. In subsequent elections, all
members of the City Council will be elected for four-year terms, with the elections being held in even years for
approximately half the seats. The City Council elects a Vice-Mayor from among its members.
The City Manager is the administrative head of the municipal government and carries out the policies
of the City Council. The City Manager is appointed by the City Council and serves at the pleasure of the City
Council.
The City Council also appoints members to certain boards, commissions, and authorities as it deems
necessary to the operation of the City.
School Board
There is an 11-member School Board which until 1994 was appointed by the City Council. After
Virginia Beach voters approved an elected School Board in 1992, the General Assembly adopted Chapters
594 and 612 of the 1993 Acts of Assembly which were signed into law by Governor Wilder on March 5, 1993.
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Chapters 594 and 612 are identical, providing for a change from an appointed School Board to an elected
School Board in the City. The transition occurred for four borough and two at-large seats at the general
election held in May 1994, and for three borough and two at-large seats at the general election held on May
7, 1996. Like the City Council, seven seats must be filled on the School Board by individuals who reside in
the seven respective residence districts of the City. Each of the eleven elected School Board members shall
be elected by the voters of the City at large. The City Charter was amended in 1995 to provide that the City's
boroughs would be replaced by seven equally populated residence districts. The 1998 elections were the
first in which School Board members were elected from the new residence districts. In May of 1998, nine of
the eleven seats were up for election. Of these nine seats, six were for four-year terms, and three were for
two-year terms. After 1998, all School Board members will serve four-year terms. The School Board
exercises all of the powers conferred and performs all of the duties imposed upon them by general law.
Elected Officials
Meyera E. Oberndorf, Mayor
Civic leader, former school teacher and radio broadcaster. Elected to City Council in 1976. Re-
elected in 1980 and 1984. First elected Mayor on July 1, 1988, re-elected in 1992, 1996 and 2000. Bachelor
of Science degree in Elementary Education from Old Dominion University.
William D. Sessoms, Jr., Vice Mayor
Senior Vice President of Wachovia Bank, N.A.. Elected to City Council in 1988 to serve the two
remaining years of an unexpired term, re-elected in 1990, 1994 and 1998. Bachelor of Science degree in
Business Administration and Management from Virginia Commonwealth University.
Linwood O. Branch, III, Councilman
Owner/Manager of the Days Inn at the Beach. Elected to City Council in 1992. Re-elected in 1996
for a two-year term due to redistricting. Won re-election in 1998. Bachelor of Arts degree in Psychology from
Randolph-Macon College.
Margaret L. Eure, Councilwoman
Co-founder of Eure Rentals, Incorporated and Eure Distributing, Incorporated. Elected to City
Council in 1998 for a two-year term due to redistricting. Won re-election in 2000. Attended Kees Business
College and the American Institute of Banking.
William W. Harrison, Jr., Councilman
Partner in the law firm of Willcox & Savage, P.C. Elected to City Council in 1994 and re-elected in
1998. Received a Bachelor of Arts and Juris Doctorate degrees from the University of Virginia.
Barbara M. Henley, Councilwoman
Partner in Henley Farm LP. Former teacher in the City's public school system. Elected in 1978 to
serve on City Council. Re-elected in 1982 and 1986. Served as Vice Mayor from 1982-1984. Won election
to City Council in 1994 and re-elected in 1998. Graduate of Old Dominion University with a Bachelor of
Science degree in Elementary Education and a Masters degree in Urban Studies.
Louis R. Jones, Councilman
Owner and operator of Hollomon-Brown Funeral Homes, Inc. Elected to City Council in 1982 and
served as Mayor from 1982 to 1984. Re-elected to City Council in 1990, 1994 and 1998. Bachelor of
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Science degree in Business Administration from the College of William and Mary, Norfolk Division (now Old
Dominion University).
Robert C. Mandigo, Jr., Councilman
[insert bio]
Reba S. McClanan, Councilwoman
Civic leader and former school teacher. Employed in the Virginia Beach Public School System from
1964 to 1968. Elected to City Council in 1980 and re-elected in 1984 and 1988. Served as Vice Mayor from
1984 to 1986. Won election to City Council in 1996 and 1998, each for a two-year term due to redistricting.
Won re-election in 2000. Bachelor of Science degree from Berea College and Master of Science degree
from Virginia Polytechnic Institute and State University.
Nancy K. Parker, Councilwoman
Co-owner of Parker Pools, Inc. Former teacher in the Virginia Beach Public School System 1968 to
1969 and 1971. Elected to the City Council in 1986, re-elected in 1990, 1994 and 1998. Bachelor of Science
degree in Education from Old Dominion University.
Rosemary Wilson, Councilwoman
[insert bio]
Certain City Council Appointees and Administrative Staff Members
The City Manager is responsible for planning, organizing, directing, and coordinating all activities of
the City. The City Manager is also responsible for appointing and discharging all City employees and officers,
though responsibilities may be delegated to subordinates. A major responsibility of the City Manager is the
preparation of the annual City Operating Budget.
The City Attomey has management, charge, and control of all legal business of the City. The City
Attorney is chief legal advisor to the City Council, the City Manager, and all City departments and agencies. It
is the duty of the City Attorney to advise the City Council concerning the legality of actions by the City and to
represent the City in all matters affecting its interest.
It is the responsibility of the Real Estate Assessor's Office to annually appraise all real property in the
City. In addition, this office administers the Land Use Assessment Program for qualifying farm and forest
lands and processes the Tax Exemption Program for qualifying senior citizens and disabled persons.
The City Clerk's Office is responsible for recording and maintaining all legislative documents and
actions of the City Council.
Appointed Officials
James K. Spore, City Manager since November 25, 1991
Previously served as City Manager of Garland, Texas (1985 to 1991), and Bumsville, Minnesota
(1981 to 1985). Also served as the Director of Community Development for the City of Lakewood, Colorado
(1976 to 1981), and the City of Elgin, Illinois (1970 to 1976). Master of Public Administration degree,
University of Colorado, Boulder; Master of Urban Planning degree, University of Illinois, Urbana.
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Leslie L. Li/ley, City Attorney since October 31, 1989
Previously Assistant City Attorney for the City from 1987 to 1989. Employed as associate with the
law firm of Taylor, Walker & Adams, P.C., from 1983 to 1987. Served as Assistant Commonwealth's
Attorney for the City from 1979 to 1983. Served as Assistant to the City Manager for intergovernmental
Relations from 1974 to 1976. Served as Budget Officer for the City from 1972 to 1974. Bachelor of Science
degree in Business Administration from University of Richmond, Virginia (1971), Master of Business
Administration degree from College of William & Mary (1972), and Juris Doctor degree from T. C. Williams
School of Law, University of Richmond, Virginia (1978).
Ruth Hodges Smith, City Clerk since January 1, 1979
Certified Municipal Clerk, Bachelor of Arts degree in Administration from Potomac State College of
West Virginia University.
Steven T. Thompson, Chief Financial Officer since July 1, 2000
Previously served as City Manager for the City of Greenville, South Carolina, from 1998 to January
2000. City Manager from 1991 to 1998 and Assistant City Manager from 1983 to 1991 for Aiken, South
Carolina. Recently a management consultant specializing in innovations and improvements in local
govemment. Bachelor of Arts degree in Political Science from the College of Charleston, South Carolina
(1977), and a Masters of Public Administration degree from the University of South Carolina (1980).
Patricia A. Phillips, Director of Finance since April 16, 1992
Previously served as Director of the Office of Research and Strategic Analysis from 1975 to 1992.
Also served as a public accountant for Coopers and Lybrand from 1970 through 1975. Bachelor of Science
degree in Business Administration, Magna Cum Laude, Old Dominion University. Master in Business
Administration degree, Old Dominion University. Certified Public Accountant since 1972.
Clarence O. Warnstaff, Director of Public Utilities since October 16, 1985
Previously employed with the City of Dallas, Texas, for 15 years. Pdor to assuming his duties in
Virginia Beach, served as Assistant Director of the Dallas Water Utility, responsible for engineering and
construction. Bachelor of Science degree in Electrical Engineering plus continuing education classes in
Engineering and Management. Registered Professional Engineer and member of the American Water
Works Association, American Society of Civil Engineers, National Society of Professional Engineers, Virginia
Society of Professional Engineers and Water Pollution Control Federation.
Governmental Services and Facilities
The City provides general governmental services for its citizens including police and fire protection,
collection and disposal of refuse, water and sewer services, parks and recreation, libraries/culture, and
maintenance of streets and highways. Other services provided by the City, which receive partial funding
from the State, include public education in grades kindergarten through twelfth, and certain technical and
special education, mental health assistance, health and social services, agricultural services, and judicial
activities.
The City's main municipal complex includes eight general administrative buildings, a school
administration building, a public safety building, a city jail, a judicial complex, a City garage complex, a
highway maintenance facility, a public utilities operational maintenance facility, a waste management facility
and a farmer's market. There are four police precind[s, 18 fire stations, one fire training center, one central
library along with six area libraries, 203 developed city parks, and 85 elementary and secondary schools
located throughout the City.
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Some of the other major facilities provided by the City include a convention center, the Virginia
Marine Science Museum, six recreational centers, a tennis complex, three municipal golf courses, and a
farmers' produce market. Recently, the City opened a 6,000 seat multipurpose sports stadium and an
amphitheater, which books approximately 35 entertainment events a year.
The City of Virginia Beach provides a comprehensive range of public services characteristic of its
position as the most populous city in the Commonwealth of Virginia.
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City of Virginia Beach
Operating Structure
Mmsmsms and C,,t#.,'al Am
City of Virginia Beach
Planning Structure
0-- Planning Team
^-6
Overview of Governmental Organization and Selected Functions
Since 1990, the City's government organizational structure has changed in response to the
challenges of increased demand for quality service, infrastructure needs, potential reductions in state and
federal funding and a slowdown in population and revenue growth. From 1991 to 1995, the City of Virginia
Beach government administration was organized into management teams to assist the City Manager in the
operations of the City and the delivery of services to citizens. A Management Leadership Team ("MLT") also
was established in 1991 to assist the City Manager with organizational issue identification and resolution.
Since 1991, the MLT has evolved and is now the executive body of government, including the City Manager,
the Chief Operating Officer, the Chief of Staff, the Chief Information Officer and the Chief Financial Officer,
which integrates and aligns the organization to address City Council's Destination Points and the major
components of the Virginia Beach Quality Service System (Business Strategy, Common Management,
System Processes, Organizational Learning and Development, Citizen Communication and
Interrelationships, Member Communication and Interrelationships and Indicator System).
In 1995, the City expanded this team management approach. The Virginia Beach Quality Service
System ('¥BQSS") was developed as a way to organize the planning structure of the government and
expand the team management approach. It is an evolving system that continues to adapt and change based
on the needs of the City's customers. It does not replace the existing departments and vertical hierarchy, but
supplements it with a cross-functional process.
In 1995, staff work on City Council's Destination Points initiative resulted in the creation of six
businesses and five commons areas. These six business areas were adopted by City Council to reflect the
manner in which the City does "business." The six businesses of the City are: Economic Vitality, Safe
Community, Quality Physical Environment, Quality Education and Lifelong Learning, Cultural and
Recreational Opportunities, and Family and Youth Opportunities. The ownership of these six businesses of
the City were assigned to Strategic Issue Teams.
Commons Policy Teams also were established to lead and manage the City's resources common to
all departments. Commons Policy Teams address the following resources: Budget and Financial
Resources, Facilities and Land, Human Resources, Information Technology and Public Relations and
Marketing. Commons Policy Teams identify issues and long term needs of the organization, prioritize such
needs and make final recommendations to the City Manager and the MLT.
In August 1998, a "Strategy to Achieve City Council's Vision for the Future" was published and
distributed throughout the organization. There are two main focuses of the Strategy: the Community and the
Government Organization. This document further defines the work of the VBQSS and the vision for the
community.
In May 1996, the City received the National Innovation Award, presented by the Los Angeles
Amedcan Society of Public Administration and the Transforming Local Government Conference in Long
Beach, California. The City was one of six cities nationwide selected to present a case study at the
conference. This national award recognizes Virginia Beach's excellence and innovation in organizational
development, strategic planning, quality initiatives and process management.
In April 1999, the City was recognized for its efforts to implement the VBQSS by receiving the
Medallion Award from the 1998 U.S. Senate Productivity and Quality Award in the public sector category for
the Commonwealth of Virginia.
Functional Departments
The Department of Agriculture provides educational and regulatory services in agriculture, home
economics, 4-H, and community resource development. The department has three major divisions. Virginia
Tech extension services offers educational programs and technical information on agriculture and
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horticulture. The Division of Environmental Services provides expert information on soil and vegetation. The
Farmer's Market provides a place for the sale of goods and products of local farmers and craftsmen and for
the provision of farm-related community activities.
The function of the Department of Communications and Information Technology is the processing
and electronic storage of information used in the daily business of the City. The department collects,
organizes and disseminates information to all City departments, City agencies, and the public school system.
It also provides consulting services in related areas to municipal users to assist them in formulating goals,
objectives and long-range plans. The department also manages school and City video production services
and facilities and provides information to the community on municipal government and the public school
system through daily cablecasting of programs on the City's Municipal Cable Access Television Station,
Channels 47 and 48.
In 1988, the Tourist Development and Convention Promotion divisions of the Economic
Development Department were reorganized and formed a new department named the Convention and
Visitor Development Department. This department coordinates the advertising and promotion of tourist
activities and is responsible for bringing meetings, conferences, and conventions of large groups to Virginia
Beach. The department operates a Visitor Information Center and the large convention center known as the
Pavilion. Over 2.7 million tourists and conventioneers visited Virginia Beach in calendar year 1998, spending
an estimated $568.0 million and generating over $43.7 million in tax revenues.
The Economic Development Department promotes and encourages the economic growth and
diversity of the City. The department works with the Virginia Beach Development Authority to attract
business and industry to Virginia Beach and to develop sites for new or expanding businesses in the City's
Business/Industrial Parks. The department was named one of the top ten development organizations in the
nation for 1990 by Site Selection and Industrial Development magazine.
The Department of Emergency Medical Services coordinates the pre-hospital emergency care
provided by the 11 volunteer Rescue Squads. In Fiscal Year 1999, it answered over 25,000 calls for medical
assistance. This care includes rapid, safe response to the scene, proper treatment of the victim, and prompt
transfer to a hospital. The department also provides all rescue squad training and coordinates the use of
specialized resources including police, fire, hospital personnel, dispatchers, and the Nightingale Air
Ambulance to deal with medical emergencies in the City. Approximately 760 volunteers were active with the
rescue squads in 1999.
The Department of Finance oversees the financial affairs of the City and ensures the financial
integrity of City operations. Departmental services include: payment of all City and School Board bills;
maintenance of accounting records; payment of all City employees and administration of employee benefits;
provision of insurance and self-insurance; maintenance of the City's fixed assets inventory; procurement of
all equipment, materials and services for all city agencies; and coordination and administration of the City's
long-term debt program.
The City's Fire Department, which is responsible for both fire prevention and fire suppression,
handled over 20,130 fire and rescue incidents in Fiscal Year 1999. The City's firefighters perform the actual
emergency responses to fires from the City's 18 fire stations. In addition, 114 available volunteer firefighters
with proper training from the City's fire training center provide a significant manpower contribution to the
firefighting force. The Emergency Services Office, whose normal daily operations are overseen by the Fire
Department, is responsible for protecting the lives and property of Virginia Beach citizens during a major
emergency disaster.
The Office of the General Registrar is responsible for providing an accessible and fair means by
which City residents can register and vote. Maintaining 288,527 records, this office makes appropriate
changes and/or deletions as required by law. The number of registered voters was approximately 225,588
as of October 31, 1999.
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The Department of General Services provides support functions for City departments. General
Services consists of three major units: Building Maintenance, Landscape Services and Internal Service
Support for Automotive Services, Records Management and Mail Distribution.
The Department of Housing and Neighborhood Preservation designs programs involving capital
improvements, new construction, and rehabilitation to revitalize areas. The department administers the State
program, which subsidizes rent up to 70 percent for qualified tenants and the Urban Preservation and Infill
Program, which provides permanent mortgage financing to qualified persons in specified areas. In addition,
the Zoning Enforcement Unit interprets and ensures compliance with the City zoning ordinance and other
sections of the City Code related to land use.
The Department of Human Resources is responsible for developing and managing the City's
personnel management programs to ensure an effective delivery of services by the workforce. The
department provides services in applicant counseling, recruitment, testing, volunteer referrals, policy
interpretations, fringe benefits, grievance procedures, disciplinary action, career counseling, professional
development, compensation, employee safety, and occupational health services.
The Juvenile Probation Office provides support services to the Juvenile and Domestic Relations
District Court. The office provides probation supervision, intake services, and parole services for juveniles. It
provides court support by processing petitions and preparing social background investigations.
The Department of Management Services develops and oversees the City Operating Budget and
Capital Improvement Program. The department provides assistance and direction to City departments for
any amendments to the above programs. The department reviews and recommends alternative budget
formats, provides multi-year forecasting of revenues and expenditures, evaluates City programs and services
and assists departments in management issues.
The Department of Mental Health/Mental Retardation/Substance Abuse carries out its mission of
strengthening the health and prosperity of the community by planning, developing, implementing, managing
and evaluating a system of mental health, mental retardation and substance abuse programs, services and
facilities within the policies of the Virginia Beach Community Services Board. The Department and the Board
work to develop a system of preventative, developmental, therapeutic, and training services to meet the
mental health needs of Virginia Beach citizens. This is accomplished through program coordination with the
Eastern State Hospital, Southeastern Virginia Training Center for the Mentally Retarded, the private sector,
and general community.
The Department of Museums and Cultural Arts operates the Marine Science Museum and The
Francis Land House and provides support services to the Arts and Humanities Commission. The Virginia
Marine Science Museum first opened in 1986 and was expanded to three times its original size in 1996. This
newly renovated 120,000 square foot facility has doubled its attendance and takes visitors on a journey of
water through Virginia's marine environment by way of exhibits that include a 300,000 gallon shark aquarium,
live otters, seals and many hands-on experiments. It also includes one of the nation's few 3-D IMAX
theaters. The purpose of the Francis Land House is to collect, preserve and present historically accurate
material reflecting life in eighteenth century Princess Anne County. The house is also used for official City
receptions. Approximately 15,000 visitors tour the house each year.
The Arts and Humanities Commission serves in an advisory capacity to City Council on matters
relating to the arts. The Commission administers public funds to arts organizations and monitors grants to
assure fiscal responsibility.
The deWitt Cottage, built in 1895, is the last beach cottage on the resort oceanfront and is listed in
the National Historic Register. The City recently joined forces with two private groups to acquire and
renovate the cottage. The Back Bay Wildfowl Guild now operates the building as the Atlantic Wildfowl Art
Museum. Additionally, the department oversees two other properties, the Contemporary Art Center of
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Virginia and the Old Coast Guard Station Museum, which are owned by the City and operated by private,
non-profit groups.
The Department of Parks and Recreation conducts a wide range of high quality, year-round leisure
time programs that are responsive to the physical, mental and cultural needs of the citizens of Virginia Beach.
The department consists of the Parks Division and the Recreation Division. In Fiscal Year 1999, the
Department generated revenues of over $10.1 million through its various programs and activities.
The Parks Division plans, acquires, constructs, and maintains parks, playgrounds, public beaches,
golf courses, and open spaces. There are 203 developed City parks, 186 of these are classified as
neighborhood parks, 9 are classified as district parks and 8 are classified as community parks. The
Recreation Division has responsibilities in the following areas: providing recreation and leisure services to
adults, senior citizens, and youths; organizing well-rounded athletic programs for persons from ten years of
age and older; providing all disabled citizens the opportunity to receive the benefits of recreation and leisure
in the least restrictive environment; operating a series of recreation centers located throughout the City; and
providing classes in the Performing Arts.
The Department of Planning and Community Development provides policy and operational planning
support in the areas of transportation, land use, zoning, and environmental protection and management. The
department is responsible for maintaining a long-range Comprehensive Plan which provides guidance for the
physical development of the City. The department reviews subdivision plans, site plans, and land
management plans and prepares the monthly Planning Commission Agenda. Its division of Development
Services provides customer-oriented management of plan review, utility, right-of-way, moving and hauling
permit issuance and surety administration. The division of Environmental Management coordinates many of
the City's environmental programs and serves as a point of contact for information and liaison with the
community on environmental issues. The department through its Permits and Inspections Division ensures
compliance with City and/or state building code standards with the inspection of all construction in the City.
The Police Department is composed of five major units: Administration, Support, Operations,
Communications and Special Investigative Divisions. The department operates through four precincts
located throughout the City. Virginia Beach's crime rate for 1998 was 41.0 crimes per 1,000 population.
Furthermore, in 1998, according to a Federal Bureau of Investigation report, Virginia Beach recorded the
lowest "part-one" crime rate among cities with 350,000 to 850,000 population.
The Department of Public Health is responsible for promoting the best possible state of health for all
Virginia Beach citizens. The department assumes primary responsibilities for providing protective, curative,
and environmental health services when not otherwise provided by the private sector. The Public Health
Department offers services and clinics in the areas of pediatrics, dentistry, family planning, immunizations,
home nursing, matemity, chest x-rays, venereal disease, health education, and environmental health.
The Department of Public Libraries manages six area libraries along with a 95,000 square foot
Central Library. The departments outreach services include a bookmobile, and special services for
homebound and disabled citizens including a subregional library for the blind and handicapped. The
department's other support services include a municipal reference library and a law library. During 1990, the
City completed the construction of the Kempsville Library and the Pungo/Blackwater Library, for a total library
system of 163,400 square feet.
The Department of Public Utilities operates and actively maintains the City-owned water distribution
and sanitary sewer collection systems serving the urban areas of the City residents. Public Utilities operates
and maintains a water distribution system comprising over 1,400 miles of water distribution pipe. Thirteen
water storage tanks, nine water pumping stations and some 7,200 fire hydrants. In addition, over 123,000
water meters are read and billed every 60 days. Laboratory staff test water quality daily throughout the
distribution system. A 24-hour control center remotely monitors and controls pump station operation. Public
Utilities operates and maintains a sanitary sewer collection and transmission system comprising over 1,400
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miles of gravity and force main pipe and over 380 sewer pump stations. A 24-hour control center remotely
monitors pump station operation. The City's sanitary sewer system collects sewage from City customers,
transmitting it to one of two wastewater treatment plants within the City. Both treatment plants are owned
and operated by the Hampton Roads Sanitary District, a regional sewage treatment authority. The total asset
evaluation of the water and sewer system at June 30, 1999, was $567 million.
The Department of Public Works oversees the design and construction of new City structures and
transportation systems, maintains a large portion of the City's infrastructure (e.g., roadways, bddges, storm
water systems, beaches and traffic control devices), and provides for collection, recycling and disposal of
solid waste. The administration of the storm water management utility is also included as a responsibility of
the department.
The Department of Social Services provides opportunities for citizens in need to achieve self-support
and self-sufficiency. The department provides programs for children in child protection and prevention
services, aid to dependent children and foster care. To assist adults, the department has programs in
employment services, care for the elderly and emergency needs services. In addition, it operates the
Pendleton Child Service Center, a community treatment agency serving children of Virginia Beach and
Chesapeake, ages 12 and under, who are exhibiting serious antisocial and maladaptive behaviors in the
home, school and/or community.
The Volunteer Council coordinates the use of volunteers throughout City departments.
Year 2000 Matters
The City is not aware of any significant adverse effects on it or its operations as a result of the date
transition from 1999 to 2000. The City's efforts to prepare for this transition and anticipated Year 2000
computer problems did not identify any material problems expected to arise after the new year.
Economic and Demographic Factors
Population
Based on the April 1990 census conducted by the U.S. Census Bureau, the population of the City of
Virginia Beach was 393,089. This census established Virginia Beach as the most populous city in the
Commonwealth of Virginia. The following table presents population figures for selected years.
POPULATION AND RATE OF CHANGE
VIRGINIA BEACH AND THE UNITED STATES
SELECTED YEARS
Year
Virqinia Beach
Rate of Chanqe
United States
Rate of Chan_ue
1950
1960
1970
1980
1990
1991
1992
1993
1994
1995
1996
1997
47,667
85,2O0
172,106
262,199
393,089
398,117
404,822
410,607
416,662
421,517
425,605
430,485
N/A
78.71%
102.00
52.35
49.92
1.28
1.68
1.43
1.47
1.17
0.97
1.15
150,697,361
178,464,236
203,211,926
227,225,000
249,398,000
252,106,000
255,011,000
257,795,000
260,289,000
262,765,000
265,190,000
267,744,000
N/A
18.43%
13.87
11.82
9.76
1.09
1.15
1.09
0.97
0.95
0.92
0.96
A-11
1998 435,550 1.18 270,299,000 0.95
1999 439,889 1.00 272,878,000 0.95
2000 451,991 2.19 N/A
Sources: City Department of Planning, U.S. Department of Commerce, U.S. Census Bureau and Bureau of Economic Analysis.
FIVE MOST POPULOUS CITIES IN VIRGINIA
City 1990 Po.~ulation 2000 Po_oulation (Estimate)
Virginia Beach 393,089 451,991
Norfolk 261,250 225,000
Richmond 202,798 192,000
Newport News 171,439 181,000
Chesapeake 151,982 207,000
Sources: U.S. Census Bureau for 1990 figures; Weldon Cooper Center for Public Service, University of Virginia, Charlottesville,
Virginia, for 2000 estimates.
Income
Presented below are tables of per capita income and personal income for selected years.
PER CAPITA INCOME
1970 1980 1990 1996 1997 1998
Virginia Beach $4,015 $10,397 $19,511 $24,993 $26,008 $26,967
Norfolk 3,655 8,820 15,048 20,104 20,497 20,967
Chesapeake 3,330 9,016 17,464 21,585 22,589 23,606
Portsmouth 3,159 8,619 15,269 18,870 19,666 20,502
Commonwealth of Virginia 3,768 9,922 20,008 25,495 26,810 28,063
United States 4,072 10,030 19,142 24,651 25,924 27,203
Source: United States Department of Commerce, Bureau of Economic Analysis. Most recent information available.
TOTAL PERSONAL INCOME
(in $ Millions)
1970 1980 1990 1996 1997 1998
Virginia Beach $696
Commonwealth of Virginia 17,561
Virginia Beach as a
percent of state 4.0%
$2,753 $7,773 $10,719 $11,212 $11,613
53,267 124,325 169,938 180,510 190,528
5.2% 6.3% 6.3% 6.2% 6.1%
Source: United States Department of Commerce, Bureau of Economic Analysis.
Presented below is a table showing median household effective buying income for the City, the
Hampton Roads MSA, the Commonwealth of Virginia and the United States for the last ten calendar years,
followed by comparative tables showing Virginia Beach as a percentage of the various regions.
Hampton
December 31 Virginia Beach Roads MSA
Commonwealth
of Virginia
United States
1989 $34,316 $27,716 $30,430 $25,976
1990 $34,191 27,790 30,504 27,912
A-12
1991 $37,271 31,853 34,400 32,073
1992 $38,305 32,775 35,322 33,178
1993 $40,838 35,125 37,838 35,058
1994 $42,944 36,836 39,463 37,070
1995 $36,982 30,966 34,136 32,238
1996 $38,453 31,953 35,405 33,482
1997 $39,654 32,194 36,802 34,618
1998 $40,509 33,509 37,740 35,377
December 31
Virginia Beach Hampton Roads Commonwealth of Virginia
AS a Percent of U.S. As a Percent of U.S. As a Percent of U.S.
1989 132.11% 106.70% 117.15%
1990 122.50 99.56 109.29
1991 116.21 99.31 107.26
1992 115.45 98.79 106.46
1993 116.49 100.20 107.94
1994 115.85 99.37 106.46
1995 114.72 96.05 105.89
1996 114.85 95.43 105.74
1997 114.55 95.08 106.31
1998 114.51 94.72 106.68
De;ember 31
Virginia Beach
as a Percent of MSA
Virginia Beach
eS a Percent of State
1989 123.81% 112.77%
1990 123.03 112.09
1991 117.01 108.35
1992 116.87 108.45
1993 116.26 107.93
1994 116.58 108.82
1995 119.43 108.34
1996 120.34 108.61
1997 120.48 107.75
1998 120.89 107.34
Source: Sales & Marketing Management
Housing and Construction
The data in the tables below are presented to illustrate various housing characteristics for the City.
As of January 1, 1999, the total estimated number of dwelling units in the City was 159,477, excluding military
housing. Single-family units represented 59 percent of this total. The distribution of all dwelling units is as
follows:
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DWELLING UNITS BY TYPE
(Estimated As Of January 1, 1999)
U n its Percent
Single Family 93,921 59%
Duplex 4,430 3
Townhouse 19,664 12
Multi-Family 41,462 26
Total 1 ~9,477 100%
Note: Does not include Military Combined Units.
Source: City Department of Planning.
In calendar year 1999, the City issued 19,174 permits valued at $455,353,722. The following table
presents a further breakdown on building permits.
NUMBER OF BUILDING PERMITS ISSUED AND VALUE
Calendar
Year Residentialm Commercial Industrial Other Total Value
1990 1,582 922 3 12,229 $364,313,097
1991 1,390 802 8 12,433 252,723,848
1992 1,480 825 7 14,361 267,009,962
1993 1,722 826 4 16,605 282,255,459
1994 1,379 740 9 16,257 279,298,570
1995 1,515 813 21 16,499 336,173,287
1996 1,409 1,011 25 18,750 342,592,049
1997 1,276 1,050 33 18,701 367,505,973
1998 1,553 1,111 32 19,597 466,077,774
1999 1,305 1,100 32 16,737 455,353,722
One residential building permit does not necessarily equal one residential unit; in many instances one permit is for multiple residential
units.
Source: City Department of Permits and Inspections.
The following table presents annual construction information for the City, including the number and
assessed value of residential and commercial units. Residential and commercial construction during Fiscal
Year 1999 totaled 2,531 residential building units and 1,097 commercial construction permits for a total value
of $312,745,994.
A-14
NEW CONSTRUCTION: NUMBER OF UNITS
AND ESTIMATED VALUE
Residential Construction Cemmercial Construction
Fiscal Number of Estimated Number of Estimated Total Estimated
Year Units Value Permits Value Value
1990 3,265 $194,529,071 942 $162,173,281 $356,702,352
1991 1,957 175,002,369 826 51,636,092 226,638,461
1992 1,917 247,427,799 851 79,186,301 326,614,100
1993 1,791 171,130,203 849 84,052,676 255,182,879
1994 2,016 202,992,500 730 37,066,141 240,058,837
1995 1,508 127,310,613 656 44,219,224 171,529,837
1996 2,330 216,411,267 933 107,463,288 323,874,547
1997 1,562 182,876,814 1,020 79,169,401 262,046,215
1998 1,783 253,002,425 1,092 112,734,060 365,736,485
1999 2,531 234,502,724 1,097 78,243,270 312,745,994
Source: City Department of Permits and Inspections.
Employment
Private employers in the City provided jobs for 139,915 persons in the first three quarters of 1999.
The following table presents the number of establishments, employment, and quarterly gross wages for the
first three quarters of 1999.
CITY OF VIRGINIA BEACH
NUMBER OF ESTABLISHMENTS, EMPLOYMENT
AND QUARTERLY GROSS WAGES
QUARTER ENDED SEPTEMBER 30, 1999
Average
Number of Average Emp. Quarterly Weekly Wages
Industry Grouo Establishments For Quarter Gross Waqes Per Emolovee
Private
Agriculture, Forestry, Fishing and Mining 203 1,528 $ 7,090,671 $357
Mining ....
Construction 1,269 119361 79,822,640 514
Manufacturing 184 6086 41,326,708 622
Transportation, Communications and
Utilities 317 6,137 48,753,312 611
Wholesale and Retail Trade 2,624 47,381 199,641,370 324
Financial, Insurance and Real Estate 1,051 11,910 95,150,901 615
Services 3,729 54,944 325.510.500
Total Private 9,579 139,915 $797,364,272 $438
Public
State Government 28 1,012 10,453,775 $499
Local Government 40 16,377 127,070,811 597
Federal Government 24 5.091 35.857.077 599
Total Public 92 23.080 173.181.775 $548
TOTAL 9,671 162.990 $970.546.047 $546
Note: Excludes non-civilian employment and wages at military installations located within the City.
Source: Virginia Employment Commission, Economic Information Services Division.
* Pursuant to the Virginia Unemployment Compensation Act, Title 60.3, Code of Virginia, Sections 60.2-114 and 60.2-623, certain
data is suppressed within the mining, agricultural, manufacturing, services and non-classifiable categories.
A-15
The following table is a breakdown of employment by sector in the City of Virginia Beach.
EMPLOYMENT BY SECTOR
AS A PERCENTAGE OF TOTAL
QUARTER ENDED SEPTEMBER 30, 1999
Services
Trade
Government
Construction
Financial, Insurance and Real Estate
Manufacturing
Transportation, Communication and Utilities
Agriculture
Total
34%
29
14
7
7
4
4
1
100%
Source: Virginia Employment Commission, Economic Information.
AS illustrated in the table below, the unemployment rate for the City has been consistently lower than
the rates for the Metropolitan Statistical Area (MSA), the Commonwealth of Virginia and the United States.
ANNUAL AVERAGE UNEMPLOYMENT RATE
1995 to 1999
1995 1996 t997 1998 1999
Virginia Beach 4.3% 4.1% 4.0% 2.8% 2.3%
MSA (1) 4.9 4.8 4.8 3.5 3.4
Commonwealth of Virginia 4.5 4.4 4.0 2.9 2.8
United States 5.6 5.4 4.9 4.5 4.2
MSA includes the Cities of Chesapeake, Hampton, Newport News, Norfolk, Poquoson, Portsmouth, Suffolk, Virginia Beach and
Williamsburg and the Counties of Gloucester, Isle of Wight, James City, Mathews and York. Aisc includes Curdtuck County,
North Carolina.
Source: U.S. Department of Labor, Bureau of Labor Statistics.
Business and Industry
The City has five major concentrations of office, industrial and commercial property - Airport
Industrial Park, Greenwich/Witchduck Corridor, Central Business District/Pembroke area, Oceana West
Corporate Park/Lynnhaven Corridor, and Corporate Landing.
Airport Industrial Park. The park encompasses 250 acres with 4 million square feet of light industrial
and office space. National and intemational manufacturing, warehousing and distribution operations are
located here.
Greenwich/Witchduck Corridor. The Greenwich/Witchduck corridor currently contains 1.3 million
square feet of Iow and mid-rise suburban office space in business parks including Koger East Business Park,
Corporate Woods and Commerce Park that house corporate headquarters and business operations of many
types. The Corridor currently contains 1.8 million square feet of light industrial space and facilities housing
regional warehousing and distribution operations.
Central Business District/Pembroke Area. The CBD encompasses 500 acres and 1.9 million square
feet of mid and high-rise office space in business parks including Columbus Center, Pembroke Office Park
and Corporate Center. 150 acres are presently available for development and an additional 150 acres are to
A-16
be recycled in the future. Corporate citizens in the area include six of the seven largest law firms in Virginia
Beach as well as numerous financial, information processing and professional services firms.
Ocean West Corporate Park/Lynnhaven Corridor. The park encompasses 1,100 acres and currently
contains 1.4 million square feet of Iow and mid-rise suburban office space and 3.8 million square feet of light
industrial space. 220 acres are presently available for development. Corporate citizens in Oceana West and
adjacent business parks including Reflections, Lynnhaven Industrial Area, Oceana East and Oceana South
Industrial Parks comprise a wise variety of domestic and foreign firms, including corporate headquarters and
manufacturing, warehousing and distribution operations.
Corporate Landing. The park encompasses over 300 acres and is owned and operated by the
Virginia Beach Development Authority. 125 acres are presently available for headquarters, professional
services, research and development, office buildings, retail and two conference centers. Corporate citizens
include world headquarters, regional offices, and high-tech manufacturing. This master-planned, multi-
faceted park contains 38 acres of lakes, jogging trails, green space and recreational opportunities.
Throughout Virginia Beach there are many additional smaller nodes of office and commercial activity
including Little Neck, Oceanfront, Birdneck/Laskin Road, First Colonial and Kempsville.
Firm
Lynnhaven Mall
Pembroke Mall
Christian Broadcasting Network
& Founders Inn
Tidewater Health Care
GEICO Direct
Lillian Vernon Corp.
Sentara Hospital Bayside and
Health Management
Avis Rent a Car System, Inc.
Stihl, Incorporated
ARVON
U. S. Postal Service
The Virginian-Pilot
Abacus Communications, LP
Bell Atlantic Corporation
Navy Exchange Service
Command (NEXCOM)
M&G Electronics Corporation
CITY OF VIRGINIA BEACH
MAJOR PRIVATE EMPLOYERS
GREATER THAN 500 EMPLOYEES
Type of Business
Retail Trade
Retail Trade
Education & Communications
Medical Services
Automobile Insurance
Catalog Fulfillment Center
Medical Services
National Processing Center
Manufacturing of Portable Outdoor Power
Equipment
Professional Staffing Services
Postal Delivery
Newspaper
Telecommunications Sales and Installation
Public Utility
Corporate Headquarters for Navy Exchange
System
Manufacturing of Wiring Harness Sets
Number of
Employees
3,000
2,300
1,932
1,800
1,800
1,500
1,200
1,000
800
700
70O
7O0
540
500
500
50O
Source: Department of Economic Development.
Retail Sales
The table presented below is a summary of the City's taxable retail sales; it does not include sales
which are exempt from tax. Specifically exempt from the sales tax under Sections 58-441.6 of the Virginia
Retail Sales and Use Tax Act are sales of alcoholic beverages in government stores; sales of certain motor
vehicles, trailers and semitrailers, mobile homes, and travel trailers; and sales of certain motor vehicle fuels.
A-17
Also, the figures do not include non-taxable sales on military bases in the City estimated to be in excess of
$125,000,000 annually.
REGISTERED RETAIL/WHOLESALE ESTABLISHMENTS
AND TAXABLE SALES
Calendar Year
Registered Retail
Establishments
Taxable Retail
Sales
1990 7,258 $2,372,539,391
1991 7,331 2,384,755,654
1992 7,468 2,422,907,525
1993 7,397 2,628,871,288
1994 7,431 2,810,901,704
1995 7,504 2,948,967,853
1996 7,617 3,021,817,302
1997 7,642 3,172,382,057
1998 7,699 3,343,759,258
1999 7,665 3,446,988,609
Source: Virginia Department of Taxation.
Tourism and Conventions
In calendar year 1999, an estimated 2.6 million people visited the resort city and spent approximately
$601 million during their stay for accommodations, meals, entertainment and other services. Approximately
$46.1 million accrued to the City in the form of tax revenues. Several thousand City businesses employ
approximately 20,000 full-time and part-time employees in the travel and tourism market. The City is
evolving into a year-round destination. In 1999, 55% of visitors, 64% of the room nights and 51% of tourist
spending came in September to May.
Statistics for 1999 show that an estimated 202,260 convention and trade show delegates attended
517 meetings at the Convention Center and at the City's more than two dozen conference hotels, producing
$67.1 million in gross revenue. Of this amount $3.69 million went directly to the City as tax revenue.
In 1999, the City participated through public-private partnerships in the development of two new golf
courses for the City. Both opened in the spring of 1999 and one hosted a Buy.ccm Tour Tournament in May
2000.
On June 24, 2000, the City held a dedication ceremony for the completion of the Beach Erosion
Control and Hurricane Protection Project at the oceanfront. The project consists of constructing a seawall
running for 58 blocks at the oceanfront, a new boardwalk and an additional sand buffer. The new seawall will
afford the City increased hurricane protection as well as beautification of the oceanfront. The project costs
are estimated at $115 million, with the City funding one-third and the federal government providing two-thirds
of the funding. The project had been under construction since 1996.
Tourism and convention activity generate tax revenue for the City, particularly in the form of a hotel
room and meal tax and a restaurant tax, as illustrated in the table below:
A-18
HOTEL ROOM AND MEAL TAX AND
RESTAURANT TAX RECEIPTS
FISCAL YEARS 1990 THROUGH 1999
Fiscal Year
Total Tax Recei_ots
1990 $20,465,279
1991 20,633,367(~)
1992 22,356,705
1993 23,205,3590)
1994 25,594,361
1995 26,484,147
1996 28,595,940
1997 30,512,485
1998 32,475,690
1999 33,740,422
The restaurant tax was increased from four to four and one-half percent, effective May 1, 1991. The hotel room and meal tax was
increased from four and one half to five percent, effective May 1, 1991.
In support of the Tourism Growth Investment Fund, the hotel room and meal tax was increased from five to five and one-half
percent, effective January 1, 1993.
Source: City Director of Finance.
Military
Four military bases in Virginia Beach have an approximate 1998 combined annual payroll of $913
million for 32,000 armed services and civilian workers. While some military activities in the area have been
identified for elimination and relocation, the region has been identified as a site for centralized command and
training for military forces based in the United States.
Oceana Naval Air Station
As part of the nation's strategic defense plan, Oceana Naval Air Station recently expanded to
accommodate the movement of the F/A-18 Hornets from Cecil Field, Florida. This expansion has brought
more than 3,700 jobs to the base, with such jobs paying $6,000 more than the average income for the area.
The Master Jet Base is the largest employer in Virginia Beach with a gross annual payroll of $540 million for
approximately 11,000 active duty personnel and 1,848 civilian employees.
Little Creek
The Naval Amphibious Base, Little Creek, the largest base of its kind in the world, is the major
operating base for the amphibious forces of the United States Atlantic Fleet. Little Creek has an annual
payroll of $215 million for approximately 9,000 military personnel and 2,800 civilian employees.
Fort Story
Fort Story is an Army base established as a coast artillery post in 1917. The primary mission is to
provide unique training facilities for the conduct of amphibious training, to serve as the Army's Logistics-Over-
The-Shore (LOTS) training and testing site, and to test new doctrines, concepts and equipment. Fort Story is
also utilized by Navy and Marine tenants and as a periodic training site for active and reserve Army, Navy,
Marine, and Air Force units and ROTC detachments. Fort Story has an annual payroll of approximately $60
million for 2,650 military personnel and civilian employees.
A-19
· Dam Neck
Fleet Combat Training Center, Atlantic, Dam Neck's primary mission is to provide training in the
operation and employment of combat direction and control systems. The average base population is 5,000
persons and the total military and civilian payroll is approximately $98 million.
Source: Public Affairs Officers at each Military Base.
Medical Facilities
As of February 2000, there were two major hospitals in the City with a combined total of 432 beds.
In addition, there were 19 emergency centers for medical assistance. Approximately 928 doctors and 216
dentists practice in the City.
Agribusiness
In 1998, the economic impact of the agricultural community was estimated at more than $51.1
million, based on products valued at approximately $16 million. There are 156 farms in the City with
approximately 32,700 acres of land under cultivation.
Education
Available within the City is a wide variety of educational facilities including public elementary, junior
and senior high schools, private and parochial schools, and three colleges. In terms of public enrollment, the
City's public school system is the largest city school system in the Commonwealth of Virginia.
PUBLIC EDUCATION FACILITIES
June 30, 1999
53
13
10
1
1
1
1
1
1
1
1
1
Elementary Schools
Middle Schools
Senior High Schools
Technical and Career Education Center
Center for Effective Learning
Virginia Beach Central Academy
Center for the Gifted and Talented
Adult Learning Center
Open Campus High School
Kemps Landing Magnet School
International Baccalaureate Magnet Center
Ocean Lakes High School Math/Science Center
Source: Business Services Office, Virginia Beach Public Schools.
Public Schools
The City's public school March 31 average daily membership totaled 76,773 for the 1999-00 school
year, a decrease of 0.23 percent over the previous year. Summarized below are the total annual enrollment
and the annual percentage change for the period from school year 1990-91 to school year 1999-00.
A-20
PUBLIC SCHOOLS STUDENT POPULATION
SCHOOL YEARS 1990-91 TO 1999-00
School Year Number of Students
1990-91 69,616
1991-92 71,950
1992-93 73,332
1993-94 74,251
1994-95 75,264
1995-96 75,898
1996-97 76,265
1997-98 76,805
1998-99 76,949
1999-00 76,773
Percent Change
2.63
3.35
1.92
1.25
1.36
.84
.48
.71
.19
(.23)
Source: Business Services Office, Virginia Beach Public Schools.
Private and Parochial Schools
There are 16 private and parochial schools in the City. Approximately 5,361 students are enrolled in
these schools.
Higher Education
Virginia Beach's higher educational resources include the Virginia Beach Higher Education Center,
Virginia Wesleyan College, Tidewater Community College, and Regent University (formerly Christian
Broadcasting Network University). Virginia Beach is home to branch campuses of George Washington
University, the University of Virginia, Virginia Polytechnic Institute and State University and St. Leo's College.
Tidewater Community College, with total enrollment of more than 17,000, is a division of the Virginia
Department of Community Colleges. The Virginia Beach campus has an enrollment of approximately
10,435. This two-year college offers general, occupational-technical, and university parallel-college transfer
education, representing the largest post-secondary institution in the region. Tidewater Community College is
a resource for business and industry to gain technical employees, as well as expertise for training and
retraining programs for current employees.
Virginia Wesleyan College is a four-year liberal arts private college located on the Virginia
Beach/Norfolk boundary line. It has an enrollment of approximately 1,074 students with 386 pad-time
students in the adult studies program.
Regent University has an enrollment of approximately 1,675 with graduate schools of business
administration, communication, education, law, public policy and Biblical studies, and an Institute of
Journalism.
The Virginia Beach Higher Education Center is a joint venture between the City, Old Dominion
University and Norfolk State University. The City donated 36 acres of land for an 84,000 square foot
undergraduate center. The facilities opened in the fall of 1999 and will eventually accommodate 6,000
students.
Scheduled for its debut in the fall of 2001, the Advanced Technology Center is a joint venture
between Tidewater Community College and the Virginia Beach Public Schools to provide technical training
for high school and college students pursuing positions in fields such as telecommunications, copier
technology and computer programming and repair. The $23 million project is the first of its kind in the
Commonwealth and will receive state funding of $10 million with the City providing the remaining funds.
A-21
· Commitments and Contingencies
The City participates in a number of federal and state grants, entitlements, and shared revenues
programs. These programs are subject to program compliance audits by the applicable federal or state
agency or their representatives. Furthermore, the U.S. Congress passed legislation called the "Single Audit
Act Amendment of 1996" which required most governmental recipients of federal assistance to have an
annual independent organization-wide financial and compliance audit. The results thereof are incorporated in
this report. The amounts, if any, of expenditures which may be disallowed by these audits cannot be
determined at this time although the City expects such amounts, if any, to be immaterial.
Retirement and Pension Plans
The City has elected to participate in the Virginia Retirement System ('~/RS"), and substantially all of
the full-time salaried general government and school employees are covered by a retirement plan, group
term life insurance, and disability and death benefits. Prior to January 1, 1978, employees contributed five
percent of their annual salary. There is presently no employee contribution; the City pays the entire cost. If
there are insufficient funds to meet the vested benefits of the employees, the City is liable.
The VRS maintains separate accounts for each participating locality based on contributions made by
the locality and the benefits paid to former employees. The City's contributions are actuarially determined by
the VRS every two years at rates that provide for both normal and accrued funding liability. The VRS basis
calculation method is an entry age normal cost calculation with 30 year amortization of the unfunded accrued
liability.
The entry age normal cost method is designed to produce normal costs over the working lifetime of
the participating employees and to permit the amortization of any unfunded liability over a period of years.
The unfunded liability arises because normal costs based on the current benefit formula have not been paid
throughout the working lifetime of current employees. The value of the unpaid normal costs, adjusted for
actuarial gains and losses, constitutes the unfunded liability.
The last actuarially computed liability was determined as of June 30, 1998, and included amounts for
general govemment and school nonprofessional employees. Total liability as of June 30, 1998, both funded
and unfunded, follows:
General Government Employees
School Nonprofessional Employees
Total
Actuarial Value Unfunded Actuarial Actuarial
of Assets Accrued Accrued
$461,352,729 $36,042,944 $497,395,673
69.174.890 3.763.941 72.938.831
$530.527.619 $39.806.885 :$570.334.504
The unfunded liability of $39,806,885 is being amortized over 30 years according to a schedule
prescribed by the VRS.
Employee Relations and Collective Bargaining
There were 5,892 City employees (including part-time and seasonal employees) and approximately
10,002 School Board employees as of June 30, 1999. Some employees are members of unions or trade or
professional associations. However, the City does not, and cannot under Virginia law, bargain collectively
with any of its employees. The Virginia General Assembly has rejected several recent legislative proposals
to authorize public employees to engage in collective bargaining. Public employees of Virginia or of any
county, city, or town in Virginia do not have a legal right to strike. Any such employee who engages in any
organized strike or willfully refuses to perform his/her duties shall, according to Virginia law, be deemed to
have terminated his/her employment. Re-employment of any such employee requires court approval.
A-22
· APPENDIX B
FINANCIAL FEASIBILITY STUDY
FINANCIAL FEASIBILITY STUDY
$40,000,000
WATER AND SANITARY SEWER SYSTEM
REVENUE BONDS
SERIES OF 2000
CITY OF VIRGINIA BEACH, VIRGINIA
June, 2000
TABLE OF CONTENTS
Letter of Transmittal
Page
1
1.0 Introduction
3
1.1 Purpose of Report
1.2 On-Site Inspections
1.3 Organization and Staff of Department of Public Utilities
1.4 Review of Documents
3
4
5
6
2.0 Water System
7
2.1 History of Water System
2.2 Water System Description
2.3 Water System Service Area
2.4 Description of Projects
2.5 Source of Water Supply
2.6 Lake Gaston Water Supply Project
2.7 Capital Improvements Program 2000/01-2005/06
7
8
10
11
12
14
15
3.0 Sanitary Sewer System
16
3.1 History of Sanitary Sewer System
3.2 Sanitary Sewer System Description
3.3 Sanitary Sewer System Service Area
3.4 Description of Projects
3.5 Capital Improvements Program - 2000/01-2005-06
16
16
17
17
18
4.0 Billing and Collection
19
4.1 Existing Water and Sanitary Sewer Rates
4.2 Water and Sanitary Sewer Accounts
4.3 Water Resource Recovery Fees
19
20
21
5.0 Financial Analysis
21
5.1 Revenues and Operating Expenses
5.2 Debt Service Requirements
5.3 Coverage
5.4 Projected Rate Increases
21
24
24
24
6.0 Summary and Conclusions
28
LIST OF TABLES
Table No.
1. History and Forecast of Revenues and Operating Expenses
2. Coverage of Debt Service
Following Page
23
24
LIST OF FIGURES
Fi_mare No.
1. Water and Sanitary Sewer System Service Area
Following Page
10
ii
.~,VORD, BI_FRDICK & HOWSON, L. L. C.
SERVICES
· WATER SUPPLY, PURIFICATION AND DISTRIBUTION
E~TG~~
20 NORTH WACKER DRIVE * SUITE t401
CHICAGO, IL 60606
TEL. (312) 236-9147 FAX: (312) 236-0692
E-MAIL: SERVOABHENGI NEERS.COM
JOHN W. ALVORO CHARLES B- BURDICK LOUIS R. HOWSON
MEMBERS
AMERICAN CONSULTING ENGINEERS COUNCIL
AMERICAN PUBLIC WORKS ASSOCIATION
June 22, 2000
Mr. Clarence O. Wamstaff, P.E.
Director
Department of Public Utilities
Municipal Center
Virginia Beach, VA 23456
Re:
Financial Feasibility Study - Final Draft Report
$40,000,000 Water and Sanitary Sewer System Revenue
Bonds, Series of 2000
We are pleased to submit herewith a Financial Feasibility Study regarding the proposed
City of V~ginia Beach (the "City") $40,000,000 Water and Sanitary Sewer System Revenue
Bonds, Series of 2000. The Series 2000 Bond is to finance capital improvements for the Water
and Sanitary Sewer Systems.
This Financial Feasibility Study includes a review of the Water and Sanitary Sewer
System projects, forecasts of revenues and operating expenses, and projections showing the
impact that the capital improvements would have on future revenue requirements.
We wish to acknowledge the excellent assistance received from the staff of the City of
Virginia Beach during the period of this study.
Mr. Clarence O. Wamstaff
June 22, 2000
When you have had an opportunity to review the report, we would be pleased to respond
to any questions or provide clarification, where necessary.
We appreciate the opportunity to serve you on this very important study.
Respectfully submitted,
ALVORD, BURDICK & HOWSON, L.L.C.
Bon G. Mui
Page - 2 -
1.0INTRODUCTION
1.1 Purpose of Report
The purpose of this study is to analyze the impact on the Water and Sewer Enterprise
Fund to service the City's outstanding water and sewer revenue supported debt, including the
proposed $40,000,000 issue of Water and Sanitary Sewer System Revenue Bonds, Series of 2000
to be issued in July of 2000.
Alvord, Burdick and Howson ("AB&H") conducted this study for the City of Virginia
Beach in the offices of the Department of Public Utilities and in other City facilities where
operational activities are relevant to the development of the study, as well as at the firm's offices
in Chicago.
In the performance of the study, reviews were carried out of the Capital Improvements
Program, Sanitary Sewer System Master Plan, Water System Master Plan, Proposed Resource
Management Plan, engineering reports, operating records and various other supporting
documents. Historical revenue and expense records provided a basis for forecasting revenues
and expenses for the following growth projections. In addition, pent up demand for water and
sewer services, resulting from water restrictions in past years, was able to be met now that the
restrictions have been lifted. The result is a large increase in the number of water and sewer
connections and increased water usage in FY 1999-2000.
Water usage would be approximately 34.2 million gallons per day (MGD) during
FY 1999-2000, 34.8 MGD in FY 2000-01, 35.2 MGD in FY 2001-02, 35.7 MGD
in FY 2002-03, 36.1 MGD in FY 2003-04.
There would be an increase of 2,910 water accounts at the end of FY 2000, 1,541
accounts in FY 2000-01, 1,544 accounts in FY 2001-02, and 1,500 accounts per
year in FY 2002-03 and FY 2003-04.
There would be an increase of 3,010 sanitary sewer accounts at the end of
FY 2000, 1,740 accounts in FY 2000-01, 1,536 accounts in FY 2001-02, 1,512
accounts in FY 2002-03, and 1,500 accounts in FY 2003-04.
The preparation of this report was also based on data obtained during visits to and on-site
inspections of the water and sanitary sewer properties of the Department of Public Utilities.
Based upon experience, the inspections of the properties enabled AB&H to:
a. Form an opinion as to the general current condition of the facilities.
b. Evaluate the future estimated operating life of the facilities.
Page - 3 -
Forecast the need for retirement and replacement of assets.
Evaluate the condition of the structures and equipment installed and their
relationship to the current state of the art and available technology.
1.2 On-Site Inspections
On-site inspections were made of the water and sanitary sewer properties of the
Department of Public Utilities in 1986, 1990, 1993 and most recently in 2000. These inspections
consisted of visits to the water system facilities, including the Lake Gaston Pumping Station,
Landstown Operations Center, in-town water pumping stations and storage facilities.
The sanitary sewer system on-site inspections were made of a representative number of
the City's 380 sewage pumping stations. The stations included older stations which had been
rehabilitated, newly completed facilities, and a facility which operates on a vacuum system.
In addition to on-site inspections of system facilities, informal discussions were held with
the operating staffto evaluate their knowledge of the system and their ability to operate under
emergency conditions. In spending time with the operations staff valuable information was
secured regarding the operating and maintenance organization, and the training of personnel.
Based on the results of the inspections, it is our opinion that the City of Virginia Beach
Water and Sanitary Sewer Utility is very well operated and maintained. It is our opinion that the
Utility is among the finest operated utilities in the country. In particular:
The staff is very competent, well trained and informed with regard to system
operations.
The design of the system provides for reasonable capacity to meet future water
demand.
Reasonable standby capacity is available for emergency operation.
The equipment installed is of a high quality.
All facilities are in very good condition with a well defined maintenance and
inspection program.
High quality records are maintained with a well defined program to continue the
level of quality which exists today.
Page - 4 -
In summary, the Virginia Beach Water and Sanitary Sewer System is well positioned to
provide continued highly reliable service to the citizens of Virginia Beach in the furore.
1.3 Organization and Staff of Department of Public Utilities
The Department of Public Utilities is under the direction of the Director of Public
Utilities and is' organized into five divisions, namely: Director's OffiCe, Engineering, Customer
Operations, Water Resources, and Business Division.
The Department of Public Utilities has approximately 379 employees. The Director of
Public Utilities oversees the operation of the divisions noted above. The Engineering Division
Manager oversees the Capital Improvements Fund and manages the development and
administration of the Engineering Division. The Water Resources Manager coordinates
engineering and administration for Virginia Beach's raw water supply. The Utility Operations
Manager oversees the operation and maintenance of the Operations Division, including water
distribution and wastewater collection. The Business Division was created this year by merging
the former Customer Service and Administration and Finance divisions.
The Department of Public Utilities' key personnel and positions are as follows:
Personnel Position
Mr. Clarence O. Wamstaff
Director of Public Utilities
Mr. Gary L. Jones
Public Utilities Engineering Manager
Mr. Thomas M. Leahy
Water Resources Manager
Mr. James W. Sarver
Utility Operations Manager
Mr. Joseph P. Martin
Acting Business Manager
Mr. Clarence O. Warnstaff, the Director of Public Utilities, has been in his present
position for 15 years. He was previously employed with the City of Dallas, Texas, for 15 years.
Prior to assuming his duties in Virginia Beach, he held the position of Assistant Director of the
Dallas Water Utility, responsible for Engineering and Construction. He has a Bachelor of
Science in Electrical Engineering, as well as continuing education classes in Engineering and
Management. He is a registered Professional Engineer and is a member of the American Water
Works Association, Association of Metropolitan Water Agencies, American Society of Civil
Page - 5 -
Engineers, National Society of Professional Engineers, and Virginia Society of Professional
Engineers.
Mr. Gary L. Jones, the Engineering Manager of Public Utilities, has 23 years of
experience with the Department of Public Utilities. He has served as the Engineering Manager
for the past 6 years and the Assistant Director of Public Utilities for the ten years prior to that.
He has a Bachelor of Science in Civil Engineering and has participated in continuing education
classes in Management. He is a registered Professional Engineer, a Professional Land Surveyor
and is a member of the American Water Works Association, American Society of Civil
Engineers, National Society of Professional Engineers and Virginia Society of Professional
Engineers.
Mr. Thomas M. Leahy, Water Resources Manager, has 20 years of experience as a water
resources engineer and Manager for the City of Virginia Beach. He has a Bachelor of Science in
Chemical Engineering, a Master of Science in Chemical Engineering and a Masters in Public
Administration. He is a registered Professional Engineer and is a member of the American
Water Works Association, National Society of Professional Engineers, Virginia Society of
Professional Engineers, and American Desalting Association.
Mr. James W. Sarver, Utility Operations Manager, has worked for the City of Virginia
Beach for 24 years. He has served in his current position as Utility Operations Manager since
1992. He has a Bachelor of Science in Civil Engineering and a Masters in Engineering
Administration. He is a registered Professional Engineer and is a member of the American
Society of Civil Engineers, and American Water Works Association.
Mr. Joseph P. Martin, the Acting Public Utilities Business Manager, has 26 years of
experience with the Department of Public Utilities. He has a Bachelor of Science in Business
Administration and a Masters in Public Administration. He is a member of the Government
Finance Officers Association and the American Water Works Association.
1.4 Review of Docnment~
In the performance of this Financial Feasibility Study various documents were reviewed,
including engineering reports, financial reports, and operating records. The Comprehensive
Annual Financial Reports, audited statements, and other financial data supplied by the
Department of Public Utilities were reviewed. Based on historical revenue and expense data,
forecasts were projected, taking into consideration the current operation and maintenance costs of
the facilities, current trends, and the impact of the proposed bond sale.
Page - 6 -
2.0 WATER SYSTEM
2.1 History_ of Water System
The Virginia Beach water system originated in 1906 with the incorporation of the Town
of Virginia Beach. The original town consisted principally of a resort area along a narrow
section of beach frontage to the Atlantic Ocean. The water system included wells, water mains,
pumps and an iron removal plant. In 1924, treated water began to be purchased from the City of
Norfolk, and was conveyed to Virginia Beach through a 16 inch diameter transmission main. An
additional 20 inch diameter main was installed from Norfolk to the town in 1944.
The present City of Virginia Beach was created in 1963 through a merger of the Town of
Virginia Beach with Princess Anne County. Water was supplied to residents through private
wells, small private water systems and, in part, from the City of Norfolk. The City of Virginia
Beach purchased the water distribution systems within its boundaries from Norfolk in 1973 and
at that time entered into a 20-year contract to purchase water surpluses from the City of Norfolk.
In 1975, a Department of Public Utilities was established to operate the Water and
Sanitary Sewer Systems.
The City of Virginia Beach experienced a drought in 1977 which caused the initiation of
water conservation measures. Stricter mandatory measures were imposed upon Virginia Beach
citizens during a more severe drought in 1980-81. Surcharges were also assessed for excessive
water consumption. Conservation efforts were effective in sustaining the water resources on a
short term basis; however, the drought accentuated the need to investigate additional water
resources to meet the long-term demands of the City.
An investigation into 24 possible long-term sources of water supply led to the decision
that Lake Gaston was the best alternative source of raw water. Lake Gaston is an existing
impounded source created by dams on the Roanoke River located just south of the Virginia
border in North Carolina. The Lake Gaston Water Supply Project (the "Project") is a 76-mile, 60
inch diameter pipeline extending from the Pea Hill Creek tributary of Lake Gaston in Brunswick
County, Virginia to the City of Norfolk's raw water facilities located in the County of Isle of
Wight and City of Suffolk. Construction of the Project was completed in November of 1997 and
the pipeline was placed into operation on January 1, 1998.
The City's 1973 Water Sales Contract with Norfolk expired on June 30, 1993, however,
the City and Norfolk signed a new Water Sales Contract, which became effective July 1, 1993.
This new contract was drafted to provide an interim water supply to the City until the Project
became operational and was terminated in January of 1998, except for certain sections which
remained until June 30, 1999.
Page - 7 -
The City and Norfolk have also entered into a Water Services Contract effective July 1,
1993, for 37 years. The Water Services Contract establishes engineering, water quality, and
operational standards for the City of Norfolk to receive, treat, convey, test and deliver Lake
Gaston water to Virginia Beach.
2.2 Water System Description
The City receives treated water from the City of Norfolk. The water is monitored through
19 master meters at eight locations along the border of the two cities. The water is distributed
within the City through approximately 1,371 miles of transmission and distribution mains
ranging in size from 2 to 48 inches in diameter. The water mains are steel, concrete, cast iron,
and ductile iron.
The City has recently acquired the last private utility serving customers within the City
limits. The private utility will be fully integrated into the City Water Utility and new distribution
lines will be added to improve the service to the approximately 200 impacted customers.
The City has nine pumping stations in its water system, including the Lake Gaston raw
water pump station. Eight pumping stations transfer the water through three pressure zones
within the City. Maximum pumping capacities of the stations range from 8.2 to 60.0 MGD,
summarized as follows:
Pump Station
Locations
Pump Station
Capacity_ 0VIGD)
1. Landstown 10.0
2. Kempsville Road 20.0
3. Columbus Street 30.0
4. Witchduck 8.5
5. Lynnhaven 30.0
6. Shore Drive 8.4
7. 1Th Street 9.8
8. Virginia Beach Blvd. 8.2
9. Lake Gaston 60.0
The eight in-town pumping stations can be monitored and operated by telemetric and
computer control from the Landstown Operations Center. The Landstown Operations Center
comprises the Water and Sanitary Sewer System operation and maintenance facility, including
administrative offices, vehicle, and equipment storage and maintenance facilities, material
Page - 8 -
storage yard, water quality testing laboratory, meter testing facility, and operation and control
center.
The Lake Gaston pumping station is controlled independently through an on-site control
and monitoring system. The Lake Gaston facilities are operated and maintained by Earth Tech, a
private company, under a five year contract with the City of Virginia Beach.
Distribution system storage is comprised of 5 elevated tanks, 2 ground level storage tanks
and 6 standpipes located at various points throughout the City. The total system storage capacity
is 30.25 million gallons (MG) summarized as follows:
Storage Tank Storage Tank Storage Tank
Location Capacity IMG) Type
Courthouse/Forest 1.00 Elevated
Great Neck Road 1.00 "
Sandbridge 0.50 "
47th Street 0.25 "
Plaza Park 1.00 "
Total Elevated Storage 3.75
17th Street 2.50 Reservoir
Lynnhaven 5.00 "
Total Reservoir Storage 7.50
Kempsville Road 3.00 Standpipe
Columbus Street I 4.00 "
Columbus Street II 4.00 "
Witchduck 2.00 "
Shore Drive 2.00 "
29th Street 4.00 "
Total Standpipe Storage 19.00
Total System Storage
30.25
Page - 9 -
The City has implemented a tank upgrade program based on an independent consulting
engineers recommendation. The purpose of this program is to ensure the safe and sanitary
operation of the storage tanks, and extend their useful life by 50 years. Improvements include the
repainting and restoration of 12 tanks to meet structural, sanitary and health regulations and the
decommissioning of 1 tank. Upgrades to the first three of the tanks should be complete by
August, 2000.
The City of Virginia Beach provides water service to customers within the City limits
through a universally metered system.
The Department of Public Utilities utilizes a programmed computerized model of the
Water System to plan improvements and extensions to the water system. The model of the Water
System was developed as part of an ongoing comprehensive water system study. The City has a
policy to repair all significant leaks in the system within 24 hours.
Under the terms of an agreement with the U.S. Government, the City "wheels" or
transports all water purchased by the U.S. Government from the City of Norfolk for delivery
through City water lines to U.S. Government establishments located within the City. The City
currently conveys approximately 1.01 million gallons per day to these U.S. Government
establishments. The City is reimbursed for this pass-through water service at a rate of $0.44 per
thousand gallons. The U.S. Government establishments are customers of the City of Norfolk.
2.3 Water System Service Area
As shown on Figure 1, provided by the City of Virginia Beach, the water system service
area is located entirely within the northern half of the corporate City boundaries. The water
service area as of FY 1999 is comprised of a land area of nearly 160 square miles containing a
population in excess of 439,000. The existing City water system serves approximately 408,000
members of the population with an average of approximately 34.2 million gallons of water per
day.
The population not served by the City water system consists of residents living in the
rural, southern end of the City, U.S. military personnel and their families living on base, and a
very small number of existing neighborhoods in the northern section of the City not served by
public water and/or sanitary sewer services.
By City Council policy, water and sanitary sewer service is not provided to residents in
the southern part of the City. The City's comprehensive Land Use Plan provides that the
southern part of the City is to remain rural with mostly farmland.
Page- 10-
CITY OF NORFOLK
LEGEND
EXISTING AND AUTHORIZED
SERV1CE AREAS
STATE I FEDERAL PROPERTIES
NOT SERVED BY VIRGINIA BEACH
GREEN UNE ($EPAP, ATES URBAN
AREA FROM TRANSITION AREA)
UMi'rs OF TRANSITION AREA
June 16, 2000 STATE OF NORTH Ca~OUNA
File:
The U.S. military bases in Virginia Beach are customers of the City of Norfolk. Virginia
Beach "wheels" water to the military bases for Norfolk. On-base residents (residential housing)
are customers of Norfolk.
Certain existing neighborhoods in the northem section of the City use wells and septic
tank systems. Neighborhoods without public water and sewer service are decreasing as the City
has extended water and sewer service to the existing neighborhoods over the past 25 years.
According to the U. S. Census, the population within the service areas was 393,069 in
1990. Data fi:om the 2000 census is not yet available. The census data for the previous four
decades is as follows:
U. S. Census Data
Ci_ty of Virginia Beach
Year Population
1960 69,036
1970 172,106
1980 262,199
1990 393,069
2.4 Description of Proieets
Water utility projects to be funded from a portion of the Series 2000 Bonds are part of a
six-year Capital Improvements Program. The program is reviewed each year by the City Council
and the Department of Public Utilities. The selected water utility projects are necessary to
continue to provide adequate water service. The water utility projects are selected and ranked by
the Department of Public Utilities based on the following criteria: health and safety, urgency,
service and benefit, budget impact, comprehensive plan compatibility, quality of life, and ranking
for water request and agreement projects.
The proceeds of the Series 2000 Bonds for water utility projects are proposed to be used,
together with other funds, for the following purposes:
1. Construction of new water mains;
2. Replacement of existing water mains;
3. Storage tank painting and upgrades;
4. Chloramine feed system;
Page - 11 -
5. Customer service information system upgrade.
2.5 Source of Water Su0pl¥
(a) Sources
The sole water supply for the City is the Pea Hill Creek tributary of Lake Gaston, located
in Brunswick County, Virginia. Prior to this the City had no independent water supply, and in
1973, entered into a 20-year agreement with the City of Norfolk to purchase surplus water from
them. A new contract was signed in 1993 to provide an interim water supply for a 6-year period
to Virginia Beach until the Lake Gaston Water Supply Project was completed.
Virginia Beach and Norfolk entered into a Water Services Contract, effective July 1,
1993, for 37 years. The Water Services Contract establishes engineering, water qua!ity, and
operational standards for the City of Norfolk to receive, convey, treat and deliver Lake Gaston
water to Virginia Beach.
A cost of service methodology is used to determine the service and water commodity
charges from the City of Norfolk. Once the Lake Gaston water supply project was put in
operation the wholesale cost from Norfolk consisted only of the cost of service charge. As of July
1, 1999 the cost of service was $2.00 per 1000 gallons. The following table summarizes the
charges from Norfolk to Virginia Beach since 1993.
Fiscal Year Co~ of Service Water Charge Total Rate
1993 N/A N/A $1.17
1994 $0.93 $.60 $1.53
1995 $1.12 $.56 $1.68
1996 $1.38 $.52 $1.90
1997 $1.52 $.48 $2.00
1998 $1.66 $.56 $2.22
1999 $1.85 $.58 $2.43
2000 $2.00 N/A $2.00
Page- 12-
The City of Norfolk's water system originated in the early 1870's and over the years
Norfolk has made additions and improvements to meet the needs of its service area. Today the
City of Norfolk has an aggressive program to meet Virginia Beach's future needs in terms of
water treatment and treated water transmission service.
Norfolk's Moores Bridges water treatment plant supplies water to Virginia Beach.
The plant was originally constructed in 1899 at a capacity of 8 MGD. The plant has been
upgraded periodically throughout the years, most recently in 1999 from 77 MGD to 108 MGD.
The plant is located near the border of Norfolk and Virginia Beach.
The sources of supply for the Moores Bridge water treatment plant are divided into two
systems. The largest is the Western Reservoir System consisting of Lake Prince, Western Branch
Reservoir, and Lake Burnt Mills. The Western Reservoir System is located about 20 miles west
of Norfolk and can store 13.3 billion gallons of water. The western reservoirs are augmented by
water pumped from the Blackwater River and the Nottoway River. The smaller reservoir system,
In-Town Lakes System, consists of interconnected surface supplies of Lake Wright, Lake
Whitehurst, Lake Smith and Lake Lawson. An additional small surface source is the North
Landing Reservoir, also called Stumpy Lake, located in Virginia Beach. The In-Town Lake
System has a storage capacity of 2.4 billion gallons of water and is located near the Moores
Bridges Water Treatment Plant. All water for the City of Virginia Beach is provided by the Pea
Hill Creek tributary of Lake Gaston, located in Brunswick County, Virginia. The water is
transmitted via a 76 mile pipeline operated and maintained by Virginia Beach to the Western
Reservoir System, and is treated at the Moores Bridges plant.
(b) Water Quality_
The raw water sources of Norfolk and Lake Gaston are of high quality. Presently, treated
water from Norfolk distributed to the City of Virginia Beach is in compliance with the Virginia
Department of Health and U.S.E.P.A. requirements.
(c) Water Demand
Lake Gaston is Virginia Beach's independent water supply. The Lake Gaston Project was
Placed into service on January 1, 1998. Prior to that date Virginia Beach had no independent
water supply and purchased all of its treated water from the City of Norfolk under a surplus water
agreement.
The FY 1999 estimate of population for the City of Virginia Beach is 439,000. The water
system service population is approximately 408,000, as discussed in Section 2.3. Growth is
expected in the Courthouse / Sandbridge area and it is possible that consumption will double in
that area. Growth is also forecasted in the Kempsville and Holland areas, but demand increases
are not projected to be as dramatic.
Page - 13 -
During FY 1999 the average day water demand was 33.8 MGD. Estimated water use for
FY 2000 is 34.2 MGD. Currently 81% of the water purchased is used by residential customers
and 19% is for commercial use. The table on the following page summarizes the historical water
demand for the past 10 years.
Historical Data Water Demands*
Fiscal Year WaterDemand(MGD)
1990 30.5
1991 31.8
1992 30.4
1993 30.2
1994 31.7
1995 31.6
1996 32.6
1997 31.7
1998 32.4
1999 33.8
* Source:
Historical data, City of Virginia Beach, Department of Public Utilities (Does not
include military use)
2.6 Lake Gaston Water Supply Pro|ect
In 1980-81 the City, in an effort to mitigate water supply constraints, had commissioned
numerous studies and imposed water restrictions and surcharges for excessive water
consumption. The City had also constructed five emergency wells in the City of Suffolk and
Counties of Isle of Wight and Southharnpton.
An investigation of more than 24 possible long-term sources of water for the City of
Virginia Beach led to the decision that the Lake Gaston Project was the best source of water for
the City.
The Lake Gaston Project consists of a 76-mile, 60 inch diameter raw water pipeline
extending from the Pea Hill Creek tributary of Lake Gaston in Brunswick County, Virginia, to
the City of Norfolk's reservoir system. Water conveyed through the Lake Gaston pipeline is
treated at the City of Norfolk's Moores Bridges Water Treatment Plant and then delivered to the
City of Virginia Beach through the City of Norfolk's water transmission system. The project was
placed in operation on January 1, 1998.
Page- 14-
The pipeline has been designed to have a capacity of 60 MGD. The City of Virginia
Beach receives 83.3% of the water transported. The City of Chesapeake has entered into an
agreement with the City of Virginia Beach for a 16.67% ownership of the Lake Gaston Project.
The City of Suffolk and the Isle of Wight County, both of which have expressed an interest and
indicated a need for water from the Lake Gaston Project, have an option to participate in the
project for up to 1 MGD each. At this time there is no contract in place with either of these
entities.
The construction cost of the Lake Gaston Project is currently estimated at $154,600,000
as specified in the 2000-2006 Capital Improvement Program. The primary means for financing
the Lake Gaston project was City of Virginia Beach general obligation bonds based on a
resolution passed by the City Council on August 13, 1984. The general obligation bonds were
approved by the voters of Virginia Beach by a margin of three to one in a bond referendum for
$200,000,000 on November 8, 1988. A decision was also made to finance a portion of the costs
of the project with cash from the Water Resource Recovery Fee and previous rate increases.
The City of Virginia Beach has executed a cost participation agreement with the City of
Chesapeake for one-sixth of the Lake Gaston Project cost and one-sixth ownership in the project.
The City of Chesapeake has contributed $24,159,794 as of June 30, 1999. Virginia Beach's share
of the cost of the project to date is $149,789,336.
On January 6, 1986, the Virginia Beach City Council adopted an ordinance establishing a
Water Resource Recovery Fee and eliminating the existing city developers' fees. The fee is
charged to all new connections to the City Water System from either new construction or existing
structures served by well water. The fee provided an additional funding source for financing a
portion of the costs of the Lake Gaston water supply project. The fee paid by the property owner
represents their share of a portion of the cost of water resources development and assorted
distribution facilities.
2.7 Capital Improvements Program - 2000-01/2005-06
The Department of Public Utilities annually prepares a six-year Capital Improvements
Program for the improvement and extension of the water system. The total estimated costs for
the 2000-01/2005-06 water system Capital Improvements Program is approximately
$34,095,000. This cost is comprised of $5,448,000 in retained earnings, $21,412,000 in water
and sewer revenue bonds, and $7,235,000 from the Water and Sewer Enterprise fund. The water
system Capital Improvements Program includes $179,687,238 water system appropriations to
date. The Department of Public Utilities has identified the Series 2000 Bonds for f'mancing
approximately $11,617,000 of the water system Capital Improvements Program.
Page - 15 -
3.0 SANITARY SEWER SYSTEM
3.1 History_ of Sanitary_ Sewer System
The sanitary sewer system for the Town of Virginia Beach originated in 1906, the year
the town was incorporated. Operation of the facilities, constructed at the end of the nineteenth
century along the ocean front, was taken over by the town and additional pumping stations and
treatment facilities were constructed. In 1938 a treatment plant was built and served the City
until 1969. The Hampton Roads Sanitation District (HRSD) system became available for
wastewater treatment in 1969 and, through connection with HRSD, treatment facilities within the
City boundaries have been phased out. The City's sanitary sewer system includes collector lines,
force mains and pump stations to transport wastewater to the HRSD facilities.
The Hampton Roads Sanitation District was created on November 5, 1940. The District
started intercepting and treatment operations on July 1, 1946. The District's first construction
project was the Warwick County trunk sewer constructed in 1946. Since then, the facilities of
the District have grown to provide sanitary service treatment to all major population centers
within its boundaries. Currently the District serves 16 cities and counties in southeastern
Virginia. The District treats only sanitary sewer wastewater and does not treat any storm water
or combined sewer wastewater.
3.2 Sanita~ Sewer System Description
The Virginia Beach sanitary sewer collection system is a separate system and does not
collect combined sanitary and storm water.
The City's storm water system is a separate system operationally and fmancially.
Groundwater and storm water inflow/infiltration are kept to a minimum by the
Department of Public Utilities maintaining an active inflow/infiltration prevention program. The
City of Virginia Beach's topography is very flat. Gravity flow is the primary means of conveying
sanitary sewage. This necessitates the use of pumping stations to deliver sanitary sewage to the
Hampton Roads Sanitation District. The Department of Public Utilities also has an actively
enforced mandatory connection program. Where service is available, property owners are
required to connect to the sanitary sewer collection system.
As of June 30, 1999, the City of Virginia Beach's sanitary sewer system consisted of over
1,451 miles of sanitary sewer mains, ranging in size from 4 to 36 inches in diameter, 119,540
connections and 380 sewage pumping stations.
Page- 16-
The City provides sewage collection service within the city limits. The citizens of
Virginia Beach pay a monthly flat charge for sanitary sewer collection to the City and a
commodity charge for treatment to HRSD.
The Hampton Roads Sanitation District (HRSD) operates nine treatment facilities in
Hampton Roads and 4 smaller treatment facilities on the Middle Peninsula. Two of the nine
Hampton Roads facilities are located in the City of Virginia Beach. The Chesapeake-Elizabeth
and the Atlantic plants have an combined operating capacity of 60 MGD with estimated current
annual flows of 46.5 MGD. Both plants were designed for expanded capacity.
3.3 Sanitary Sewer System Service Area
As shown previously on Figure 1, the City of Virginia Beach sanitary sewer system
service area is located entirely within the northern half of the City boundaries. The sanitary
sewer system service area is approximately 160 square miles with a population in excess of
439,000. The population served by the sanitary sewer system is approximately 400,000.
Residents in the southern part of the City, in a limited number of existing neighborhoods in the
northern part of the City, and on U.S. military bases are not served by the sanitary sewer system,
as discussed in Section 2.3.
3.4 Description of Projects
Sanitary sewer utility projects to be funded from a portion of the Series 2000 Bonds are
part of a six-year Capital Improvements Program. The Capital Improvements Program is
reviewed each year by the City Council and the Department of Public Utilities. The sanitary
sewer utility projects listed in the Capital Improvements Program are necessary to continue to
provide adequate sanitary sewer service. The sanitary sewer utility projects are evaluated and
ranked by the Department of Public Utilities based on the following criteria: health and safety,
urgency, service and benefit, budget impact, comprehensive plan compatibility and quality of
life.
The proceeds of the Series 2000 Bonds for sanitary sewer utility projects are expected to
be used, together with other funds, for the following purposes:
1. Construction of new gravity sanitary sewers and force mains;
2. Rehabilitations of existing sanitary sewers;
3. Modification of existing pumping stations;
4. Construction of new pumping stations;
Page - 17 -
Pumping station alarm systems;
Customer service information system upgrade.
3.5 Capital Improvements Program - 2000-01/2005-06
The Department of Public Utilities annually prepares a six-year Capital Improvements
Program for the improvement and extension of the sanitary sewer system. The total estimated
cost for the 2000-01/2005-06 sanitary sewer system Capital Improvements Program is
approximately $62,758,000. This cost is comprised of $48,783,000 in revenue bonds,
$10,765,000 from the Water and Sewer Enterprise Fund, and $3,210,000 from the Hampton
Roads Sanitation District. The sanitary sewer system Capital Improvements Program includes
$72,683,349 in sanitary sewer system appropriations to date. The Department of Public Utilities
has identified the Series 2000 Bonds for financing $28,383,000 of the sewer system Capital
Improvements Program.
Page - 18 -
4.0 BILLING AND COLLECTION
4.1 Existing Water and Sanitary Sewer Rates
Water and sanitary sewer rates are determined by the Department of Public Utilities and
are reviewed and approved by the City Council.
The water customers are billed bimonthly and they are charged a monthly minimum
service availability charge plus a commodity charge based on actual water usage. The monthly
minimum service availability charges were last adjusted on October 1, 1990 to the amount of
$3.40.
The sanitary sewer customers are billed bimonthly and they are charged a monthly
sanitary sewer service charge based on customer classification for residential users and water
meter size for nonresidential users.
The following shows historical water commodity rates and sanitary sewer service charges
for a single family residence and their effective dates:
Water Commodity Rate
($ per 1,000 gallons)
Effective Date
$2.69 July 1, 1990 (1)
$2.77 October 1, 1990 (3)
$2.96 July 1, 1991 (2), (3)
$3.11 July 1, 1992 (2), (3)
$3.38 July 1, 1993 (2)
$3.65 July 1, 1994 (2)
$3.55 July 1, 1999
Sanitary Sewer Service Charge -
Single Family Residence ($ per month)
$ 9.65
$10.58
$11.38
Effective Date
October 1, 1990 (4)
July 1, 1991 (4)
July 1, 1992 (4)
2.
3.
4.
Increase for funding Lake Gaston Water Supply Project.
Increase in wholesale price of water from Norfolk.
Increase for system operating requirements other than Lake Gaston.
Increase for sanitary sewer system operating requirements.
Page- 19-
4.2 Water and Sanitary_ Sewer Accounts
As of June 30, 1999, the water and sanitary sewer system had 120,646 water accounts and
119,540 sanitary sewer accounts. All water accounts are metered.
The following shows the historical number of water and sanitary sewer accounts for the
past 10 years:
Historical
Fiscal Water Sanitary Sewer
Year Accounts Accounts
1990 107395 103,066
1991 109,573 104,870
1992 111,297 106,638
1993 113,296 108,554
1994 114,952 110,637
1995 114,546 111,806
1996 117,177 113,916
1997 117,403 116,433
1998 119,414 117,749
1999 120,646 119,540
Historical data, City of Virginia Beach, Department of
Public Utilities
4.3 Water Resource Recovery_ Fees
On January 6, 1986, the Virginia Beach City Council adopted an ordinance establishing a
Water Resource Recovery Fee and eliminating the existing city developer fees. The fee is
charged to all new connections to the City Water System from either new construction or existing
structures served by well water. The fee paid by the property owner represents their share of the
cost of water resources development and assorted distribution facilities.
Page - 20 -
5.0 FINANCIAL ANALYSIS
5.1 Revenues and Operating Expenses
Projections of revenues and expenses have been developed for the following growth
scenario:
Water usage would be approximately 34.2 million gallons per day (MGD) during
FY 1999-2000, 34.8 MGD in FY 2000-01, 35.2 MGD in FY 2001-02, 35.7 MGD
in FY 2002-03 and 36.1 MGD in FY 2003-04.
There would be an increase of 2,910 water accounts at the end of FY 2000, 1,541
accounts in FY 2000-01, 1,544 accounts in FY 2001-02 and an increase of 1,500
accounts per year in FY 2002-03 and FY 2003-04.
There would be an increase of 3,010 sanitary sewer accounts at the end of FY 2000,
1,740 accounts in FY 2000-01, 1,536 accounts in FY 2001-02, 1,512 accounts in
FY 2002-03 and 1,500 accounts in FY 2003-04.
Table 1 summarizes revenues and operating expenses. This includes historical data for
fiscal year 1995 through 1999 and a forecast for the water and sanitary sewer system revenues
and operating expenses for fiscal year 2000 through 2004. The forecast is based upon the
following:
1. The present water rate is $3.55/1,000 gallons effective July 1, 1999.
2. The present sanitary sewer service charges were effective July 1, 1992.
3. Revenues are forecast as follows:
The service charge revenue consists of water service charges, water meters,
sanitary sewer charges and miscellaneous service charges. The water
service charge and water meter forecasts are based on the estimated growth
of water accounts and the present water service charges and present water
meter charges. The sanitary sewer charge forecast is based on the estimated
growth of sanitary sewer accounts and the present sanitary sewer service
charges. Miscellaneous service charges are water mm-on fees, new account
service fees, inspection services, water sampling testing, portable pump
fees, sewer pump station flow fees, etc.
bo
Water usage revenue is the sale of water. Water usage revenue forecast is
based on the forecasted water demand and the present water rate.
Page - 21 -
Miscellaneous revenue consists of fire hydrant rental, Navy wheelage
charge, tap fees and miscellaneous charges. Fire hydrant rental is forecast at
$18,000 per year for fiscal years 2000 through 2004. The Navy wheelage
charge is based on 1.01 MGD usage and the present wheelage charge of
$0.44/1000 gallons. The tap fee forecast is based on the number of new
water and sanitary sewer accounts each year. Miscellaneous sales of
salvage materials, sales of properties, etc., is forecast at $145,000 for fiscal
year 2000 increasing to $161,000 in fiscal year 2004.
Interest revenue is interest earning on invested funds. Interest earnings from
the Series 2000 Bond proceeds are not included in the forecast.
Approximately $126,000,000 in the water resource recovery fee cash
account and water resource rate increase cash account are assumed to be
transferred to other City funds in FY 1999-2000. Interest earning on this
$126,000,000 is not included in the forecast. Interest revenue is estimated
to earn at a rate of 4.5% on invested funds.
The Norfolk Water Service Contract calls for a tree-up of actual expenses
versus projected expenses every two years. The first true-up was conducted
in FY 1996 for fiscal years 1994 and 1995. An overcharge of $11,078,000
was credited to Virginia Beach in 1997. In FY 1998 a true-up was
performed for fiscal years 1996 and 1997, resulting in a credit of $4,466,000
received in 1999. The most recent tree-up was performed in fiscal year
2000 for fiscal years 1998 and 1999. The overcharge of $5,448,000 is to be
credited to Virginia Beach in 2001.
On January 6, 1986, the water resource recovery fee was adopted and the
existing water connection fees for developers were eliminated. Water
resource recovery fee revenue is forecast at $4,928,000 for fiscal year 2000
decreasing to $3,267,000 in fiscal year 2004 based on the estimated growth
of water accounts and the water resource recovery fee.
Sanitary sewer main extensions and line fees forecasts are based on the
number of new sanitary sewer accounts each year and the present fees.
Operating expenses for fiscal years 2000 and 2001 are based on the City's operating
budget. Operating expenses for fiscal year 2002 through 2004 are forecast as follows:
Water service expense is the cost of Norfolk water treatment and delivery of
Lake Gaston water to Virginia Beach. Water service expense forecast is
based on water demands and Norfolk water service rates to Virginia Beach
of $2.00/1,000 gallons effective July 1, 1999, for fiscal year 2000 and
$2.01/1,000 gallons effective July 1, 2000 and thereafter. Water rate
Page - 22 -
Ce
increases to Virginia Beach by Norfolk are assumed to be passed on to the
customers of Virginia Beach and no forecast for water rate increases from
Norfolk to Virginia Beach is included in the forecast.
There is no water charge after June 30, 1999. The water charge applies only
to the old water sales contract with the City of Norfolk.
Lake Gaston operation and maintenance expense forecast for fiscal years
2002 through 2004 is based on fiscal year 2001 budget and a 3% general rate
of inflation.
go
jo
Water pump station expense forecast is based on fiscal year 2001 budget and
a 3.25% general rate of inflation for personnel services and fringe benefits
and a 3% general rate of'inflation for other expenses.
Water distribution expense forecast is based on fiscal year 2001 budget and
a 3.25% general rate of inflation for personnel services and fringe benefits
and 3% general rate of inflation for other expenses.
Meter operating expense forecast is based on fiscal year 2001 budget and a
3.25% general rate of inflation for personnel services and fringe benefits and
3% general rate of inflation for other expenses. Additional meter reading
cost starting in fiscal year 2002 is assumed at $0.50 per additional meter
reading for switching from bimonthly meter reading to monthly meter
reading.
Sanitary sewer collection system expense forecast is based on fiscal year
2001 budget and a 3.25% general rate of inflation for personnel services and
fringe benefits and 3% rate of inflation for other expenses.
Sanitary sewer pump station expense forecast is based on fiscal year 2001
budget and a 3.25% general rate of inflation for personnel services and
fringe benefits and a 3% rate of inflation for other expenses.
Business division expense forecast is based on fiscal year 2001 budget and a
3.25% general rate of inflation for personnel services and fringe benefits and
3% general rate of inflation for other expenses. Additional billing cost
starting in fiscal year 2002 is assumed at $0.50 per additional bill for
switching from bimonthly billing to monthly billing.
Administration and engineering expenses consist of the Directors Office,
Engineering staff, Operation Administration, Water Resources, general fund
charges and contingency. The administration and engineering expense
Page - 23 -
forecast is based on fiscal 2001 budget and a 3.25% general rate of inflation
for personnel services and fringe benefits and 3% general rate of inflation
for other expenses.
5.2 Debt Service Requirements
The Department of Public Utilities has $ 82,937,960 outstanding principal mount of
long-term indebtedness on revenue bonds and notes, double-barrel bonds and general obligation
bonds as of June 30, 1999. The fiscal year 2000 debt service on this amount is $12,386,720.
The City of Virginia Beach financial consultants anticipate the Series 2000 Bonds will be
issued at an average interest rate of less than 6.2% with a final maturity of fiscal year 2025.
5.3 Coverage
The historical and forecasted operating results of the Water and Sewer Enterprise Fund
and coverage of debt service are summarized on Table 2.
Historically, coverage of debt service varied from 2.31 to 1.84 during fiscal years 1995 to
1999, respectively. The forecast illustrates that coverage of debt service on Water and Sanitary
Sewer Revenue Bonds and Notes would vary from 4.25 in fiscal year 2000 to 1.72 in fiscal year
2004 and coverage of total debt service would vary from 2.20 in fiscal year 2000 to 1.22 in fiscal
year 2004.
5.4 Projected Rate Increases
Since 1986 AB&H has been used as the City's water and sanitary sewer rate consultant to
perform various studies and analyses for the water and sanitary sewer systems. AB&H regularly
examines the books and records of the Department of Public Utilities and conducts a physical
inspection of the operating facilities in order to develop recommendations for adequate water and
~sewer rates. The terms of the contract have called for AB&H to conduct a cost of service study
and develop recommended rates which would be adequate for the succeeding five fiscal years.
The analyses have included a projection of revenues and expenditures for a period of five fiscal
years from a test year. In the aggregate, the studies have resulted in a program of regular rate
adjustments over the past 15 years. Periodic water and sanitary sewer rate increases have been
approved by City Council to meet anticipated increases in revenue requirements, including:
1. Increases in the wholesale price of water from Norfolk
2. Funding requirements of the water and sanitary sewer capital program
Page - 24 -
3. The addition of the Lake Gaston Project to the Virginia Beach water supply system
4. Provisions of the City's Sales and Services Contracts with the City of Norfolk
Rates have been established to ensure revenues are sufficient to cover all cash
expenditures (operation and maintenance expenses, debt service payments, equity funding for the
capital program.) and to ensure that the requirements of the Water and Sanitary Sewer Master
Bond Resolmion are fully satisfied.
In the most recent preliminary cost of service study, dated March 23, 2000, AB&H
opined that, based on the assumptions contained in the study, existing sanitary sewer charges are
not adequate for the study period of FY 2000 through F? 2005. An increase in sanitary sewer
rotes will be needed effective July 1, 2001. The mount of the sanitary sewer rate increase has
not been finalized at this time, but preliminary analysis indicates the following:
Effective Date
Sanitary Sewer Service Charge
Single Family Residence (per month)
July 1, 2001 $12.06
July 1, 2002 $12.79
July 1, 2003 $13.55
The sanitary sewer capital program is the primary reason to seek an increase in sewer
rotes. The cost of service study will be updated in the summer of 2000 to further define the
magnitude of the increases needed.
Historical water commodity rotes and sanitary sewer charges for a single family residence
and their effective dates are outlined on the following page.
Page - 25 -
Water Commodity Rate
Effective Date (per 1 ~000 gallons)
July 1, 1983 $1.62
August 1, 1987 $1.81
October 1, 1987 $1.99
July 1, 1988 $2.18
July 1, 1989 $2.51
July 1, 1990 $2.69
October 1, 1990 $2.77
July 1, 1991 $2.96
July 1, 1992 $3.11
July 1, 1993 $3.38
July 1, 1994 $3.65
July 1, 1999 $3.55
Sanitary Sewer Service
Charge - Single Family
Residence (per month)
$ 9.46
$ 9.65
$10.58
$11.38
As noted above the last water rate increase was in 1994 (six years ago); water rates were
decreased $0.10 per thousand gallons July l, 1999. The cost of service study indicates that water
rates do not require an adjustment during the forecast period (through FY 2004/2005).
Sanitary sewer rates were last increased July 1, 1992 (eight years ago). To fund furore
bond sales (beyond the $40,000,000 Series 2000 sale) an increase in sanitary sewer rates is
needed. The projected sanitary sewer rate increases are quite modest. A table of typical water
and sewer bills projected through FY 2003 (the time o£the last sanitary sewer rate increase) is
given on the following page.
Page - 26 -
A single family residence consuming 6,000 gallons for 31 days would receive a bill as follows:
Current Rates Projected Projected Projected
7/1/01 7/1/02 7/1/03
Water Usage (6 X $3.55) $21.30 $21.30 $21.30 $21.30
Minimum Service
Availability Charge $ 3.40 $ 3.40 $ 3.40 $ 3.40
Subtotal $24.70 $24.70 $24.70 $24.70
Sanitary Sewer Charge $11.38 $12.06 $12.79 $13.55
Total $36.08 $36.76 $37.49 $38.25
(% increase) (1.9%) (2%) (2%)
For the typical sanitary sewer customer the increase in monthly billing would be as follows:
FY Amount Increase %Increase
2001 $0.68 1.9%
2002 $0.73 2%
2003 $0.76 2%
The total amount of the increase over 3 years would be $2.17 (6%); commercial rates
would increase a comparable amount.
A comparison of current water and sewer rotes with other local cities is as follows:
City Typical Monthly Bill (6,000 gallons)
Virginia Beach $36.08
Norfolk $32.20
Chesapeake $30.15
Suffolk $34.31
It is anticipated that recommendations to increase sewer rates will be provided to the .City
Council in the fall of 2000.
Page - 27 -
6.0 SUMMARY AND CONCLUSIONS
The present Director of the City of Virginia Beach Department of Public Utilities has
been with the Department since 1985. It is our opinion that the Department's
management has the experience and is professionally well qualified to develop and
implement the proposed water and sanitary sewer system projects.
o
Based'upon site inspection of the water and sanitary sewer facilities, performed in 1986,
1990, 1993 and 2000, it is our opinion that the facilities are well operated and are
maintained in excellent condition.
o
Based upon examination of the books, records, forecasts of demands and rate structure of
the City's Water and Sanitary Sewer System, it is our opinion that the existing rates and
charges are sufficient to support the $40,000,000 bond sale.
The system capacity is adequate at current and projected demands to generate sufficient
revenues for the proposed bonds.
The cost for water and sanitary sewer services is reasonable and adequate when
considering the facilities and service provided.
The six-year Capital Improvements Program will require additional funds. Potential
sources of these funds are the Water and Sewer Enterprise Fund and proceeds of future
bond issues.
The Water and Sanitary Sewer Utility has demonstrated its ability to increase charges for
services to meet its financial obligations and provide adequate debt service coverage.
Based upon the preliminary cost of service study, existing water rates do not require an
adjustment during the forecast period, through FY 2005. Existing sanitary sewer charges
will not be adequate for the period of FY 2002 through FY 2005. An increase in sanitary
sewer rates will be needed effective July 1, 2001. The amount of the sanitary sewer rate
increase has not been finalized at this time. It is anticipated that recommendations to
increase sewer rates will be provided to the City Council in the fall of 2000.
Page - 28 -
APPEND~ C
AUDITED FINANCIAL STATEMENTS OF THE
WATER AND SEWER ENTERPRISE FUND
FOR THE FISCAL YEARS ENDED JUNE 30, 1998 AND 1999
2100 Dominion Tower
999 Waterside Drive
Norfolk, VA 23510
Independent Auditors' Report
Honorable Mayor, Members of City Council
and City Manager
City of Virginia Beach, Virginia:
We have audited the accompanying general purpose financial statements of the City of Virginia
Beach, Virginia (the City), as of and for the year ended June 30, 1999. These general purpose
financial statements are the responsibility of the City's management. Our responsibility is to
express an opinion on these general purpose financial statements based on our audit. We did not
audit the financial statements of the Virginia Beach Community Development Corporation, a
component unit of the City, whose statements reflect total assets of $8,423,107 as of June 30,
1999 and total revenues of $1,951,731 for the year then ended. Those financial statements were
audited by other auditors whose report has been furnished to us, and our opinion on the general
purpose financial statements, insofar as it relates to the amounts included for such entities, is
based on the report of the other auditors.
We conducted our audit in accordance with generally accepted auditing standards. Those
standards require that we plan and perform the audit to obtain reasonable assurance about
whether the general purpose financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in the
general purpose financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the overall general
purpose financial statement presentation. We believe that our audit and the report of other
auditors provide a reasonable basis for our opinion.
The schedule of funding pro~ess and the Year 2000 information are not a required part of the
general purpose financial statements, but are supplementary information required by the
Governmental Accounting Standards Board, and we did not audit and do not express an opinion
on such information. We have applied to the schedule of funding progress certain limited
procedures prescribed by professional standards, which consisted principally of inquiries of
management regarding the methods or measurement and presentation of the schedules. We were
unable to apply certain of these limited procedures to the Year 2000 information because of the
nature of the subject matter underlying the disclosure requirements and because sufficiently
specific criteria regarding the matters to be disclosed have not been established. In addition, we
do not provide assurance that the City is or will become Year 2000 compliant, that the City's
Year 2000 remediation efforts will be successful in whole or in part or that parties with which the
City does business are or will become Year 2000 compliant.
KPMG LLP KPMG LLF~ a tJ.S I~mited Ilablltt¥ Dart~ersnr~. ~$
International. a Swiss assoc;at~on
Honorable Mayor, Members of City Council
and City Manager
City of Virginia Beach, Virginia
Page 2
In our opinion, based on our audit and the report of other auditors, the general purpose financial
statements referred to above present fairly, in all material respects, the financial position of the
City of Virginia Beach, Virginia as of June 30, 1999, and the results of its operations and cash
flows of its proprietary fund types for the year then ended, in conformity with generally accepted
accounting principles.
November 12, 1999
CITY OF VIRGINIA BEACH, VIRGINIA
WATER AND SEWER ENTERPRISE FUND
COMPARATIVE BALANCE SHEET
JUNE 30, 1999 AND 1998
1999
1998
ASSETS
Current Assets:
Cash and investments
Cash with Fiscal Agent
Accounts Receivable - Net of Estimated Uncollect~bles
Due From Other Funds
Due From Local Governments
Inventory
Total Current Assets
Restricted Assets:
Cash and Investments - Water Resoume Rate Increase - D-8
Cash for Water and Sewer Debt Service - D-8
Total Restricted Assets
Deferred Charges
Property, Plant and Equipment:
Land
Buildings
Utility System
Office Furniture and Fixtures
Machinery and Equipment
Total Property, Plant and Equipment
Less: Accumulated Depreciation
Net Property, Plant and Equipment
Construction in Progress
TOTAL ASSETS
LIABILITIES AND EQUITY
Current Liabilities:
Vouchers and Accounts Payable
Federal Arbitrage Payable
Deposits Payable
Accrued Interest Payable
Construction Contracts Payable
Due to Other Funds
Sinking Fund 1977 Notes
Matured Bonds Payable
Matured Interest Payable
Current Portion of:
Double Barrel and Revenue Bonds and Notes - D-9
General Obligation Bonds - D-9
Accrued Compensated Leave
Total Current Liabilities
$ 58,182,329
2,038,809
11,460,955
14,436
133,217
1,449,157
$ 73,278,903
$
4,678,341
$ 4,678,341
$ 596,668
$ 6,627,335
2,659,067
566,825,390
1,553,997
13,513,907
$ 591,179,696
159,140,967
$ 432,038,729
$ 68,776,506
$ 579,369,147
$ 5,507,132
61,867
108,664
1,382,437
1,927,114
981,041
2,678,308
5,261,528
2,915,000
51,498
$ 20,874,589
$ 25,377,670
2,798,690
11,741,937
4,819,674
1,210,655
$ 45,948,626
$ 34,720,298
4,678,341
$ 39,398,639
$ 658,469
$ 6,609,619
2,659,067
645,233,776
1,503,370
13,097,585
$ 569,103,417
146,653,322
$ 422,450,095
$ 64,648,000
$ 573,003,829
$ 3,472,070
61,867
142,678
1,572,874
2,244,643
1,152,325
1,929,617
556,279
220,669
6,504,892
1,135,000
120,562
$ 19,113,476
(continued)
CITY OF VIRGINIA BEACH, VIRGINIA
WATER AND SEWER ENTERPRISE FUND
COMPARATIVE BALANCE SHEET
JUNE 30, 1999 AND 1998
1999
1998
Deferred Revenue
Long-Term Liabilities (less current portion):
Double Barrel and Revenue Bonds and Notes - D-9
General Obligation Bonds - D-9
Deferred Loss on Refunding
Premium on Refunding Bonds
Accrued Compensated Leave
Total Long-Term Liabilities (less current portion)
Total Liabilities
Equity:
Contributed Capital: - D-7
Municipality
Customers and Developers
Water Resoume Recovery Fees
Commonwealth of Virginia
Federal Government
Federal Revenue Shadng
Federal Community Development
Total Contributed Capital
Retained Earnings - unreserved
Total Equity
TOTAL LIABILITIES AND EQUITY
$ 189,257
$ 66,061,432
8,700,000
(1,727,421)
522,085
1,272,907
$ 74,829,003
$ 95,892,849
$ 4,452,756
209,304,130
63,541,611
314,742
2,085,592
6,255,063
4,382,555
$ 290,336,449
193,139,849
$ 483,476,298
$ 579,369,147
925,128
65,422,966
11,615,000
(1,919,536)
623,135
1,156,071
$ 76,897,636
$ 96,936,240
4,437,335
206,700,404
59,697,458
314,742
2,085,592
6,255,063
4,563,268
$ 284,053,862
192,013,727
$ 476,067,589
$ 573,003,829
The accompanying notes are an integral part of the financial statements.
CITY OF VIRGINIA BEACH, VIRGINIA
WATER AND SEWER ENTERPRISE FUND
COMPARATIVE STATEMENT OF REVENUES, EXPENSES AND CHANGES IN RETAINED EARNINGS
FOR THE YEARS ENDED JUNE 30, 1999 AND 1998
1999 1998
OPERATING REVENUES
Service Charges $ 28,236,610 $ 27,822,007
Sale of Water 41,306,534 39,982,908
Tap Fees 1,105,604 93,161
Fire Hydrant Rental 18,290 25,110
Navy Wheelage Charges 162,195 185,059
Miscellaneous 197,661 35,470
Total Operating Revenues $ 71,026,894 $ 68.143,715
OPERATING EXPENSES
Cost of Goods Sold - Water Pumhases
Personal Services
Fringe Benefits
Contractual Services
Intemal Services
Other Charges
Leases and Rentals
Land Structures and Improvements
Bad Debts
Depreciation
Total Operating Expenses - D-10
OPERATING (LOSS}
NONOPERATING REVENUES (EXPENSES)
Sale of Salvage
Interest Income
Loss on Disposition of Assets
Interest on Double Barrel/Revenue Bonds and Notes
Interest on General Obligation Bonds
City of Norfolk Sale of Water True Up
Total Nonoperating Revenues (Expenses)
INCOME (LOSS} BEFORE OPERATING TRANSFERS
OPERATING TRANSFERS
Operating Transfers Out
NET INCOME (LOSS}
Add: Transfer of Depreciation to Contributed Capital Accounts
INCREASE IN RETAINED EARNINGS
RETAINED EARNINGS - JULY 1
RETAINED EARNINGS - JUNE 30
32,325,393 $ 28,874,799
12,867,306 12,366,000
3,334,255 3,068,109
3,203,081 2,019,536
2,296,930 2,215,948
7,035,976 7,157,490
84,463
9,464
440,860 354,289
12.755,750 12,418,470
$ 74,259,551 $ 68,568,568
$ (3.232,657) $ (424,853)
35,691 $ 28,972
3,359,305 3,968,646
(8,273) (44,020)
(3,740,566) (4,042,321)
(531,1 95) (500,741)
4,465,869
$ (885,038) $ 3,876,405
$ (4,117,695) $ 3,451,552
$ (911,420) $ (186,4207
$ (5,029,115) $ 3,265,132
6,155,237 5,441,490
$ 1,126,122 $ 8,706,622
192,013,727 183,307,105
$ 193,139,849 $ 192,013,727
The accompanying notes are an integral part of the financial statements.
CITY OF VIRGINIA BEACH, VIRGINIA
WATER AND SEWER ENTERPRISE FUND
COMPARATIVE STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 1999 AND 1998
1999
1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Operating (Loss)
Adjustments to Reconcile Operating (Loss) to Net
Cash Provided by Operating Activities
Depreciation
Decrease in Premium on Refunding Bonds
Amortization of Deferrals
(Increase) Decrease in Assets:
Accounts Receivable
Due from Other Funds
Due From Local Governments
Deferred Charges
Inventory
Increase (Decrease) in Liabilities:
Vouchers and Accounts Payable
Deposits Payable
Accrued Interest Payable
Due to Other Funds
Sinking Fund
Deferred Revenue
Amounts Payable - Matured Debt and Construction Contracts
Accrued Compensated Leave
Total Adjustments
Net Cash Provided By Operating Activities
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Payments to Other Funds
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVmES:
Receipts of Capital Contributions
Interest Paid on Long-Term Debt
Payments for Capital Acquisitions
Proceeds from Sale of Refunding Bonds
Proceeds from Sale of Salvage
Proceeds and Reductions from Virginia Resources Authority Loans
City of Norfolk Water Purchase True Up
Principal Repayment on Refunding Long-Term Debt
Principal Repayment on Long-Term Debt
Net Cash Used In Capital and Related Financing Activities
CABH FLOWS FROM INVESTING ACTIVITIES:
Interest Received on Investments
Net Cash Provided by Investing Activities
NET (DECREASE) IN CASH AND INVESTMENTS
CASH AND INVESTMENTS AT BEGINNING OF YEAR
CASH AND INVESTMENTS AT END OF YEAR
NQNCASH TRANSACTIONS;
Capital Contributions of Fixed Assets
$ {3,232,657)
12,755,750
(101,050)
192,115
280,982
(14,436)
4,686,457
61,801
(238,502)
2,035,062
(34,014)
(190,437)
(171,284)
748,691
(735,871)
(1,094,477)
47,772
$ 18,228,559
$ 14,995,902
$ (911,420)
$ 6,994,825
(4,271,761)
(21,138,164)
35,691
5,890,048
(7,629,946)
$ (20,119.307)
$ 3,359,305
$ 3,359,305
$ (2,675,520)
67,574,999
$ 64,899,479
$ 5,442,999
(424,853)
12,418,470
(101,050)
53,897
(3,809,920)
32,232
(51,630)
1,427,569
57,682
(156,959)
294,228
637,500
236,850
(2,173,585)
123,150
$ 9,319,116
$ 8,894,263
{186,420)
5,479,863
(4,543,062)
(33,449,240)
3,580,000
28,972
4,465,869
(3,430,000)
(6,916,972)
(34,784,570)
$ 3,968,646
$ 3,968,646
$ (22,108,081)
89,683,080
$ 67,574,999
$ 4,710,150
The accompanying notes are an integral part of the financial statements.
CITY OF VIRGINIA BEACH, VIRGINIA
WATER AND SEWER ENTERPRISE FUND
COMPARATIVE SCHEDULE OF CHANGES IN FUND EQUITY CONTRIBUTED CAPITAL ACCOUNTS
FOR THE YEARS ENDED JUNE 30, 1999 AND 1998
1999 1998
Balance - July 1
Additions: Capital Assets
Balance - June 30
$ 4,437,335 $ 4,436,470
15,421 865
$ 4,452,756 $ 4,437,335
CUSTOMERS AND DEVELOPERS Balance - July 1
Additions: Capital Assets
Main Extensions and Line Fees
Deductions: Depreciation on Contributed Assets
Balance - June 30
$ 206,700,404 $ 205,125,479
5,427,578 4,709,285
2,415,867 1,645,050
(5,239,719), (4,779,410)
$ 209,304,130 $ 206,700,404
W~.TER RESOURCE RECOVERY FEES
Balance - July 1
Additions: Fees
Deductions: Depreciation on Contributed Assets
Balance - June 30
$ 59,697,458 $ 56,344,011
4,578,958 3,834,813
(734,805) (481,366)
$ 63,541,611 $ 59,697,458
$ 314,742 $ 314,742
$ 2,085,592 $ 2,085,592
$ 6,255,063 $ 6,255,063
COMMONWEALTH OF VIRGINIA
Balance - June 30
FEDERAL GOVERNMENT
Balance - June 30
FEDERAL REVENUE SHARING
Balance - June 30
FEDERAL COMMUNITY DEVELOPMENT
Balance - July 1
Deductions: Depreciation on Contributed Assets
Balance - June 30
$ 4,563,268 $ 4,743,982
(180,713) 1180,714)
$ 4,382,555 $ 4,563,268
CITY OF VIRGINIA BEACH, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
WATER AND SEWER ENTERPRISE FUND
JUNE 30, 1999 AND 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The present City of Virginia Beach, Virginia, was formed on January 1, 1963, by the merger of Princess Anne
County and the former smaller City of Virginia Beach. The City operates under the Council-Manager form of
government. The elected eleven-member City Council, vested with the legislative powers, appoints the City
Manager who is the executive and administrative head of the City government.
The Water and Sewer Fund reflects the activity of the Department of Public Utilities which owns and operates a
water and sewer system serving the City of Virginia Beach, Virginia. The following is a summary of the significant
accounting policies for the Water and Sewer Enterprise Fund (the Fund) for the City of Virginia Beach:
A. Fund Accounting
The accounts of the City are organized on the basis of funds and account groups, each of which is considered
a separate accounting entity. The operations of each Fund are accounted for with a separate set of
self-balancing accounts which comprise its assets, liabilities, fund equity, revenues, expenditures or expenses,
as appropriate. The Water and Sewer Enterprise Fund is reported as an Enterprise Fund.
Enterprise Funds are used to account for operations (a) that are financed and operated in a manner similar
to private business enterprises where the intent of the governing body is that costs (expenses, including
depreciation) of providing goods or services to the general public on a continuing basis be financed or
recovered primarily through user charges; or (b) where periodic determination of revenues earned, expenses
incurred, and/or net income is deemed appropriate for capital maintenance, public policy, management
control, accountability, or other purposes.
B. Fixed Assets and Long-Term Liabilities
Assets and liabilities (whether current or non-current) of the Fund including capital leases (Note 6) are
included on its balance sheet. The reported fund equity (net total assets) is segregated into contributed capital
and retained earnings components.
Depreciation of exhaustible fixed assets used by the Fund is recorded as an expense against its operations
and accumulated depreciation is reported on the Fund's balance sheet. Depreciation has been provided over
the estimated useful lives using the straight-line method of depreciation.
Generally, the City does not capitalize interest on construction projects.
The utility system in the Water and Sewer Enterprise Fund has been recorded at cost since July 1, 1976 and
contributed capital asset additions have been recorded at their estimated fair market value in the year
contributed as determined by the City's utility engineers. Prior to that date, the utility system was recorded
at "estimated historical cost depreciated" as determined by independent professional engineers.
Depreciation on the utility system, based on costs described above, and other capital assets oftheWater and
Sewer Enterprise Fund has been charged to operations and was computed as follows:
Utility System (exclusive of machinery and equipment)
Less: estimated salvage value of 20% of costs
Machinery and Equipment
Furniture and Fixtures
20-100 years
20-25 years
5-10 years
C. Basis of Accounting
The Fund is accounted for on a flow of economic resources measurement focus. With this measurement
focus, all assets and all liabilities associated with the operation of the Fund are included on the balance sheet.
Fund equity (i.e., net total assets) is segregated into contributed capital and retained earnings componen~ts.
The operating statements present increases (e.g., revenues) and decreases (e.g., expenses) in net total
assets.
CITY OF VIRGINIA BEACH, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
WATER AND SEWER ENTERPRISE FUND
JUNE 30, 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
C. Basis of Accounting (continued)
The Fund is reported under the accrual basis of accounting. Revenues are recognized when earned and
expenses are recognized when incurred. Unbilled Water and Sewer Enterprise Fund accounts receivable for
utility services provided through June 30 are included in the financial statements. In accordance with
Governmental Accounting Standards Board (GASB) Statement No. 20 "Accounting and Financial Reporting
for Proprietary Funds and Other Governmental Entitiesthat use Proprietary Fund Accounting" (Statement No.
20), proprietary fund types follow all applicable GASB pronouncements as well as all Financial Accounting
Standards Board (FASB) pronouncements and predecessor Accounting Principles Board Opinions and
Accounting Research Bulletins (ARB) issued on or before November 30, 1989 unless those FASB
pronouncements conflict with or contradict GASB pronouncements. Under paragraph 7 of Statement No. 20,
the City has elected not to apply FASB pronouncements issued after November 30, 1989.
The Fund reports deferred revenue on its combined balance sheet. Deferred revenues arise when resources
are received by the government before it has a legal claim to them. In subsequent periods, when the
government has a legal claim to the resources, the liability for deferred revenue is removed from the balance
sheet and revenue is recognized.
D. Inventories
The Water and Sewer inventory is reported at cost using the moving weighted average cost inventory method.
E. Accrued Compensated Leave
Annual leave, according to a graduated scale based on years of employment, is credited to each employee
as it accrues. A permanent City employee may accrue a maximum of 50 days. Upon employment
termination, payment is made by the City to the respective employee on the unused portion.
City employees are granted one sick leave day per month and may accumulate an unlimited number of sick
leave days; however, no payment is made by the City on the unused portion upon employment termination
(except on the condition of retirement). In accordance with Governmental Accounting Standards Board
Statement (GASB) Number 16, an accrual has been made in the financial statements for these payments.
The estimated amount of accrued compensated leave for employees of the Fund are recorded as liabilities
when earned. See Note 5E for the estimated amounts related thereto.
F. Miscellaneous
1. Cash and Investments
Cash invested at June 30 is included in the various cash accounts reflected in the financial statements.
investments are stated at amortized cost or at their fair value (see Note 7). interest earnings on
investments are allocated to the appropriate funds based upon the average monthly cash balance of each
Fund.
2. Other Charges
This category mainly consists of City of Virginia Beach General Fund charges (e.g., data processing,
buildings and grounds, indirect costs) to the Fund and insurance premiums and claims payments
(including the current estimated claims and judgements in the Risk Management Fund of the City.
3. Premium and Deferred Loss on Refunding Bonds
The premium on refunding bonds is amortized using the straight-line method which does not differ
materially from the interest method. The deferred loss on refunding is being charged to operations
throug.h the year 2009 using the straight-line method, in accordarce with GASB Statement Number 23.
CITY OF VIRGINIA BEACH, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
WATER AND SEWER ENTERPRISE FUND
JUNE 30, 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
F. Miscellaneous. (continued)
4. Deferred Char_qe
The Fund's deferred charge represents unamortized bond issuance costs incurred in the sale of Revenue
Bonds. These costs will be amortized using the straight-line method which does not differ materially from
the interest method.
5. Statement of Cash Flows
For purposes ofthe statements of cash flows, all highly liquid debt instruments and certificates of deposit,
regardless of maturity date, are grouped into cash and temporary investments. The Water and Sewer
Fund participates in a centralized cash and investment pool and therefore, separate information on cash
equivalents (i.e., investments with maturities of three months or less upon acquisition) for the fund is not
available.
6. Reclassification
Certain reclassifications have been made to the 1998 information to conform with their 1999 presentation.
During FY99, cash generated from the Water Resource Rate Increase, which had previously been
administratively restricted, was reclassified as operating cash.
2. ALLOWANCES FOR UNCOLLECTIBLE ACCOUNTS RECEIVABLE
Allowances for uncollectible accounts receivable are generally established using historical collection data, specific
account analysis and subsequent cash receipts. The allowances for the Fund was $1,939,588 and $1,498,022 at
June 30, 1999 and 1998, respectively.
3. DEFERRED REVENUE
Deferred revenue for the Fund represents collections received from Customers and developers in advance of the
installation of water and sewer lines. The total was $189,257 and $925,128 at June 30, 1999 and 1998,
respectively.
4. FIXED ASSETS
Construction in Pro.qress
At the balance sheet date, there were several Water and Sewer Utility projects which were in a state of substantial
completion. These projects will not be transferred from Construction in Progress to the various capital asset
accounts until completion. Of the amounts reported as Construction in Progress at June 30, 1999 and 1998,
utility projects within the following categories were substantially completed:
Category
1999 1998
Construction Construction
in Pro.qress in Proqress
Water Utility Projects
Sewer Utility Projects
Total
$ 16,639,493 $ 12,105,528
52,137,013 52,442,472
$ 68,776,506 $ 64,548,000
Cate,qory
Water Utility Projects
Sewer Utility Projects
Total
Substantially Substantially
Completed Completed
$ 4,545,142 $ -
9,106,524 18,788,976
$ 13,651,666 $ 18,788,976
CITY OF VIRGINIA BEACH, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
WATER AND SEWER ENTERPRISE FUND
JUNE 30, 1999
LONG-TERM DEBT
Bonds~ Notes and Loans Payable
General Obligation Bonds and Loans:
1998 Public Improvement and Refunding bonds ($125,610,000)
dated March 15, 1998; annual installments of $2,400,000 to
$11,915,000 through August 1, 2017; true interest cost -
4.764679%; Marine Science Enterprise Fund incurs 4.27%, and the
Stormwater Enterprise Fund incurs 1.31% of debt service costs;
principal outstanding-
1999
3,525,000
1998
$ 3,580,000
1993 Refunding serial bonds ($156,080,000) dated April 15,
1993; annual installments of $1,770,000 to $13,730,000
through July 15, 2011; true interest cost- 4.9999386%; Water
and Sewer Enterprise Fund incurs 6.51%; of debt service costs;
principal outstanding -
7,390,000
7,815,000
1992 Refunding serial bonds ($37,590,000) dated February 1,
1992; annualinstallments of $650,000 to $4,120,000 through
February 1, 2007; true interest cost- 5.591571%; Water and
Sewer Enterprise Fund incurs 14.71% of debt service costs;
principal outstanding-
$3,385,000 was refunded under the 1998 Public Improvement and
Refunding bond; principal outstanding to be redeemed by the
escrow agent on February 1, 2002
Total General Obligation Bonds and Loans
700,000
11,615,000
1,355,000
$ 12,750,000
"Double Barrel" and Revenue Bonds and Notes:*
1998 TaxableWater & Sewer System Revenue Bonds ($6,200,000)
dated August 28, 1998; semi-annual installments of $103,139 to
$231,462 through June 1, 2019; true interest cost - 4.3% principal
outstanding -
6,200,000
1997 Taxable Water and Sewer System Revenue bonds
($7,190,048) dated January 30, 1997; semi-annual installments of
$119,487 to $278,165 through December 1,2017; true interest cost
-4.75% principal outstanding -
6,959,326
7,500,000
1994 Taxable Water and Sewer System Revenue bonds
($1,405,031) dated January 18, 1995; annual installments of
$26,738 to $53,295 through June 1, 2015; true interest costs -
4.5% principal outstanding -
1,233,634
1,285,358
1993 Water and Sewer Revenue and Refunding bonds
($46,440,000) dated December 15, 1993; annual installments of
$1,120,000 to $2,800,000 through February 1,2019; true interest
costs - 5.131153%; principal outstanding -
40,690,000
41,975,000
CITY OF VIRGINIA BEACH, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
WATER AND SEWER ENTERPRISE FUND
JUNE 30, 1999
LONG-TERM DEBT (continued)
A. Bonds~ Notes and Loans Payable (continued)
"Double Barrel" and Revenue Bonds and Notes:* (continued)
1992 Water and Sewer Revenue bonds ($19,975,000) dated
February 1, 1992; annual installments of $530,000 to $595,000
through February 1, 2002; true interest cost-6.53376%; principal
outstanding -
$15,235,000 was refunded under the 1993 Revenue and
Refunding bond issue; principal outstanding to be redeemed by
the escrow agent on February 1, 2002
1999
1,690,000
1998
$ 2,195,000
1986 Water and Sewer Refunding serial bonds ($8,235,000) dated
September 1, 1986; final payment to be made on July 15, 1998;
true interest cost - 6:95337%; principal outstanding -
1,575,000
1982 Water and Sewer revenue notes ($1,800,000) dated August
31, 1982; annual installments of $72,000 through August 31,
2007; net interest cost - 10.00%; principal outstanding -
648,000
720,000
1982 Water and Sewer revenue notes ($2,200,000) dated August
31, 1982; annual installments of $88,000 through August 31,2007;
net interest cost - 10.00%; principal outstanding-
792,000
880,000
1978 Drought Relief revenue term bonds ($2,000,000) dated
February 1, 1978; annual sinking fund (Note 5E2) payments of
$400,000 February 1, 2003 through February 1,2007; net interest
cost - 5.00%; principal outstanding -
2,000,000
2,000,000
1977-B Water and Sewer serial bonds ($19,900,000) dated
December 1, 1978; annual installments of $960,000 to $1,140,000
through October 1, 2001; net interest cost - 5.6296%; principal
outstanding -
3,150,000
4,020,000
1977 Water and Sewer revenue term notes ($5,100,000) dated
December 15, 1977; annual sinking fund (Note 5E1) payments of
$637,500 through December 15, 2002; net interest cost - 6.00%;
principal outstanding -
2,550,000
3,187,500
1977-A Water and Sewer serial bonds ($20,000,000) dated
September 1, 1977; annual installments of $1,240,000 to
$1,470,000 through September 1, 2002; net interest cost -
5.095544%; principal outstanding-
5,410,000
6,590,000
Total "Double Barrel" and Revenue Bonds and Notes*
Total Bonds, Notes and Loans Payable (Excludes Other
Component Units)
*Water and Sewer Enterprise Fund incurs 100% of debt service costs
$ 71,322,960
$ 82,937,960
$ 71,927,858
$ 84,677,858
CITY OF VIRGINIA BEACH, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
WATER AND SEWER ENTERPRISE FUND
JUNE 30, 1999
LONG-TERM DEBT (continued)
B. A Summary of Annual Requirements to Amortize All Bonds and Notes Payable as of June 307 1999
Fiscal Year
Enterprise Funds
"Double Barrel" Water & Sewer Only Water & Sewer Only
and Revenue Bonds General Obligation Interest
& Notes Bonds
1999-00 $ 5,261,528 $ 2, 915,000 $ 4,210,191
2000-01 5,630,451 980,000 3,814,707
2001-02 5,914,461 980,000 3,503,973
2002-03 5,379,577 1,795,000 3,042,004
2003-04 3,388,348 3,535,000 2,596,334
2004-05 3,520,828 935,000 2,350,202
2005-06 3,659,573 475,000 2,159,056
2006-07 3,794,641 -- 1,983,516
2007-08 3,546,094 -- 1,711,113
2008-09 3,548,995 ~ 1,536,712
2009-10 2,568,411 -- 1,359,496
2010-11 2,694,412 -- 1,232,460
2011-12 2,832,070 ~ 1,098,708
2012-13 2,966,464 ~ 958,096
2013-14 3,112,672 ~ 810,800
2014-15 3,270,778 -- 656,225
2015-16 3,325,655 ~ 494,996
2016-17 3,492,810 -- 329,329
2017-18 1,837,139 ~ 155,310
2018-19 1,578,053 ~ 72,225
$ 71,322,960 $ 11,615,000 $ 34,075,453
Water and Sewer "Double Barrel" debt is secured by the full faith and credit and unlimited taxing power the
City, and an additional pledge of charging rates or fees sufficient to pay the costs of water and sewer
operations and debt service.
"Double Barrel" and Revenue Bonds and Notes:
1999 1998
'Double Barrel" Bonds $ 8,560,000 $ 10,610,000
Revenue Bonds and Notes 62,762,960 61,317,858
Total $ 71,322,960 $ 71,927,858
Water and Sewer Enterprise Fund
General Obligation Bonds
$ 11,615,000 $ 12,750,000
C. Water and Sewer Enterprise - Sinking Fund Requirements
Water and Sewer Revenue Notes dated December 15~ 1977 for $5~100~000 - were issued to pay a
portion of the purchase price for the stock of Princess Anne and Aragona Utility Corporations (private utility
companies). At least one business day before each December 15, beginning December 15, 1995 and
continuing until the payment of the notes on December 15, 2002, the City's Director of Finance is required
to deposit the sum of $637,500 into a sinking fund account from net revenues of the Water and Sewer
Enterprise. _
CITY OF VIRGINIA BEACH, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
WATER AND SEWER ENTERPRISE FUND
JUNE 30, 1999
5. LONG-TERM DEBT (continued)
C. Water and Sewer Enterprise - SinkinR Fund Requirements (continued)
Drought Relief Revenue Bond dated February 1, 1978 for $2,000~000 - was issued pursuant to a grant
and loan agreement between the City and the United States of America, Department of Commerce,
Economic Development Administration. At least one business day before each February 1, beginning
February 1, 2003 and continuing until the payment of the bond on February 1, 2007, the City's Director of
Finance is required to deposit the sum of $400,000 into a sinking fund account from net revenues of the
Water and Sewer Enterprise.
D. Water and Sewer Enterprise Cash for Debt Service
Water and sewer main extension and line fees collected from customers and developers and interest earnings
on bond proceeds invested are administratively used to Fund the debt service costs of water and sewer general
obligation bonds (Note 5C) and certain capital projects. Unrestricted cash in the Water and Sewer Fund available
for debt service at June 30, 1999 is $58,182,329 and $25,377,670 for June 30, 1998.
E. Accrued Compensated Leave
The accrued compensated leave is as follows at June 30, 1999 and 1998:
Compensated 1999 1998
Leave Water & Sewer Water & Sewer
City - Annual $ 1,224,302
City - Compensatory 64,496
City - Sick 35,607
Total $ 1,324,405
$ 1,180,158
57,142
39,333
$ 1,276,633
F. Unissued Bonds
The following is a synopsis of bonds authorized and/or appropriated, and unissued as of June 30, 1999:
Unissued
1990 W & S Revenue Bonds $ 2,272,739
1991 W & S Revenue Bonds 3,203,700
1993 W & S Revenue Bonds 4,123,530
1994 W & S Revenue Bonds 12,663,000
1995 W & S Revenue Bonds 2,769,952
1996 W & S Revenue Bonds 6,960,000
1997 W & S Revenue Bonds 12,730,000
1998 W & S Revenue Bonds 11,600,000
1999 W & S Revenue Bonds 9,513,500
Total $ 65.836,421
G. Revenue Covenants
The City is in compliance with all significant financial covenants contained in the various bond indentures,
including those found in the Master Resolution adopted February 1992.
6. DEPOSITS AND INVESTMENTS
A. Deposes
The Constitution of Virginia and the Code of Virginia require the election of a City Treasurer. The City's Charter
provides that the City Treasurer is the custodian of City cash and has powers and duties prescribed by general
law.
CITY OF VIRGINIA BEACH, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
WATER AND SEWER ENTERPRISE FUND
JUNE 30, 1999
6. DEPOSITS AND INVESTMENTS. (continued)
A. Deposits (continued)
At year-end the carrying value of the City's (including balance reported in School Board Component Unit and
excluding School Board Activity Funds) deposits with banks and savings institutions was $13,098,571, and the
bank balancewas $25,686,198. Ofthe bank balance, $25,686,198 was covered by Federal Depository insurance
or collateralized in accordance with the Virginia Security for Public Deposits Act. Under the Act, banks holding
public deposits in excess of amounts insured by FDIC must pledge collateral equal to 50% of such excess
deposits to a collateral pool in the name of the State Treasury Board. Savings and Loan institutions are required
to collateralize 100% of deposits in excess of FDIC limits. The State Treasury Board is responsible for monitoring
compliance with the collateralization and reporting requirements of the Act and for notifying local governments
of compliance by banks and savings and loans. If any member financial institution fails, the entire collateral
becomes available to satisfy the claims of the City. If the value of the pool's collateral is inadequate to cover a
loss, additional amounts would be assessed on a pro-rata basis to the members (banks and savings and loans)
of the pool. Therefore, these deposits are considered collateralized and as a result of this are considered insured.
Cash with fiscal agents totaling $2,038,809 and cash with School Board Activity Funds totaling $4,110,041 are
covered by Federal depository insurance or collateralized in accordance with the Virginia Security for Public
Deposits Act. The City has compensating balance arrangements with two financial institutions. Bank of America
provides services to the City while a $3.5 million balance is maintained in a demand deposit account. A
fluctuating checking balance, based on monthly investment services, is a requirement of BB&T Bank.
At June 30, 1999 the City had on deposit with Resource Bank $24,431. On this date, the institution does not hold
public deposits in excess of the $100,000 insured by The Federal Deposit Insurance Corporation (FDIC).
However, since the amount on deposit with Resource Bank is less than the FDIC $100,000 limit, all funds are
completely insured.
B. Investments
Statutes authorize the City to invest in obligations of the United States or agencies thereof; the Commonwealth
of Virginia or political subdivisions thereof; obligations of the International Bank for Reconstruction and
Development (World Bank); the Asian Development Bank; the African Development Bank; commercial paper
rated A-1 by Standard and Poor's Corporation or P-1 by Moody's Commercial Paper Record; bankers'
acceptances; repurchase agreements which are collateralized with securities approved for direct investment,
State Treasurer's Local Government Investment Pool (LGIP); and corporate notes with at least a rating of Aa by
Moody's or AA by Standard and Poor's. The amount of investments in commercial paper is limited to 35% of
the total available for investment, and not more than 5% of the total available for investment can be invested in
any one issuing corporation.
The City's investments are categorized below to give an indication of the level of risk assumed by the entity at
year-end. Category 1 includes investments that are insured or registered or for which the securities are held by
the City or its safekeeping agent in the City's name. Category 2 includes uninsured and unregistered investments
forwhich the securities are held by the counterparty agent in the City's name. Category 3 includes uninsured and
unregistered investments for which the securities are held by the counterparty agent but not in the City's name.
CITY OF VIRGINIA BEACH, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
WATER AND SEWER ENTERPRISE FUND
JUNE 30, 1999
6. DEPOSITS AND INVESTMENTS (continued)
B. Investments. (continued)
Category
1 2 3
Bankers'Acceptance $ 39,596,418 $
Commercial Paper 88,564,759
U.S. Government Securities 106,260,879 7,758,587
$ 234,422,056 $_._ 7,758,587
Reported
Amount
39,596,418
88,564,759
114~019,486
$ 242,180,643
Investment in State Treasurer's Local
Govemment Investment Pool (LGIP)
Investment in State Non arbitrage Program - SNAP
Investment in Arbitrage Investment Management Program - AIM
Total Investments
Total School Board Activity Fund Deposits
Total Cash With Fiscal Agents
Total Deposits
Total Deposits and Investments
$ 25,000,000
26,208,011
1,810,197
$ 295,198,851
4,110,041
2,038,809
13~098~571
$ 314,446,272
The City's investment in repurchase agreements represents an overnight sweep of the City's main operating bank
account balances. These amounts will vary on a daily basis. On June 30, 1999, there were no repurchase
agreements.
As of October 1, 1988, all bankers' acceptances, commercial paper, and Treasury Notes purchased by a local
government that have a maturity date of greater than thirty days from the date of purchase are required to be
safekept by a third party acting as a trust agent for the City. The City's securities are safekept by BB&T Bank
and are registered in the name of the City.
The investments in State Treasurer's LGIP, AIM, and SNAP programs are not subject to categorization as to
assumed risks because, in the aggregate, they are considered pooled investments in nature and are not
evidenced by securities that exist in physical or book entry form. The cash and investments of the School Board
component unit have been pooled with the cash and investments of the primary government and, therefore, are
included in the above information. The remaining component units, with cash and investments amounting to
$6,597,157, have been excluded because categorization information is not available.
The City adopted GASB Statement No. 31, Accounting and Financial Reporting for certain Investments and for
External Investment Pools, beginning in the year ended June 30, 1998. This statement requires certain
investments to be recorded at fair value. At June 30, 1999 in accordance with GASB 31 investments in bankers'
acceptances, commercial paper and U.S. Government Securities are recorded at fairvalue. All other investments
are reported utilizing amortized cost. The fair valuing of bankers' acceptances, commercial paper and U.S.
Government Securities at June 30, 1999 resulted in a net increase of $1,229,296.
As previously noted, all City and School Board Funds participate in a centralized cash and investment pool.
Interest earnings on investment are allocated to the appropriate funds based upon the average monthly cash
balance of each fund. As of June 30, 1999, $2,423,426 was reported in designated funds and subsequently
transferred to the General Fund.
7. COMMITMENTS AND CONTINGENCIES
A. Litigation
The City is a named defendant in litigation filed by parties concerning alleged personal injuries, property damage,
and other causes of action. The City is vigorously defending all cases and expects no losses will be incurred
which would have a material effect on the City's financial position.
CiTY OF VIRGINIA BEACH, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
WATER AND SEWER ENTERPRISE FUND
JUNE 30, 1999
7. COMMITMENTS AND CONTINGENCIES (continued)
B. Lake Gaston Project
A major initiative completed by the City within the last two years is the Lake Gaston Water Supply Project. The
City has constructed a 76-mile, 60-inch diameter pipeline, a submerged water intake structure, and a pump
station to provide raw water to the City of Norfolk raw water reservoirs from Lake Gaston to be treated and
pumped to Virginia Beach. The project was completed in December 1997 and put into service on January 1,
1998. Additional expenses will be incurred on this project in FY00. At June 30, 1999, $3,310,664 was
unexpended. The project can supply an additional 60 mgd of rawwater. Virginia Beach's share is 48 to 50 mgd
of water on an average annual basis. In November 1987, the City executed a cost participation agreement with
the City of Chesapeake for one-sixth (10 MGD) of the project cost and ownership. In addition, Suffolk and Isle
of Wight may participate for up to 1 mgd each.
C. Water Sales and Treatment Contract
The City and Norfolk have entered into a Water Services Contract effective July 1, 1993 expiring in the year 2030.
The Services Contract establishes engineering, water quality, and operational standards for Norfolk to receive,
convey, treat, and deliver Lake Gaston water to the City.
Norfolk is required to reset rates every two years based upon a cost of services study performed by an
independent consulting firm which compares projected versus actual water expenses. On a biennial basis an
adjustment is made based upon the actual costs incurred in the previous two years.
8. RELATED PARTY TRANSACTIONS
The Water and Sewer Enterprise Fund, as a component unit of the City, receives a number of services from the
City. The primary provider of these services is the General Fund. The services cover a wide range of activities
and primarily come in the form of office rental, landscaping services and building maintenance. Also, as an
Enterprise Fund for the City the Water and Sewer Fund is billed annually for the value of indirect services
provided by the General Fund. The cost in the Water and Sewer Fund from the General Fund of these services
were $2,440,135 and $2,908,388 in 1999 and 1998, respectively. Revenue received by the Fund from the General
Fund for fire hydrant rental was $18,290 in 1999 and $25,110 in 1998.
Contributed Capital Reconciliation
The ~llowing provides areconciliation ofcontributed capital withintheWaterand SewerFund ~rJune30,1999
and 1998:
1999 1998
Contributed Capital, July 1 -
Capital Contributions - Assets & Fees
Depreciation on Contributed Assets
Contributed Capital, June 30
$ 284,053,862 $ 279,305,339
12,437,824 10,190,013
(6,155,237) (5,441,490)
$ 290,336,449 $ 284,053,862
9. RISK MANAGEMENT
A. Primary Government Self-Insurance Pro,qram
The City of Virginia Beach and the Water and Sewer Fund are exposed to various risks of loss related to torts;
theft of, damageto, and destruction of assets; errors and omissions; injuriesto employees; and natural disasters.
During fiscal year 1973, the City established a Risk Management Fund (an Internal Service Fund)to account for
and finance its uninsured risks of loss. Under this program, the Risk Management Fund provides coverage for
up to a maximum of $500,000 for each workers' compensation claim, $2,000,000 for each general liability claim,
$100,000 for each fire and property claim, and $2,000,000 for each public officials (errors and omissions) claim.
The insurance coverage for each major category of risk is the same as those reported in the prior fiscal year.
The City has $10 million of excess insurance coverage.
CITY OF VIRGINIA BEACH, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
WATER AND SEWER ENTERPRISE FUND
JUNE 30, 1999
9. RISK MANAGEMENT (continued)
A. Primary Government Self-Insurance Program (continued)
All Funds of the City participate in the program and make payments to the Risk Management Fund based on
normal underwriting criteria and each agency's loss experience. The City uses an actuary to aid in the
determination of self-insurance liabilities.
The estimated claims and judgments liability of $12,473,217 (discounted at a rate of 6%) reported in the Fund
at June 30, 1999 is based on the requirements of Governmental Accounting Standards Board Statement No. 10,
which requires that a liability for claims be reported if information prior to the issuance of the financial statements
indicates that it is probable that a liability has been incurred at the date of the financial statements and the
amount of the loss can be reasonably estimated.
Current-Year
Beginning-of- Claims & Balance at
Fiscal-Year Changes in Claims Fiscal Year-
Liability Estimates Payments End
1997-1998 $ 12,981,874 $ 957,506 $ 3,173,930 $ 10,765,450
1998-1999 10,765,450 7,611,443 5,903,676 12,473,217
B. Surety Bonds
All City employees, including employees of elected constitutional officers (Commissioner of Revenue, Treasurer,
Commonwealth's Attorney, Sheriff, Clerk of the Circuit Court), are bonded in favor of the City in the amount of
$1,000,000. This bond is wdtten by the Aetna Casualty and Surety Company.
The City Treasurer has secured a bond in favor of the City in the amount of $1,250,000. This bond is written by
the Saint Paul Fire and Marine Insurance Company. Also, the Commonwealth of Virginia has secured a blanket
bond for the City Treasurer which covers only Commonwealth cash in the amount of $300,000. This bond is
written by the Fidelity and Deposit Company of Maryland.
The Commonwealth of Virginia has secured a blanket bond for certain constitutional officers (Commissioner of
the Revenue - $3,000, Sheriff- $60,000, Clerk of the Circuit Court - $600,000) which provides coverage for both
City and Commonwealth cash. This bond is written by the Fidelity and Deposit Company of Maryland. The
Commonwealth of Virginia has also secured a blanket bond for the above constitutional officers and their
respective employees in the amount of $50,000 for each loss. This bond is written by the Home Insurance
Company.
10. RETIREMENT AND DEFERRED COMPENSATION
A. Virginia Retirement System
1. Plan Description
The City and School Board contribute to the Virginia Retirement System (VRS orthe System), an agent and
cost-sharing multiple-employer defined benefit pension plan, respectively, administered bythe VRS. All full-
time, salaried permanent employees of participating employers must participate in the System. Benefits vest
after five years of service. Employees may retire at age 65 with at least five years of service or at age 50
with at least thirty years of service (twenty-five years of service for law enforcement or firefighting officers).
Annual benefit is equal to 1.7% of average final salary (AFS) per year of service. AFS is defined as the
highest consecutive 36 months of salary. Benefits are actuarially reduced for vested employees who retire
on service retirement prior to becoming eligible for full retirement benefits. Law enforcement and firefighters
are entitled to an additional monthly benefit supplement from the time they retire to age sixty-five. Th~ VRS
also provides death and disability benefits. Title 51.1 of the Code of Vir,qinia (1950), as amended, assigns
the authority to establish and amend benefit provisions to the State Legislature. The System issues a publicly
available comprehensive annual financial report that includes financial statements and required
supplementary information for VRS. A copy of that report may be obtained by writing the System at P.O.
Box 2500, Richmond, VA 23218-2500.
10.
A.
CITY OF VIRGINIA BEACH, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
WATER AND SEWER ENTERPRISE FUND
JUNE 30, 1999
RETIREMENT AND DEFERRED COMPENSATION (continued)
Virginia Retirement System (continued)
2. Funding Status and Progress
Plan members are required by Title 51.1 of the Code of Vir,qinia (1950), as amended, to contribute 5% of
their annual salary to the VRS. The City and School Board have assumed this 5% member contribution.
In addition, the City and School Board are required to contribute the remaining amounts necessary to fund
its participation in the VRS using the actuarial basis specified by the Code of Virqinia and approved by the
VRS Board of Trustees. The City's contribution rate for the fiscal year ended 1999 was 8.59% of annual
covered payroll. The School Board (non-professional employees) contribution rate for the fiscal year ended
1999 was 6.75% of annual covered payroll.
The School Board 1999 contribution to the VRS statewide teacher pool was $21,513,192. This amount
represented 8.49% of annual covered payroll for 1999 and was 7.28% for 1998 and 6.41% for 1997. The
actual contribution for each of these years was equal to the required contribution.
3. Annual Pension Cost
For the fiscal year ended 1999, the City's annual pension cost of $14,858,193 was not equal to the City's
actual required contributions of $14,415,009. For 1999, the School Board's annual pension cost of
$1,909,960 was not equal to the School Board's required actual contributions of $1,413,224.
The required contributions were determined as part of the June 30, 1996 actuarial valuation using the entry
age normal actuarial cost method. The actuarial assumptions include (a) 8% investment rate of return, (b)
projected salary increase of 4% peryear, and (c) 3.5% per year cost-of-living adjustments. Both (a) and (b)
include an inflation component of 4%. The actuarial value of the City's and School Board's assets are equal
to the modified market value of assets. This method was determined using techniques that smooth the
effects of short-term volatility in the market value of assets over a five-year period. The City's and School
Board's unfunded actuarial accrued liability is being amortized as a level percentage of payroll on an open
basis within a period of 30 years or less.
Annual Pension Cost and Net Pension Obligation. The City and School Board's annual pension costs and
net pension obligation to VRS for the current year were as follows:
City School Board
Annual required contribution
Interest on net pension obligation
Adjustment to annual required contribution
Annual pension cost
Contributions made
Increase (decrease) in net pension obligation
Net pension obligation beginning of year
Net pension obligation end of year
$ 14,775,335 $ 1,901,908
285,161 27,712
(202,303) (19,660)
14,858,193 1,909,960
(14,415,009) (1,413,224)
443,184 496,736
3,564,508 346,397
$ 4,007,692 $ 843,133
4. Three-Year Trend Information for City of Virginia Beach
Historical trend information is not available for years prior to June 30, 1998 due to the implementation of
GASB No.27 in 1998.
CITY OF VIRGINIA BEACH, VIRGINIA
NOTES TO FINANCIAL STATEMENTS
WATER AND SEWER ENTERPRISE FUND
JUNE 30, 1999
10.
RETIREMENT AND DEFERRED COMPENSATION (continued)
A. VirRinia Retirement System (continued)
4. Three-Year Trend Information for City of Virginia Beach (continued)
Annual Percentage
Fiscal Year Pension of APC Net Pension
Ending Coat (APC) Contributed Obligation
City
June30, 1999 $ 14,858,193 97.0% $ 4,007,692
June30, 1998 $ 14,662,955 75.7% $ 3,564,508
School Board
June 30, 1999 $ 1,909,960 74.0% $ 843,133
June 30, 1998 $ 1,508,692 77.0% $ 346,398
The net pension obligation at July 1, 1997, date of adoption of GASB No. 27, was zero and was determined
in accordance with GASB Statement No. 27. The net pension obligation at June 30, 1999 is recorded in
the General Long-Term Debt Account Group.
B. Deferred Compensation Plan
The City provides an approved deferred compensation plan under section 457 of the Internal Revenue Code. All
City and School employees are eligible to participate and may defer 25% of gross income or $8,000 per year,
whichever is less. The deferrals and income thereon are not available to participating employees until
termination, retirement, death or unforeseeable emergency. Investment options available to participants are 13
mutual funds, a fixed income fund and investments through ICMA.
All amounts of compensation deferred under the plan, all property and rights purchased with those amounts, and
all income attributable to those amounts, property, or rights are (until paid or made available to the employee
or other beneficiary) solely the property and rights of the City and the School Board employees. The City and
School Board have no liability for losses under the plan but do have the duty of due care that would be required
of an ordinary prudent investor.
Effective July 1, 1997, the City adopted the provisions of GASB No. 32 resulting in these assets no longer being
reported on the City's and School's financial statements.
C. Poat-Employment Benefits
In addition to the pension benet-rts described in Note 11, the City provides post-retirement health care benefits,
in accordance with City statutes, to all employees who retire from the City with at least 25 years of service or 5
years of service for those with a job related disability. This benefit is payable until the retiree reaches the age
of 65. Currently, 198 retirees meet those eligibility requirements and have elected to receive this benefit. The City
has agreed to pay for each retiree who has elected to continue health care coverage the sum of $175 per month
towards the cost of their health care benefit. Expenditures for post-retirement health care benef'((s is recognized
on a monthly basis through the City's records. Du ring the year, expenditures of $497,882 were recognized for this
post-retirement benefit. Expenditures, per retiree, for the current fiscal year are comparable to that ofthe previous
year.
CITY OF VIRGINIA BEACH
SCHEDULE OF REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULES OF FUNDING PROGRESS FOR VRS - UNAUDITED
City Employees
(a) (b) (b-a) (a/b) (c) ((b-a)/c)
Unfunded UAAL as a
Actuarial Actuarial Actuarial Percentage of
Valuation Actuarial Accrued Accrued Funded Covered Covered
Date Value of Assets Liability (AAL) Liability (UAAL) Ratio Payroll Payroll
June30,1994 $ 260,646,024 $ 270,413,794 $ 9,767,770 96.4% $134,816,053 7.2%
June30,1996* $ 329,381,789 $ 368,678,819 $ 39,297,030 89.3% $146,418,505 26.8%
June30,1998 $ 461,352,729 $ 497,395,673 $ 36,042,944 92.8% $163,260,328 22.1%
Historical trend information is not available for years prior to 1994 due to implementation of GASB 27, July 1, 1997.
Revisions made to economic and demographic assumptions.
CITY OF VIRGINIA BEACH
SCHEDULE OF REQUIRED SUPPLEMENTAL INFORMATION - UNAUDITED
YEAR 2000 READINESS DISCLOSURE
JUNE 30, 1999
To prevent problems at the turn of the millennium, the city leaders have instituted a plan to verify and correct where
necessary every computer program used in providing citizen services. The project plan is actually a consolidation of
two plans, with the first addressing enterprise-wide systems and the second addressing ail independent (department
level) systems throughout the city. This includes a little known but highly important problem of embedded systems.
To manage this enormous task, a full-time project manager was assigned to organize and lead this effort. The task was
divided into several phases:
1. Awareness Phase
2. Assessment Phase
3. Renovation Phase
4. Validation Phase
5. Implementation Phase
All five phases have been completed for the mainframe systems supported by the Information Technology
Department. As a result, that department upgraded its mainframe operating system software and hardware prior to
1997. All applications were scheduled for renovation to make them year 2000 compliant starting in 1997 and
completing in early 1999. This schedule included replacing the Financial and Police Systems. The final system was
implemented at the end of February 1999. Each system's renovation included data exchanged with other agencies and
businesses. For the remainder of 1999, Information Technology has focused on assisting other departments in moving
forward with their renovation strategies and developing technology related contingency plans.
To organize the independent systems at the department level, a Year 2000 Team was established and comprised
of technically skilled representatives from each City department and/or agency. This team completed a massive
inventory of all known systems/programs and determined the readiness of those applications. This effort included all
applications developed by the department or any independent work group, all software purchased commercially or via
contract from vendors. This inventory has undergone a risk assessment to prioritize the replacement/upgrade effort for
any non-compliant systems. The renovation or replacement of mission critical systems is nearing completion and is
on target for meeting the December 1999 deadline.
Embedded Systems are computer chips often housed in the mechanical devices. These devices may control the
functioning of traffic signals, water pumps, radio communications equipment, as well as the climate controls, security
and lighting for the more than 250 city maintained buildings and public facilities. The inventory process for these
embedded systems has been completed, the millennium readiness has been identified and the city has addressed those
of issue. The majority of the issues were not with actual chip processing, but with the departmental computers receiving
information from these sensors.
In addition to its review of citywide technologies, the Y2K Team is also working with private sector business
partners and vendors to ensure compliance for all related citizen services. Our files contain over 17,000 entries related
to services and products purchased. As part of our due diligence process the critical suppliers have been identified and
contacted to make sure our success is uninterrupted.
Contingency plans have been developed for each vital service the city provides. These plans address the
department's abilityto continueto provide service should failures occur in either software, hardware, embedded systems
or business partners/suppliers.
We are confident all issues have been identified for mission critical systems and are in the process of taking the
necessary action to resolve them.
To ensure adequate public awareness about Y2K, the city's efforts to address the problem, and steps individuals
could take themselves, a strategic communications plan was developed and implemented with the assistance of the
city's Public Information Office. That plan included:
Information in all 1999 issues of Beach Advisory, the city's external tabloid, delivered to 60,000 Va Beach
residents quarterly;
· Information in The Beam, the city's monthly, internal newsletter;
· Information in The Civic League Advisory, disseminated to more than 300 neighborhood organizations;
CITY OF VIRGINIA BEACH
SCHEDULE OF REQUIRED SUPPLEMENTAL INFORMATION - UNAUDITED
YEAR 2000 READINESS DISCLOSURE
JUNE 30, 1999
· Development and implementation of a Speakers Bureau, which made direct presentations to citizens; and
· A Y2K section on the city's Web site, offedng answers to Frequently Asked Questions and status updates.
Additionally, the city wrote and produced a Y2K video through our Video Services Department, which has aired
on our municipal cable channel in addition to similar programming featuring other business and service providers in
the city. Copies of all web information and the videos, as well as Beach Advisory, are available at all public libraries.
Finally, the city also partnered with and took a leadership role in a regional Y2K public awareness campaign
involving 11 other municipal governments, utility providers, healthcare organizations, the military, and the American
Red Cross. This initiative featured an extensive media campaign, including outdoor advertising, broadcast public service
announcements and handout materials, providing one toll-free number which callers could use to access information
on Y2K efforts throughout the region and personal preparedness information from the American Red Cross.
The following list shows costs identified for the Year 2000 compliance project at the City of Virginia Beach:
Item FY 1998 FY1999 FY2000
Pr~ect Mgt. $ 105,261 $ 123,500 $ 156,000
ContmctProg. 160,020 60,300 83,850
Contract Analysis - - 89,190
Redeployed Centrall. S. Staff 62,020 129,325 71,893
Y2k Software Tools 10,320 65,245 -
Contract Eng. - 12,000 285,990
Hardware Upgrades - - 563,060
SoffwareUpgmdes - - 269,750
Because of the unprecedented nature of the Year 2000 issue, its effects and the success of related remediation efforts
will not be fully determinable until the year 2000 and thereafter. Management cannot assure that the City is or will be
Year 2000 ready, that the City's remediation efforts will be successful in whole or in part, or that parties with whom the
City does business will be year 2000 ready.
APPENDIX D
INFORMATION REGARDING THE DEPOSITORY
TRUST COMPANY AND ITS BOOK-ENTRY SYSTEM
APPEND~ D
INFORMATION REGARDING THE DEPOSITORY
TRUST COMPANY ANDITS BOOK-ENTRY SYSTEM
The description which follows of the procedures and recordkeeping with respect to
beneficial ownership interests in the Series 2000 Bonds, payments of principal of and premium, if
any, and interest on the Series 2000 Bonds to The Depository Trust Company, New York, New York
("DTC"), its nominee, Participants or Beneficial Owners (each as hereinafter defined), confirmation
and transfer of beneficial ownership interests in the Series 2000 Bonds and other bond-related
transactions by and between DTC, Participants and Beneficial Owners is based solely on information
furnished by DTC.
DTC will act as securities depository for the Series 2000 Bonds. The Sedes 2000 Bonds will be
issued as fully-registered securities registered in the name of Cede & Co., DTC's partnership nominee. One
fully-registered Series 2000 Bond certificate will be issued for each matudty of the Series 2000 Bonds, each
in the aggregate principal amount of such maturity, and will be deposited with DTC.
DTC is a limited-purpose trust company organized under the New York Banking Law, a "banking
organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC also facilitates the settlement
among Participants of securities transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in Participants' accounts, thereby eliminating the need for
physical movement of securities certificates. Direct Participants include securities brokers and dealers,
banks, trust companies, cleadng corporations, and certain other organizations. DTC is owned by a number
of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc., and
the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others
such as securities brokers and dealers, banks, and trust companies that clear through or maintain a custodial
relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). The Rules applicable
to DTC and its Participants are on file with the Securities and Exchange Commission.
Purchases of Bonds under the DTC system must be made by or through Direct Participants which
will receive a credit for the Series 2000 Bonds on DTC's records. The ownership interest of the actual
purchaser of each Series 2000 Bond ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but
Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well
as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial
Owner entered into the transaction. Transfers of ownership interests in the Series 2000 Bonds are to be
accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial
Owners will not receive certificates representing their ownership interests in Series 2000 Bonds, except in the
event that use of the book-entry system for the Series 2000 Bonds is discontinued.
To facilitate subsequent transfers, all Series 2000 Bonds deposited by Participants with DTC are
registered in the name of DTC's partnership nominee, Cede & Co. The deposit of Series 2000 Bonds with
DTC and their registration in the name of Cede & Co. effect no change in beneficial ownership. DTC has no
knowledge of the actual Beneficial Owners of the Series 2000 Bonds; DTC's records reflect only the identity
of the Direct Participants to whose accounts such Series 2000 Bonds are credited, which may or may not be
the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on
behalf of their customers.
D-1
Conveyance of notices and other communications by DTC to Direct Participants, by Direct
Participants to Indirect Participants, and by Direct Participants and Indirect Participants to BeneficiaJ Owners
will be governed by arrangements among them, subject to any statutory or regulatory requirements as may
be in effect from time to time.
Neither DTC nor Cede & Co. will consent or vote with respect to Series 2000 Bonds. Under its usual
procedures DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The
Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose
accounts the Series 2000 Bonds are credited on the record date (identified in a listing attached to the
Omnibus Proxy).
Principal and interest payments on the Series 2000 Bonds will be made to DTC. DTC's practice is to
credit Direct Participants' accounts on payment dates in accordance with their respective holdings shown on
DTC's records unless DTC has reason to believe that it will not receive payment on payment dates.
Payments by Participants to Beneficial Owners will be governed by standing instructions and customary
practices, as is the case with securities held for the accounts of customers in bearer form or registered in
"street name," and will be the responsibility of such Participant and not of DTC or the City, subject to any
statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest
to DTC is the responsibility of the City, disbursement of such payments to Direct Participants shall be the
responsibility of DTC, and disbursement of such payments to the Beneficial Owners shall be the
responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as securities depository with respect to the Series 2000
Bonds at any time by giving reasonable notice to the City. Under such circumstances, in the event that a
successor securities depository is not obtained, Series 2000 Bond certificates are required to be prepared,
executed and delivered.
The City may decide to discontinue use of the system of book-entry transfers through DTC (or a
successor securities depository). In that event, either a successor securities depository will be selected by
the City or Series 2000 Bond certificates will be prepared, executed and delivered.
DTC management is aware that some computer applications, systems, and the like for processing
data ("Systems") that are dependent upon calendar dates, including dates before, on, and after January 1,
2000, may encounter "Year 2000 problems." DTC has informed its Participants and other members of the
financial community (the "Industry") that it has developed and is implementing a program so that its Systems,
as the same relate to the timely payment of distributions (including principal and income payments) to
securityholders, book-entry deliveries, and settlement of trades within DTC ("DTC Services"), continue to
function appropriately. This program includes a technical assessment and a remediation plan, each of which
is complete. Additionally, DTC's plan includes a testing phase, which is expected to be completed within
appropriate time frames.
However, DTC's ability to perform properly its services is also dependent upon other parties,
including but not limited to issuers and their agents, as well as third party vendors from whom DTC licenses
software and hardware, and third party vendors on whom DTC relies for information or the provision of
services, including telecommunication and electrical utility service providers, among others. DTC has
informed the Industry that it is contacting (and will continue to contact) third party vendors from whom DTC
acquires services to: (i) impress upon them the importance of such services being Year 2000 compliant; and
(ii) determine the extent of their efforts for Year 2000 remediation (and, as appropriate, testing) of their
services. In addition, DTC is in the process of developing such contingency plans as it deems appropriate.
According to DTC, the foregoing information with respect to DTC has been provided to the Industry
for informational purposes only and is not intended to serve as a representation, warranty, or contract
modification of any kind.
D-2
The foregoing information in this section concerning DTC and DTC's book-entry system has been
obtained from sources that the City believes to be reliable, but the City takes no responsibility for the
accuracy thereof.
The City has no responsibility or obligation to the Participants or the Beneficial Owners with respect
to (A) the accuracy of any records maintained by DTC or any Participant; (B) the payment by any Participant
of any amount due to any Beneficial Owner in respect of the principal of and interest on the Series 2000
Bonds; (C) the delivery or timeliness of delivery by any Participant of any notice to any Beneficial Owner
which is required or permitted under the terms of the Resolution to be given to Series 2000 Bondholders; or
(D) any other action taken by DTC, or its nominee, Cede & Co., as Series 2000 Bondholder, including the
effectiveness of any action taken pursuant to an Omnibus Proxy.
So long as Cede & Co. is the registered owner of the Series 2000 Bonds, as nominee of DTC,
references in this Official Statement to the Owners of the Series 2000 Bonds shall mean Cede & Co. and
shall not mean the Beneficial Owners and Cede & Co. will be treated as the only Series 2000 Bondholder of
Series 2000 Bonds for all purposes under the Resolution.
The City may enter into amendments to the agreement with DTC or successor agreements with a
successor securities depository, relating to the book-entry system to be maintained with respect to the Series
2000 Bonds without the consent of Beneficial Owners or Series 2000 Bondholders.
D-3
APPENDIX E
SUMMARY OF RESOLUTION
APPENDIX E
SUMMARY OF RESOLUTION
The following is a summary of certain provisions contained in the Resolution and does not purport to
be a complete statement of all of the provisions of the Resolution. Reference is made to the Resolution in its
entirety for complete information on its terms and the terms of the Series 2000 Bonds, the security provisions
and the application of Revenues. See also the sections entitled "Description of the Series 2000 Bonds,"
"Security for and Sources of Payment of the Series 2000 Bonds" and "Amendments to Resolution" contained
in the Official Statement.
Definitions. In addition to the terms previously defined in this Official Statement, the following words
as used in this summary shall have the following meanings unless a different meaning clearly appears from
the context:
"Consulting Engineer" shall mean (a) an Independent Consulting Engineer or (b) the Utilities
Engineering Manager or the bureau chief of utilities engineering of the Department of Public Utilities of the
City, or the corresponding officer of any successor department, who is (1) an engineer experienced in the
field of water or sanitary sewer engineering (as appropriate) and (2) licensed and registered as a professional
engineer in the Commonwealth.
"Cost" or "Cost of a Project" shall mean the cost of improvements, the cost of construction or
reconstruction, the cost of all labor, materials, machinery and equipment, the cost of all lands, property,
rights, easements, franchises and permits acquired, financing charges, interest prior to and during
construction and for up to one year after completion of construction, start-up costs and operating capital, the
cost of plans, specifications, surveys, estimates of costs and of revenues, the cost of engineering, legal and
other professional services, including financial advisory services, expenses necessary or incident to
determining the feasibility or practicability of any such acquisition, construction or reconstruction, payments
by the City of its share of the cost of any multi-jurisdictional project, administrative expenses, any amounts to
be deposited in the Debt Service Reserve Fund and such other expenses as may be necessary or incidental
to the financing of such Project. Any obligation or expense incurred by the City in connection with any of the
foregoing items of Cost may be regarded as a part of such Cost and reimbursed to the City out of the
proceeds of the Bonds issued to finance such Project.
"Cost of Contracted Services" shall mean the payments to be made by the City for Contracted
Services under service agreements as set forth in the Resolution which shall consist of three components:
(a) a "Debt Service Component" which is that part of the payment for Contracted Services for which the City
is obligated to pay, to receive such Contracted Services to be for the purpose of paying a fixed charge or the
principal of and/or interest on the obligations, directly or indirectly associated with rendering the Contracted
Services, of the entity providing the Contracted Services, (b) the "Operating Component" which is that part of
the payment for the Contracted Services that meets the definition of Operating Expenses under the
Resolution, and (c) the "Remaining Component" which is the remaining part of the payment for Contracted
Services which is not included in the definition of Debt Service Component or Operating Component.
"Debt Service Reserve Requirement" shall mean from time to time the amount equal to Maximum
Annual Debt Service.
In lieu of all or any portion of the required amounts to be on deposit in the Debt Service Reserve
Fund, the City may cause to be deposited to the credit of such Series Debt Service Reserve Fund a surety
bond or an insurance policy payable to the City for the benefit of the holders of all or a portion of the Bonds or
a letter of credit entitling the City on any interest payment date to draw on it in an amount equal to all or any
portion of the difference between the Debt Service Reserve Requirement and the sum then to the credit of
the Debt Service Reserve Fund. The City may, from time to time, substitute cash, surety bonds, insurance
policies or letters of credit for any of such forms of security so long as such substituted security complies with
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the requirements of this definition and the terms and conditions set forth in a Supplemental Resolution. In
addition to any such terms, requirements and conditions, such forms of security shall be obtained from
providers whose obligations are rated in the two highest rating categories by the Rating Agencies.
On the scheduled date of final payment of a Series of Bonds, the City may cause to be transferred to
the Revenue Bond Fund the moneys in the Debt Service Reserve Fund. In lieu of the portion of the debt
service payments attributable to such Series of Bonds, such transferred moneys may be used to pay the
principal and interest due on such Series of Bonds on their final payment date.
"Defeased Obligations" shall mean obligations of any state or territory of the United States or any
political subdivision thereof which obligations are rated in the highest rating category by the Rating Agencies
and which meet the following requirements: (a) the obligations are not subject to redemption or the fiduciary
holding such obligations has been given irrevocable instructions to call such obligations for redemption and
the issuer has covenanted not to redeem such obligations other than as set forth in such instructions, (b) the
obligations are secured by cash or Government Obligations, Government Certificates or other Defeased
Obligations (which are not subject to redemption other than at the option of the holder thereof) that may be
applied only to principal, premium and interest payments of such obligations, (c) the principal of and interest
on the Government Obligations, Government Certificates or other Defeased Obligations (plus any cash held
in escrow) are sufficient to meet the liabilities of the obligations, (d) the Government Obligations, Government
Certificates or other Defeased Obligations serving as security for such obligations are held by bank or trust
company acting as escrow agent, and (e) the Government Obligations, Government Certificates or Defeased
Obligations are not available to satisfy any other claims, including those against bank or trust company acting
as escrow agent.
"Fiscal Agent'' shall mean The Bank of New York, New York, New York, a New York banking
corporation, or its successors or assigns under the Resolution.
"Government Certificates" shall mean certificates representing proportionate ownership of
Government Obligations, which Government Obligations are held by a bank or trust company organized
under the laws of the United States of America or any of its states in the capacity of custodian of such
certificates.
"Govemment Obligations" shall mean (a) bonds, notes and other direct obligations of the United
States of America, (b) securities unconditionally guaranteed as to the timely payment of principal and interest
by the United States of America, or (c) bonds, notes and other obligations of any agency of the United States
of America unconditionally guaranteed as to the timely payment of principal and interest by the United States
of America. Government Obligations may be held directly by the Fiscal Agent or a bank or trust company
organized and existing under the laws of the United States of America or any of its states in the capacity of
custodian, or in the form of securities of any open-end or closed-end management type investment company
or investment trust registered under the Investment Company Act of 1940, provided that the portfolio of such
investment company or investment trust is limited to Government Obligations.
"Independent Consulting Engineer" shall mean an independent engineer experienced in the field of
water or sanitary sewer engineering (as appropriate) and licensed and registered as a professional engineer
in the Commonwealth.
"Maximum Annual Additional Parity Debt Service" shall mean the maximum amount required to be
deposited in the Parity Double Barrel Bond Fund and the Parity Debt Service Component Fund, respectively,
on account of principal of (whether at maturity or by mandatory sinking fund redemption) and interest on
Parity Double Barrel Bonds and Parity Debt Service Components in the then current or any future Fiscal
Year. For purposes of calculating Maximum Annual Additional Parity Debt Service, the assumptions set forth
in sections (a) through (e) of the definition of Maximum Annual Debt Service are to be used to calculate the
principal and interest coming due in any Fiscal Year.
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"Maximum Annual Debt Service" shall mean the maximum amount payable on account of principal of
(whether at maturity or by mandatory sinking fund redemption) and interest on the Bonds in the then current
or any future Fiscal Year. For purposes of calculating Maximum Annual Debt Service, the following
assumptions are to be used to calculate the principal and interest coming due in any Fiscal Year:
(a) in determining the principal amount due in each Fiscal Year, payment shall be assumed to
be made in accordance with any amortization schedule established for such debt (unless a different
subsection of this definition applies for purposes of determining principal maturities or amortization), including
any scheduled redemption of Bonds on the basis of accreted value and, for such purpose, the redemption
payment shall be deemed a principal payment and, further, payment shall be assumed to be made at the
time deposits are required to be made to the Revenue Bond Fund;
(b) if any Outstanding Bonds or any Bonds proposed to be issued would constitute Tender
Indebtedness, then Maximum Annual Debt Service on the options or obligations of the holders of such Bonds
to tender the same for purchase or payment prior to their stated maturity or maturities shall be treated as a
principal maturity occurring on the first date on which owners of such Bonds may or are required to tender
such Bonds, except that any such option or obligation to tender Bonds shall be ignored and not treated as a
principal maturity if (1) such Bonds are rated in one of the two highest long-term rating categories (without
regard to any rating refinement or gradation by numerical modifier or otherwise) by a Rating Agency or such
Bonds are rated in the highest short-term, note or commercial paper rating categories by a Rating Agency,
and (2) any obligation, if any, the City may have, other than its obligation on such Bonds, to reimburse any
extender of a credit or liquidity facility or a bond insurance policy, or similar arrangement, shall either be
subordinated to the obligation of the City on the Bonds or shall have been incurred under and shall have met
the tests and conditions for the issuance of Bonds set forth in the Resolution;
(c) if any Outstanding Bonds constitute Variable Rate Indebtedness, the interest rate on such
Bonds shall be assumed to be 110% of the greater of (1) the daily average interest rate on such Bonds
during the 12 months ending with the month preceding the date of calculation, or such shorter period that
such Bonds shall have been Outstanding, or (2) the rate of interest on such Bonds on the date of calculation;
(d) if any Bonds proposed to be issued would constitute Variable Rate Indebtedness, then such
Bonds shall be assumed to bear interest at the rate quoted in The Bond Buyer 25 Revenue Bond Index as
published in The Bond Buyer, for the last week of the month preceding the date of sale of such Bonds, or if
that index is no longer published, a similar index selected by the City that is generally accepted in the
municipal bond industry, or if the City fails to select a replacement index, an interest rate equal to 80% of the
yield for outstanding United States Treasury Bonds having an equivalent maturity as the Bonds proposed to
be issued, or if there are no such Treasury Bonds having equivalent maturities, 80% of the lowest prevailing
prime rate of any of the five largest commercial banks in the United States of America ranked by assets; and
(e) if moneys, Govemment Obligations or Government Certificates have been irrevocably
deposited with a bank or trust company acting as escrow agent to be used to pay principal and/or interest on
specified Bonds, then the principal and/or interest to be paid from such moneys or obligations or from the
earnings thereon shall be disregarded and not included in the calculation of Maximum Annual Debt Service.
Notwithstanding anything in the Resolution to the contrary, for purposes of the definition of Maximum
Annual Debt Service, Bonds shall not include Bond Anticipation Notes or revenue anticipation notes issued in
anticipation of revenues of the System.
"Maximum Annual Prior Parity Bond Debt Service" shall mean the maximum amount required to be
deposited in the Prior Parity Bond Account in the Revenue Bond Fund on account of principal of (whether at
maturity or by mandatory sinking fund redemption) and interest on Prior Parity Bonds in the then current or
any future Fiscal Year. For purposes of calculating Maximum Annual Prior Parity Bond Debt Service, the
assumptions set forth in sections (a) through (e) of the definition of Maximum Annual Debt Service are to be
used to calculate the principal and interest coming due in any Fiscal Year.
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"Net Proceeds" shall mean the gross proceeds from any insurance recovery or recovery in any
condemnation proceeding remaining after payment of attorneys' fees, fees and expenses of the Registrar
and all other expenses incurred in collection of such gross proceeds.
"Operating Expenses" shall mean all current expenses directly or indirectly attributable to the
ownership or operation of the System, including, without intending to limit or restrict any proper definition of
such expenses under any applicable laws or generally accepted accounting principles, reasonable and
necessary usual expenses of administration, operation, maintenance and repair, costs for billing and
collecting the rates, fees and other charges for the use of or the services furnished by the System, insurance
and surety bond premiums, legal, engineering, auditing and financial advisory expenses, expenses and
compensation of the Registrar and the Fiscal Agent, Operating Components of Cost of Contracted Services,
and deposits into a self insurance program as described in the Resolution. Operating Expenses shall not
include any allowance for depreciation, Debt Service Components or Remaining Components of Cost of
Contracted Services, deposits or transfers to the Revenue Bond Fund, the Parity Double Barrel Bond Fund,
the Parity Debt Service Component Fund, the Debt Service Reserve Fund, the Subordinate Debt Fund, the
Renewal and Replacement Account, or the Capital Improvement Account, or expenditures for capital
improvements to and extensions of the System. Notwithstanding the foregoing, Operating Expenses shall
include all payments of Demand Charges, Supplemental Demand Charges, Commodity Charges, Fixed
Capacity Charges and Termination Payments, if any, to be paid from System Revenues, and all charges
under the Water Sales Contract.
"Opinion of Counsel" shall mean an opinion of any attorney or firm of attomeys acceptable to the
Fiscal Agent, who may be counsel for the City but shall not be a full time employee of either the City or the
Fiscal Agent.
"Parity Obligations" shall mean Prior Parity Bonds, Bonds, Parity Double Barrel Bonds and Parity
Debt Service Components.
"Prior Padty Bonds" shall mean the City's (a) $3,000,000 Revenue Bonds, 1977 (P.A. Corp.), (b)
$5,100,000 Water and Sewer Revenue Notes, 1977 (P.A. Corp.), (c) $2,000,000 Drought Relief Revenue
Bond, 1978, (d) $2,200,000 Water and Sewer Revenue Notes, 1982 (County Utilities), (e) $1,800,000 Water
and Sewer Revenue Notes, 1982 (Kempsville Utilities), and (f) $13,000,000 Water and Sewer Revenue
Bond, Series of 1989.
"Prior Subordinate Bonds" shall mean the City's (a) $20,000,000 General Obligation Water and
Sewer Bonds, Series of 1977A; (b) $19,900,000 General Obligation Water and Sewer Bonds, Sedes of
1977B; (c) $16,000,000 General Obligation Water and Sewer Bonds, Series of 1981; (d) $7,500,000 General
Obligation Water and Sewer Bonds, Series of 1982; (e) $10,180,000 General Obligation Water and Sewer
Bonds, Series of 1984; (f) $6,240,000 General Obligation Water and Sewer Bonds, Series of 1985; (g)
$6,080,000 General Obligation Water and Sewer Bonds, Series of 1986; and (h) $8,235,000 General
Obligation Water and Sewer Refunding Bonds, Series of 1986.
"Project" shall mean (a) water or sanitary sewer facilities which are to become part of the System or
(b) any water or sewage treatment capacity or service (which service is required to be capitalized or which
the City propedy elects to capitalize) which is to be acquired by the City.
"Qualified Independent Consultant" shall mean an independent professional consultant having the
skill and experience necessary to provide the particular certificate, report or approval required by the
provision of the Resolution or any Supplemental Resolution in which such requirement appears, including
without limitation, an Independent Consulting Engineer and an independent certified public accountant.
"Series" or "Series of Bonds" shall mean a separate series of Bonds issued under the Resolution
pursuant to a Supplemental Resolution.
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"Supplemental Resolution" shall mean any Supplemental Resolution adopted as described in the
Section herein "Supplemental Resolutions".
"Tender Indebtedness" shall mean any indebtedness a feature of which is an option or obligation on
the part of the holders of such indebtedness to tender all or a portion of such indebtedness to a fiduciary for
mandatory purchase or redemption prior to the stated maturity date of such indebtedness, which may include
Variable Rate Indebtedness with such a feature.
"Term Bonds" shall mean any Bonds stated to mature on a specified date and required to be
redeemed in part prior to maturity according to a sinking fund schedule.
"Utility Transfers" shall mean an annual transfer from the Residual Account to the City's general
fund, as may be approved by the City Council, in an amount not to exceed 2% of the increase of retained
earnings of the System for the immediately preceding Fiscal Year over the next previous Fiscal Year, as
shown on the City's audited financial statements. Utility Transfers are to compensate the City's general fund
for loss of System Revenues because the System is owned by the City and is not a private entity.
'~/ariable Rate Indebtedness" shall mean any indebtedness the interest rate on which is not
established at the time of incurrence at a fixed or constant rate.
Provisions for the Series 2000 Bonds. The Resolution, as supplemented by the Sixth Supplemental
Resolution, provides for the issuance of the Series 2000 Bonds, the redemption of the Series 2000 Bonds
and all other terms pertaining to the Series 2000 Bonds, as described in "SECTION TWO: THE SERIES
2000 BONDS, Description of the Series 2000 Bonds" in this Official Statement.
Application of Proceeds of Series 2000 Bonds. The proceeds of the Series 2000 Bonds shall be
applied by the Treasurer as follows:
(a) The amount received as accrued interest on the Series 2000 Bonds from their date to the
date of their delivery shall be deposited in the Interest Account in the Revenue Bond Fund.
(b) The amount of Series 2000 Bond proceeds necessary, together with amounts on deposit in
the Debt Service Reserve Fund, to equal the Debt Service Reserve Requirement after the issuance of the
Series 2000 Bonds shall be paid to the Fiscal Agent and deposited in the Debt Service Reserve Fund.
(c) The balance of the proceeds shall be paid to the Fiscal Agent and deposited in the General
Account in the Construction Fund and used to pay the Cost of the Project.
Payment of Bonds: Limited Obli_oations. The City shall promptly pay or cause to be paid when due
the principal of (whether at maturity, call for redemption or otherwise) and premium, if any, and interest on the
Bonds at the places, on the dates and in the manner provided in the Resolution and in the Bonds.
Issuance of Additional Series of Bonds. Bonds may be issued (a) to pay the Cost of a Project, (b) to
pay the costs of planning or investigating the feasibility of a Project, (c)to refund any bonds (which for
purposes of this Section shall include notes or other obligations) secured by or payable from Pledged
Revenues, including any Bonds, or (d) for a combination of such purposes.
If such Bonds are issued to pay the Cost of a Project, the following:
(a) A written statement of the Consulting Engineer, which if the original principal amount of any
Series of Bonds exceeds $10,000,000 has been reviewed and approved by an Independent Consulting
Engineer, setting forth the Consulting Engineer's (1) estimate of the Cost of such Project (including all
financing and related costs) and the date on which such Project will be completed, and (2) opinion that the
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proceeds of such Bonds, together with any other moneys available for such purpose, will be sufficient to pay
the Cost of such Project;
(b) Evidence that upon issuance of such Bonds the Debt Service Reserve Fund will contain the
Debt Service Reserve Requirement; and
(c) A certificate of a Qualified Independent Consultant stating that based on the City's financial
records for the last 24 months (the "Test Period") prior to the issuance of such Bonds the City is able to meet
the following two independent requirements for a consecutive 12-month period during such Test Pedod:
(1) Pledged Revenues were sufficient to equal the sum of (A) Operating Expenses for
such 12-month period, (B) 115% of the sum of Maximum Annual Debt Service and Maximum Annual
Prior Parity Bond Debt Service, and (C) 100% of Maximum Annual Additional Parity Debt Service
immediately after the issuance of such Bonds; provided, however:
(i) if the City has increased its rates, fees and other charges and such rates,
fees and other charges went into effect after the beginning of the Test Period or are
scheduled to go into effect within two years after the issuance of such Bonds, the Qualified
Independent Consultant may assume that such rates, fees and other charges were in effect
for the Test Period;
(ii) the Qualified Independent Consultant may assume that the customer base
at the end of the Test Period was the customer base for the entire Test Period; and
(iii) the Operating Expenses resulting from and System Revenues to be
collected from any acquisition of facilities that have become or will become a part of the
System shall be taken into account.
(2) System Revenues were sufficient to meet the requirement set forth in paragraph (b)
of the subsection "Revenue Covenant" in Section Two: the Series 2000 Bonds - Security for and
Sources of Payment of the Series 2000 Bonds" in this Official Statement for such 12-month period.
If such Bonds are issued to refund any bonds, the City shall file with the City Clerk the following:
(1) Evidence that the City has made provision as required by the Resolution for the payment or
redemption of all bonds to be refunded;
(2) A written determination by the bank or trust company acting as escrow agent for the bonds
to be refunded, which may be given in reliance on a certificate of an independent verification agent or an
independent public accountant, that the proceeds (excluding accrued interest) of such Bonds, together with
any other moneys deposited with a bank or trust company acting as escrow agent for such purpose and the
investment income to be earned on moneys held for the payment or redemption of the bonds to be refunded,
will be sufficient to pay either (A) the principal of and the premium, if any, on the bonds to be refunded and
the interest which will accrue on such bonds to the respective redemption or maturity dates, or (B) the
principal and interest on the refunding Bonds to a date certain, at which time such proceeds, moneys and
earnings will be sufficient to pay the principal of and the premium, if any, on the bonds to be refunded and the
interest which will accrue on such bonds to the respective redemption or matudty dates; and
(3) Either (A) a wdtten determination by the bank or trust company acting as escrow agent or a
Qualified Independent Consultant that after the issuance of such Bonds and the provision for payment or
redemption of all bonds to be refunded, the annual debt service requirements for each Fiscal Year in which
there will be Outstanding Bonds of any Series not to be refunded will be not more than what the annual debt
service requirements for such Fiscal Year would have been on all Bonds Outstanding immediately prior to
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the issuance of such Bonds, including the bonds to be refunded, and that the final maturity of any Series of
Bonds being refunded has not been extended, or (B) the City satisfies the tests as described in (c) above.
Construction Fund. The Master Resolution makes provision for the establishment of the
Construction Fund, in which there is established a General Account and an Equity Account. Bond proceeds
shall be deposited in the General Account, and all moneys derived from any other source for improvements
to the System, including without limitation, capital contributions by the City, shall be deposited in the Equity
Account. If so directed in a Supplemental Resolution, there shall be maintained within the Construction Fund
special accounts as may be provided for in such Supplemental Resolution. Deposits shall be made to the
credit of the Construction Fund and any special accounts as provided in such Supplemental Resolution. All
earnings on moneys in each Account and subaccount shall be credited to such Accounts and subaccount.
The City shall hold moneys in the Construction Fund shall be held by the City in trust to be used only
to pay the Cost of a Project. Notwithstanding anything in the Resolution to the contrary, the Equity Account is
not pledged to the payment of Bonds.
Revenue Covenant. The Resolution imposes on the City the Revenue Covenant as described in
"SECTION TWO: THE 2000 BONDS - Security for and Sources of Payment of the Series 2000 Bonds -
Rate Covenant."
Funds and Accounts. The Master Resolution establishes the following funds and accounts:
(a) City of Virginia Beach Water and Sewer System Revenue Fund, in which there are
established a Revenue Account, a Renewal and Replacement Account, a Capital Improvement Account and
a Residual Account, to be held by the City;
(b) City of Virginia Beach Water and Sewer System Revenue Bond Fund, in which there are
established a Prior Parity Bond Account, an Interest Account, a Principal Account, a 1994 RLF Debt Service
Account, a 1997 RLF Debt Service Account and a 1998 RLF Debt Service Account, to be held by the Fiscal
Agent;
(c) City of Virginia Beach Water and Sewer System Parity Double Barrel Bond Fund, in which
there are established an Interest Account and a Principal Account, to be held by the Fiscal Agent;
(d) City of Virginia Beach Water and Sewer System Padty Debt Service Component Fund, to be
held by the Fiscal Agent;
(e) City of Virginia Beach Water and Sewer System Debt Service Reserve Fund, to be held by
the Fiscal Agent; and
City of Virginia Beach Water and Sewer System Subordinate Debt Fund, to be held by the
City.
All Pledged Revenues are deposited weekly into the Revenue Account in the Revenue Fund.
Operating Expenses are paid out of the Revenue Account. After retaining an amount equal to two months'
operating expenses, the City will make monthly transfers from the Revenue Account on the 25th day of each
month as follows:
Revenue Bond Fund.
(a) Prior P~rity Bond Account. One-sixth of the amount of interest coming due on the next
succeeding six months and one-twelfth of the principal coming due in the next succeeding twelve months on
the Prior Parity Bonds.
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(b)
Bonds.
Interest Account. One-sixth of the amount of interest due in the next six months on all the
(c)
all Bonds.
Principal Account. One-twelfth of the amount of principal due in the next twelve months on
(d) 1994 RLF Debt Service Account. One-sixth of the finance payment due in the next six
months as required by Section 6.1 of the Financing Agreement dated as of November 1, 1994, between the
City and the Virginia Water Facilities Revolving Fund.
(e) 1997 RLF Debt Service Account. One-sixth of the finance payment due in the next six
months as required by Section 6.1 of the Financing Agreement dated as of January 1, 1997, between the
City and the Virginia Water Facilities Revolving Fund.
months
and the
(f) 1998 RLF Debt Service Account. One-sixth of the finance payment due in the next six
as required by Section 6.1 of the Financing Agreement dated as of August 1, 1998, between the City
Virginia Water Facilities Revolving Fund.
Parity Double Barrel Bond Fund.
(a) Interest Account. One-sixth of the interest due in the next six months on all Padty Double
Barrel Bonds.
(b) Principal Account. One-twelfth of the principal due in the next twelve months on all Parity
Double Barrel Bonds.
Parity Debt Service Component Fund. The amount of Padty Debt Service Component coming due
in the next succeeding month.
Debt Service Reserve Fund. The amount necessary to increase the amount on deposit in the Debt
Service Reserve Fund to the Debt Service Reserve Requirement.
Subordinate Debt Fund. The amount of principal and interest on subordinate debt coming due in the
next succeeding month. If the subordinate debt is paid on a basis other than a monthly basis, the City may
make monthly deposits.
Renewal and Replacement Account within the Revenue Fund. One-twelfth of $2,000,000 or such
larger amount as may be recommended by the Consulting Engineer and approved by the City Council.
C~pital Improvement Account within the Revenue Fund. On the 25th day of the first full month after
the approval by the City Council of the City's capital improvement program, the annual amount budgeted for
deposit into the Capital Improvement Account (or such lesser amount if the entire amount is not available in
the Revenue Account, in which event the balance shall be transferred from the Residual Account).
Residual Account within the Revenue Fund. On or after the 25th day of the last month of the Fiscal
Year but prior to the end of the fiscal year, to the Residual Account any amounts remaining in the Revenue
Account. Amounts are used for any lawful purpose of the System.
Pledge of Pledoed Revenues and Certain Funds and Accounts. Pledged Revenues and moneys in
the Revenue Account are hereby pledged equally and ratably to the payment of principal of and interest on
all Parity Obligations, subject only to the right of the City to make application thereof to purposes as provided
in the Resolution. Moneys in the General Account within the Construction Fund, the Revenue Bond Fund
(except for the Prior Parity Bond Account) and the Debt Service Reserve Fund shall be trust funds and are
hereby pledged equally and ratably to the payment of the principal of and interest on all Bonds, subject only
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to the right of the City to make application thereof, or to direct the Fiscal Agent to make application thereof, to
other purposes as provided in the Resolution. The lien and trust hereby created are for the benefit of the
Bondholders and for their additional security until all the Bonds have been paid.
Investment of Moneys. Any moneys held in the funds and accounts shall be separately invested and
reinvested by or at the direction of the City Treasurer, after consultation with the Director of Finance, in
Investment Obligations, subject to the limitations stated herein. Investment Obligations shall mean the
following, so long as they are authorized for investment of public funds by Section 2.1-328 et seq. of the
Virginia Code or other provisions of law applicable to such investments:
(a) Govemment Obligations;
(b) Government Certificates;
(c) Defeased Obligations;
(d) bonds, notes and other evidences of indebtedness of the Commonwealth and securities
unconditionally guaranteed as to the timely payment of principal and interest by the Commonwealth, so long
as such obligations are rated by one or more of the Rating Agencies with ratings equal to or higher than the
ratings on the Bonds;
(e) commercial paper with a maturity of 270 days or less, so long as ratings not less than
ratings on bonds which complies with the requirements of Section 2.1-328.1 of the Virginia Code, so long as
such commercial paper is rated by the Rating Agencies with ratings equal to or higher than the ratings on the
Bonds;
(f) bankers acceptances which comply with the requirements of Section 2.1-328.3 of the
Virginia Code;
(g) savings accounts, time deposits, certificates of deposit and other interest bearing accounts
of any (1) national bank located within the Commonwealth or (2) state-chartered bank, provided that such
funds are secured in the manner required by the Virginia Security for Public Deposits Act or any successor
provision of law and that no deposits made under this Subsection shall be made for a period in excess of five
years; and
(h) savings accounts and certificates of deposit of (1) savings institutions which are under
supervision of the Commonwealth and (2) Federal institutions located within the Commonwealth organized
under the laws of the United States of America and under Federal supervision, but only to the extent that
such accounts and certificates are fully insured by the Federal Deposit Insurance Corporation or any other
Federal insurance agency, unless such deposits in excess of the amount insured shall be fully collateralized
(A) by eligible collateral as defined in Section 2.1-360(e) of the Virginia Code, (B) by Government National
Mortgage Association Pass-through Certificates, (C) by Federal National Mortgage Association Guaranteed
Pass-through Certificates, (D) by Federal Home Loan Mortgage Corporation Participation Certificates, or (E)
as provided by the Virginia Security for Public Deposits Act or any successor provision of law, provided that
no deposits made under this Subsection shall be made for a period in excess of five years.
(i) units representing beneficial interests in investment pools created pursuant to the
Government Non-Arbitrage Investment Act.
Any moneys held in the Revenue Bond Fund and the Debt Service Reserve Fund shall be
separately invested and reinvested by the City Treasurer in investments described in Subsections (a), (b),
(d), (g) and (h) of this Section, so long as they are authorized for investment of public sinking funds by
Section 2.1-327 of the Virginia Code or other provisions of law applicable to such investments.
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Any investments described in Subsections (a) and (b) of this Section may be pumhased by the City
pursuant to an overnight, term or open repumhase agreement with any (1) bank or trust company, including
an affiliate of the Fiscal Agent, within or without the Commonwealth having a combined capital, surplus and
undivided profits of not less than $50,000,000, (2)government bond dealer reporting to, trading with and
recognized as a primary dealer by the Federal Reserve Bank of New York and which is a member of the
Security Investors Protection Corporation or with a dealer or parent holding company that is rated in one of
the top three rating categories by one or more of the Rating Agencies, provided that the obligation of any
bank or government bond dealer to repurchase shall not exceed the lesser of five years or the time limitations
for investments set forth below. Such repurchase agreement shall be considered a purchase of such
securities even if title to and/or possession of such securities is not transferred to the City, Fiscal Agent, bank
or government dealer, as applicable, so long as (A) the repurchase obligation is collateralized by the
securities themselves, (B) such securities have on each day the repurchase agreement is in effect a fair
market value equal to at least 102% of the amount of the repurchase obligation, including principal and
interest, (C) such securities are held by a third party as agent for the benefit of the City, Fiscal Agent, bank or
government dealer, as applicable, as fiduciary for the holders of the Bonds and are segregated from
securities owned generally by such third party, and (D) a perfected first security interest in such securities is
created for the benefit of the holders of the Bonds under the Uniform Commercial Code of Virginia or book
entry procedures prescribed at 31 C.F.R. 306.1 et seq. or 31 C.F.R. 350.0 et seq. In the event the fair
market value of such securities falls below the level required by (B) above and is not replenished within 48
hours, the City shall sell and reduce such investments to cash.
Investments in a money market or other fund, investments of which fund are exclusively in
obligations or securities described in Subsections (a), (b) and (d) of this Section, shall be considered
investments in obligations described in Subsections (a), (b) and (d) of this Section.
Moneys held in the following Funds and Accounts shall be invested in obligations described in this
Section of the following maturities:
(a) Construction Fund - not later than the dates on which such moneys will be needed to pay
Costs of a Project;
(b) Revenue Account within the Revenue Fund - not later than the last dates on which such
moneys will be needed to be transferred to any other Fund or Account under the Resolution (or if investment
obligations are transferred, not later than maturities for investment obligations for the applicable Fund or
Account);
(c) Revenue Bond Fund, Parity Double Barrel Bond Fund and Subordinate Debt Fund - not
later than the dates on which such moneys will be needed to pay principal of or interest on Prior Parity
Bonds, Bonds, Padty Double Barrel Bonds and Subordinate Debt, respectively;
(d) Padty Debt Service Component Fund - not later than the dates on which such moneys will
be needed to pay Parity Debt Service Components;
(e) Debt Service Reserve Fund - not later than the eadier of five years from the date of
acquisition of the investment or the final maturity of the Series of Bonds which provided such proceeds; and
(f) Renewal and Replacement Account and Capital Improvement Account within the Revenue
Fund - not later than the dates needed to pay costs from such Accounts; and
(g) Residual Account within the Revenue Fund - not later than the earlier of five years from the
date of acquisition of the investment or the final maturity of the Bonds.
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For purposes of this Section, investments shall be considered as maturing on the date on which they
are redeemable without penalty at the option of the holder or the date on which the City may require their
repurchase pursuant to a repurchase agreement.
Whenever a payment or transfer of moneys between two or more funds or accounts is permitted or
required, such payment or transfer may be made in whole or in part by transfer of one or more Investment
Obligations at a value determined in accordance with the provisions in the Resolution, provided that the
investment obligations transferred are permitted investments for the fund or account receiving such
Investment Obligations.
Operation and Maintenance. The City shall establish and enforce reasonable rules and regulations
governing the use of and the services furnished by the System, shall maintain and operate the System in an
efficient and economical manner, shall maintain the same in good repair and sound operating condition, and
shall make all necessary repairs, replacements and renewals. All compensation, salaries, fees and wages
paid by the City in connection with the operation and maintenance of the System shall be reasonable. The
City shall observe and perform all of the terms and conditions contained in the Public Finance Act and
comply with all valid acts, rules, regulations, orders and directions of any legislative, executive, administrative
or judicial body applicable to the System or the City.
Sale ~)r Encumbrance of System. Neither the System nor any integral part thereof shall be leased,
sold or otherwise disposed of without an Independent Consulting Engineer's certification that such disposition
will not have a negative impact on the overall viability of the System unless the proceeds of such disposition,
together with any other available funds, are sufficient to pay the principal of and premium, if any, and interest
on all Bonds then Outstanding and the proceeds are used for such purpose. The City shall not create or
suffer to be created any lien or charge upon the System or any part thereof or any lien or charge upon
Pledged Revenues and other funds pledged herein ranking equally with or prior to the lien and charge of the
Bonds, except as provided in the Resolution. Notwithstanding anything in the Resolution to the contrary, the
City may acquire items of personal property constituting part of the System under lease purchase
agreements or similar financing arrangements entered into in the ordinary course of business which may be
subject to purchase money security interests or other liens in an aggregate amount not to exceed
$1,000,000.
Insurance. The City shall continuously maintain insurance with recognized responsible commercial
insurance companies against such risks and in such amounts as are customary for public bodies owning and
operating similar systems, including without limitation (a) fire insurance and extended coverage against loss
or damage to the System, (b) public liability insurance against liability for bodily injury, including death
resulting therefrom, and for damage to property, including loss of use thereof, arising out of the ownership or
operation of the System, and (c) workers' compensation insurance with respect to the System.
In lieu of insurance written by commercial insurance companies, the City may maintain a program of
self insurance or participate in group risk financing programs, including without limitation, sponsored
insurance programs, risk pools, risk retention groups, purchasing groups and captive insurance companies,
and in state or Federal insurance programs; provided, however, that the City shall obtain and maintain on file
a favorable written opinion of a Qualified Independent Consultant that such alternative is reasonably
acceptable under all the circumstances.
Damage. Destruction. Condemnation and Loss of Title. If all or any part of the System is destroyed
or damaged by fire or other casualty, condemned or lost by failure of title, the City shall restore promptly the
property damaged or destroyed to substantially the same condition as before such damage, destruction,
condemnation or loss of title with such alterations and additions as the City may determine and which will not
impair the capacity or character of the System for the purpose for which it is then being used or is intended to
be used; provided, however, that the City may prepay in whole all Bonds then Outstanding with the Net
Proceeds and any other funds that may be available for such purpose and provided further that such
prepayment is in accordance with the terms of the Resolution and pursuant to the appropriate optional
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redemption provisions for each Series of Bonds then Outstanding. The City shall apply so much as may be
necessary of the Net Proceeds received on account of any such damage, destruction, condemnation or loss
of title to payment of the cost of such restoration, either on completion or as the work progresses. If such Net
Proceeds are not sufficient to pay in full the cost of such restoration, the City shall pay so much of the cost as
may be in excess of such Net Proceeds from any legally available funds. Any balance of such Net Proceeds
remaining after payment of the cost of such restoration shall be deposited in the Revenue Fund.
Records and Accounts: Inspections and Reports. The City shall keep proper books of records and
accounts, separate from any of its other records and accounts, showing complete and correct entries of all
transactions relating to the System, and any Bondholder shall have the right at all reasonable times to inspect
the System and all records, accounts and data relating thereto. The City shall also cause a certified audit of
its records and accounts to be made in accordance with generally accepted accounting principles by an
independent certified public accountant or the Auditor of Public Accounts of the Commonwealth at the end of
each Fiscal Year which shall reflect in reasonable detail the financial condition and record of operation of the
System.
The City shall also cause an Independent Consulting Engineer at least once every five years to
inspect the System and make a written report thereof which shall include such Independent Consulting
Engineer's findings and recommendations as to the maintenance of the System and the construction of
additions, extensions and improvements to the System and capital replacements thereof. Such report shall
be completed in sufficient time so that the City may take into account any recommendations thereof in
preparing its next Annual Operating Budget.
Covenants with Credit Banks. Insurers. etc. The City may make such covenants and agreements in
a Supplemental Resolution as it may determine to be appropriate with any insurer, credit bank or other
financial institution that shall agree to insure or to provide credit or liquidity support to enhance the security or
the value of any Bonds. Such covenants and agreements may be set forth in the applicable Supplemental
Resolution and shall be binding on the City and all the Bondholders the same as if such covenants were set
forth in full in the Resolution.
Free Service, Competing Service. Billing and Enforcement of Charges. The City shall not permit
connections to or use of the System or provide any services of the System without making a charge therefor
in accordance with the City's schedule of rates, fees and charges for the System other than those
connections, use or services already in existence; provided, however, the City may accept proffers and other
forms of payment in lieu of cash payments that the City deems are in its best interest to accept.
Service Agreements. The City may enter into service agreements for the benefit of the System,
provided that such agreements shall specify the items payable as the Debt Service Component of the Cost of
Contracted Services and provided, further, that the City shall not enter into such service agreements that
would create Parity Debt Service Components unless a certificate of a Qualified Independent Consultant
stating that based on the City's financial records for the last 24 months (the 'q'est Period") prior to the
issuance of such Bonds the City is able to meet the two independent requirements for a consecutive 12-
month period during such Test Period as described previously and in the Resolution.
Defeasance of Bonds. If (a) all Bonds shall have become due and payable in accordance with their
terms or otherwise as provided in the Resolution or have been duly called for redemption or irrevocable
instructions to call the Bonds or to pay them at maturity have been given by the City to the Registrar and (b) a
bank or trust company acting as escrow agent holds cash, noncallable Government Obligations or, if
permitted by the laws of the Commonwealth, noncallable Government Certificates or noncallable Defeased
Obligations, the principal of and the interest on which at maturity will be sufficient (1) to redeem in
accordance with the relevant sections of the Resolution and in any applicable Supplemental Resolution all
Bonds that have been called for redemption, or for which irrevocable instructions for call for redemption have
been given, on the date set for such redemption, (2) to pay at maturity all Bonds not irrevocably called for
redemption, (3) to pay interest accruing on all Bonds prior to their redemption or payment at maturity, (4) to
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make all required arbitrage rebate payments to the United States of America, and (5) to pay to the escrow
agent its reasonable fees and expenses and any other fees and expenses for which the City is responsible
under the Resolution, then the covenants, liens and pledges and entered into, created or imposed pursuant
hereto shall be fully discharged.
Bonds for the payment or redemption of which cash, noncallable Government Obligations or, if
permitted by the laws of the Commonwealth, noncallable Government Certificates or noncaliable Defeased
Obligations, the principal of and premium, if any, and interest on which will be sufficient therefor shall have
been deposited with the escrow agent (whether upon or prior to the date of their maturity or their redemption
date) shall be deemed to be paid, shall no longer be entitled to the benefits provided by the Resolution and
shall be deemed to be no longer Outstanding; provided, however, that if such Bonds are to be redeemed
prior to the maturity thereof, irrevocable notice of such redemption shall have been duly given or irrevocable
arrangements satisfactory to the Registrar shall have been made for the giving thereof.
~,~e~_g.L[~J~. Each of the following events shall be an "Event of Default" upon the conditions
and subject to the limitations provided in the Master Resolution: (a) default in the due and punctual payment
of the principal of or premium, if any, on any Bond (whether at maturity, call for redemption or otherwise); (b)
default in the due and punctual payment of the interest on any Bond; (c) failure of the City to observe and
perform any of its other covenants, conditions or agreements under the Resolution or in the Bonds for a
period of 60 days after written notice from the Fiscal Agent or holders of not less than 25% in aggregate
principal amount of outstanding Bonds, specifying such failure and requesting that it be remedied, or in the
case of any such default that cannot with due diligence be cured within such 60 day period, failure of the City
to proceed promptly to cure the same and thereafter prosecute the curing of such default with due diligence;
(d) destruction or damage to any substantial part of the System to the extent of impairing its efficient
operation or adversely affecting Pledged Revenues to a substantial degree and failure for any reason
promptly to repair, replace or reconstruct the same (whether such failure promptly to repair, replace or
reconstruct the same be due to the impracticability of such repair, replacement or reconstruction, the lack of
moneys therefor or for any other reason); (e) (1) commencement by the City of a voluntary case under the
Federal bankruptcy laws, as now or hereafter constituted, or any other applicable Federal or state
bankruptcy, insolvency or other similar law, (2) consent by the City to the appointment of a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official for the City, the System or any
substantial part of the City's property, or to the taking possession by any such official of the System or any
substantial part of the City's property, (3) making by the City of any assignment for the benefit of creditors, or
(4) taking of corporate action by the City in furtherance of any of the foregoing; (f) the entry of any (1) decree
or order for relief by a court having jurisdiction over the City or its property in an involuntary case under the
Federal bankruptcy laws, as now or hereafter constituted, or any other applicable Federal or state
bankruptcy, insolvency or other law, (2) appointment of a receiver, liquidator, assignee, trustee, custodian,
sequestrator or similar official for the City, the System or any substantial part of the City's property, or (3)
order for the termination or liquidation of the City or its affairs; or (g) failure of the City within 60 days after the
commencement of any proceedings against it under the Federal bankruptcy laws or any other applicable
Federal or state bankruptcy, insolvency or similar law, to have such proceedings dismissed or stayed.
Certain of the City's obligations other than the obligation to make all payments on the Bonds may be
suspended if by reason of force ma_ieure, as defined in the Master Resolution, the City is unable to carry out
such obligations.
If an Event of Default shall have occurred and be continuing, the holders of not less than 25% in
aggregate principal amount of outstanding Bonds may call a meeting of the Bondholders for the purpose of
appointing a trustee (if a trustee has not been appointed previously for all holders of outstanding Bonds
pursuant to a Supplemental Resolution adopted by the City Council in accordance with the provisions of the
Resolution). Upon such appointment, the trustee shall be the trustee for the holders of all outstanding Bonds
and shall be empowered to exercise in the name of the Bondholders all the rights and powers conferred in
the Master Resolution on Bondholders, subject to the limitations provided in the Master Resolution.
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S~p.olemental Resolutions. The City may, without the consent of, or notice to, any of the
Bondholders, adopt Supplemental Resolutions as shall not be inconsistent with the intent of the terms and
provisions hereof for any one or more of the following purposes: (a) to cure any ambiguity, formal defect or
omission in the Resolution; (b) to grant to or confer upon the Bondholders any additional rights, remedies,
powers or authority that may lawfully be granted to or conferred on the Bondholders; (c) to add to the
covenants and agreements of the City in the Resolution other covenants and agreements to be observed by
the City; (d) to modify, amend or supplement the Resolution in such manner as required to permit the City to
comply with the provisions of the Code relating to the rebate to the United States of America of eamings
derived from the investment of the proceeds of Bonds, provided that such modification, amendment or
supplement does not materially adversely affect the holders of all Outstanding Bonds; (e) to modify, amend
or supplement the Resolution in such manner as may be required by a Rating Agency to maintain its rating
on the Bonds provided that such modification, amendment or supplement does not materially adversely
affect the holders of all Outstanding Bonds; (f) to modify, amend or supplement the Resolution to implement
any covenants or agreements contemplated by the Section herein "Covenants with Credit Banks, Insurers,
etc."; (g) to authorize the issuance of and to secure one or more Series of Bonds pursuant to Article III of the
Resolution; and (h) to provide for a bank or trust company having an office in the Commonwealth to act as
trustee for all the Outstanding Bonds, including without limitation provisions for (1) qualifications, (2) duties,
(3) resignation, and (4) replacements.
In addition, the holders of not less than a majodty in aggregate principal amount of outstanding
Bonds shall have the right from time to time, notwithstanding anything in the Master Resolution to the
contrary, to consent to the adoption by the City of such other resolution or resolutions supplemental hereto as
shall be deemed necessary or desirable by the City for the purpose of modifying, altering, amending, adding
to or rescinding, in any particular, any of the terms or provisions contained in the Master Resolution and any
Supplemental Resolution; provided, however, that nothing in the Resolution shall permit, or be construed as
permitting, (a) an extension of the matudty of the principal of or the interest on any Bond, (b) a privilege or
priority of any Bond or Bonds over any other Bond or Bonds, (c) a reduction in the aggregate principal
amount of Bonds required for consent to such Supplemental Resolution, (d) a reduction in the principal
amount of or premium, if any, on any Bond or the rate of interest thereon, or (e) an extension of time or a
reduction in amount of any payment required by any sinking fund that may be applicable to any Bond, without
the consent of the holders of all of the outstanding Bonds.
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APPENDIX F
FORM OF BOND COUNSEL OPINION
APPENDIX F
Set forth below is the proposed form of opinion of bond counsel. It is
preliminary and subject to change prior to delivery of the Series 2000 Bonds.
Mayor and Council
City of Virginia Beach
Virginia Beach, Virginia
City of Virginia Beach, Virginia
$40,000,000 Water and Sewer System
Revenue Bonds, Series of 2000
Ladies and Gentlemen:
We have examined the applicable law and certified copies of proceedings and documents relating to
the issuance and sale by the City of Virginia Beach, Virginia (the "City"), of its $40,000,000 Water and Sewer
System Revenue Bonds, Series of 2000 (the "Bonds"). The Bonds are being issued to finance the cost of
improvements and extensions to its water and sanitary sewer system (the "System"). Reference is made to
the form of the Bonds for information concerning their details, including payment and redemption provisions,
and the proceedings pursuant to which they are issued, including a Master Resolution adopted by the City
Council of the City on February 11, 1992 (the "Master Resolution"), as supplemented by a Sixth
Supplemental Resolution adopted on July 5, 2000 (the "Sixth Supplemental Resolution," and collectively, the
"Resolution").
Without undertaking to verify the same by independent investigation, we have relied on certifications
by representatives of the City as to certain facts relevant to both our opinion and requirements of the Intemal
Revenue Code of 1986, as amended (the "Code"). The City has covenanted to comply with the provisions of
the Code regarding, among other matters, the use, expenditure and investment of the proceeds of the Bonds
and the timely payment to the United States of any arbitrage rebate amounts with respect to the Bonds, all as
set forth in the proceedings and documents relating to the issuance of the Bonds (the "Covenants").
Based on the foregoing, we are of the opinion that:
(1) The Bonds have been duly authorized and issued in accordance with the Constitution and
statutes of the Commonwealth of Virginia and constitute valid and binding limited obligations of the City
payable solely from Pledged Revenues (as defined in the Resolution) and other moneys pledged as
described in the Resolution to secure payment thereof. The Bonds are secured on a parity with the
outstanding revenue bonds issued in connection with the System as described in the Resolution and any
additional bonds and other obligations (collectively, "Parity Debt") that may be issued or incurred as provided
in the Resolution. The Bonds, the premium, if any, and the interest thereon do not constitute a pledge of the
faith and credit of the Commonwealth of Virginia or any political subdivision thereof, including the City.
(2) The City is required to fix, charge and collect such rates, fees and other charges for the use
of and for the services fumished by the System so that such rates, fees and other charges will be sufficient in
each fiscal year to pay the cost of operation and maintenance of the System and the principal of and
premium, if any, and interest on the Bonds and Parity Debt, and to provide certain reserves therefor, all as
provided in the Resolution.
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(3) The Resolution has been duly adopted, is in full force and effect, and is valid and
enforceable against the City in accordance with its terms, and the Sixth Supplemental Resolution complies in
all respects with the requirements of the Master Resolution. The Resolution pledges Pledged Revenues as
security for payment of the principal of and premium, if any, and interest on the Bonds and Parity Debt.
(4) The rights of the holders of the Bonds and the enforceability of such rights, including
enforcement of the obligations of the City under the Resolution, may be limited or otherwise affected by (a)
bankruptcy, insolvency, reorganization, moratorium and other laws affecting the rights of creditors generally
and (b) principles of equity, whether considered at law or in equity.
(5) Under existing law, interest, including accrued original issue discount ("OLD"), on the Bonds
(a) is not included in gross income for Federal income tax purposes and (b) is not an item of tax preference
for purposes of the Federal alternative minimum income tax imposed on individuals and corporations;
however, with respect to corporations (as defined for Federal income tax purposes) subject to the alternative
minimum income tax, such interest, including accrued OlD, is taken into account in determining adjusted
current earnings for purposes of computing such tax. Failure by the City to comply with the Covenants could
cause interest, including accrued OlD, on the Bonds to be included in gross income for Federal income tax
purposes retroactively to their date of issue. In the case of Bonds maturing in the years through (the
"OlD Bonds"), the difference between (i) the stated principal amount of each maturity of OlD Bonds and (ii)
the initial offering price to the public (excluding bond houses and brokers) at which a substantial amount of
such maturities of OlD Bonds is sold will constitute OlD; OlD will accrue for Federal income tax purposes on
a constant yield-to-maturity method; and a holder's basis in such a Bond will be increased by the amount of
OlD treated for Federal income tax purposes as having accrued on the Bond while the holder holds the
Bond. We express no opinion regarding other Federal tax consequences of the ownership of or receipt or
accrual of interest on the Bonds.
(6) Under existing law, interest, including accrued OlD, on the Bonds is exempt from income
taxation by the Commonwealth of Virginia.
Our services as bond counsel to the City have been limited to delivering the foregoing opinion based
on our review of such proceedings and documents as we deem necessary to approve the validity of the
Bonds and the tax-exempt status of the interest thereon. We express no opinion herein as to the financial
resources of the City, its ability to provide for payment of the Bonds or the accuracy or completeness of any
information, including the City's Preliminary Official Statement dated , 2000, and its Official
Statement dated -, 2000, that may have been relied upon by anyone in making the decision to
purchase Bonds.
Very truly yours,
F-2
APPENDIX G
FORM OF CONTINUING DISCLOSURE AGREEMENT
CONTINUING DISCLOSURE AGREEMENT
APPENDIX G
This CONTINUING DISCLOSURE AGREEMENT dated as of , 2000 (the "Disclosure
Agreement"), is executed and delivered by the City of Virginia Beach, Virginia (the "City"), in connection with
the issuance by the City of its $40,000,000 Water and Sewer System Revenue Bonds, Series of 2000 (the
"Bonds"). The City hereby covenants and agrees as follows:
Section 1. Purpose. This Disclosure Agreement is being executed and delivered by the City for the
benefit of the holders of the Bonds and in order to assist the purchasers of the Bonds in complying with the
provisions of Section (b)(5)(i) of Rule 15c2-12 (the "Rule") promulgated by the Securities and Exchange
Commission by providing certain annual financial information and material event notices required by the Rule
(collectively, "Continuing Disclosure").
Section 2. Annual Disclosure. (a) The City shall provide annually certain financial information
and operating data in accordance with the provisions of Section (b)(5)(i) of the Rule as follows:
(i) audited financial statements of the City's water and sewer enterprise fund, prepared in
accordance with generally accepted accounting principles; and
(ii) the operating data with respect to the water and sewer system described in the City's
Official Statement dated , 2000, entitled "Ten Largest Utility Customers," "Rates &
Billings," "Water and Sewer Debt," "Water and Sewer Enterprise Fund Debt Service Requirements"
and "System Operating Revenues, Expenses and Coverage."
If the financial statements filed pursuant to Section 2(a) are not audited, the City shall file such statements as
audited when available.
(b) The City shall provide annually the financial information and operating data
described in subsection (a) above (collectively, the "Annual Disclosure") within 180 days after the end of the
City's fiscal year, commencing with the City's fiscal year ending June 30, 2000, to each nationally recognized
municipal securities information repository ("NRMSIR") and to the appropriate state information depository if
any then exists (~SlD").
(c) Any Annual Disclosure may be included by specific reference to other documents
previously provided to each NRMSIR and to the SID or filed with the SEC; provided, however, that any final
official statement incorporated by reference must be available from the Municipal Securities Rulemaking
Board (the "MSRB").
(d) The City shall provide in a timely manner to each NRMSIR or the MSRB and to the
SID notice specifying any failure of the City to provide the Annual Disclosure by the date specified.
Section 3. Event Disclosure. The City shall provide in a timely manner to each NRMSIR or the
MSRB and to the SID notice of the occurrence of any of the following events with respect to the Bonds, if
material:
(a) principal and interest payment delinquencies;
(b) non-payment related defaults;
(c) unscheduled draws on debt service reserves reflecting financial difficulties;
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(d)
(e)
(f)
unscheduled draws on any credit enhancement reflecting financial difficulties;
substitution of credit or liquidity providers, or their failure to perform;
adverse tax opinions or events affecting the tax-exempt status of the Bonds;
(g) modifications to rights of Bondholders;
(h) bond calls;
(i)
~)
defeasance of all or any portion of the Bonds;
release, substitution, or sale of property securing repayment of the Bonds; and
(k) rating changes.
Section 4. Termination. The obligations of the City hereunder will terminate upon the redemption,
defeasance (within the meaning of the Rule) or payment in full of all the Bonds.
Section 5. Amendment. The City may modify its obligations hereunder without the consent of
Bondholders, provided that this Disclosure Agreement as so modified complies with the Rule as it exists at
the time of modification. The City shall within a reasonable time thereafter send to each NRMSIR and the
SID a description of such modification(s).
Section 6. Defaults. (a) If the City fails to comply with any covenant or obligation regarding
Continuing Disclosure specified in this Disclosure Agreement, any holder (within the meaning of the Rule) of
Bonds then outstanding may, by notice to the City, proceed to protect and enforce its rights and the rights of
the holders by an action for specific performance of the City's covenant to provide the Continuing Disclosure.
(b) Notwithstanding anything herein to the contrary, any failure of the City to comply
with any obligation regarding Continuing Disclosure specified in this Disclosure Agreement (i) shall not be
deemed to constitute an event of default under the Bonds or the resolution providing for the issuance of the
Bonds and (ii) shall not give rise to any right or remedy other than that described in Section 6(a) above.
Section 7. Additional Disclosure. The City may from time to time disclose certain information and
data in addition to the Continuing Disclosure. Notwithstanding anything herein to the contrary, the City shall
not incur any obligation to continue to provide, or to update, such additional information or data.
Section 8. Counterparts. This Disclosure Agreement may be executed in several counterparts
each of which shall be an original and all of which shall constitute but one and the same instrument.
Section 9. Governing Law. This Disclosure Agreement shall be construed and enforced in
accordance with the laws of the Commonwealth of Virginia.
CITY OF VIRGINIA BEACH, VIRGINIA
Mayor, City of Virginia Beach, Virginia
G-2
City Manager, City of Virginia Beach,
Virginia
G-3
APPENDIX H
OFFICIAL NOTICE OF SALE
APPENDIX H
OFFICIAL NOTICE OF SALE
CITY OF VIRGINIA BEACH, VIRGINIA
$40,000,000
WATER AND SEWER SYSTEM REVENUE BONDS, SERIES OF 2000
Electronic bids only will be received by the City of Virginia Beach, Virginia (the "City"), in accordance
with this Official Notice of Sale until 11:00 a.m., Local Time, on Tuesday, July 25, 2000 (the "Date of Sale"). In
the case of a malfunction of the Electronic Bidding System (as defined below), facsimile bids will be allowed,
as more fully described below.
Immediately thereafter, the bids will be publicly announced, and the City Manager will act upon the
bids by 2:00 p.m., Local Time.
Bid Submission
Solely as an accommodation to bidders, electronic bids via PARITY (the "Electronic Bidding
System") will be accepted in accordance with this Official Notice of Sale. The City is using PARITY as a
communication mechanism to conduct the electronic bidding for the sale of $40,000,000 Water and Sewer
System Revenue Bonds, Series of 2000 (the "Bonds"), as described herein. No other form of electronic
bid or provider of electronic bidding services will be accepted. For purposes of the bidding process, the
time as maintained by PARITY shall constitute the official time with respect to all bids submitted. To the
extent any instructions or directions set forth in PARITY conflict with this Official Notice of Sale, the terms
of this Official Notice of Sale shall control.
Each bidder submitting an electronic bid agrees (i) that it is solely responsible for all arrangements
with PARITY, (ii) that PARITY is not acting as the agent of the City, and (iii) that the City is not responsible
for ensuring or verifying bidder compliance with any of the procedures of PARITY. The City assumes no
responsibility for, and each bidder expressly assumes the risks of and responsibility for, any incomplete,
inaccurate or untimely bid submitted by such bidder through PARITY. Each bidder shall be solely
responsible for making necessary arrangements to access the Electronic Bidding System for purposes of
submitting its bid in a timely manner and in compliance with the requirements of this Official Notice of
Sale. Neither the City nor the Electronic Bidding System shall have any duty or obligation to provide or
assure such access to any bidder, and neither the City nor PARITY shall be responsible for proper
operation of, or have any liability for, any delays or interruptions of, or any damages caused by, PARITY.
For further information about PARITY, potential bidders may contact Dalcomp at 395 Hudson Street, New
York, New York 10014, telephone (212) 806-8304.
In the event of a malfunction of the Electronic Bidding System, facsimile transmission bids will be
accepted up to 11:00 a.m., Local Time, on the Date of Sale in order to be considered. Bidders choosing to
submit bids in the case of a malfunction by facsimile transmission shall use the following telecopier
numbers for such transmission: (757) 427-4302 or (757) 427-4135 (Attention: Patricia A. Phillips).
Transmissions received after the deadline shall be rejected. It is the responsibility of the bidder to ensure
that the bid is legible, that the bid is received prior to 11:00 a.m., Local Time, and that the bid is sent to
one of the telecopier numbers set forth above. Illegible transmissions will not be accepted. The City's
financial advisors (Government Finance Associates, Inc. and Government Finance Group, a division of
ARD Incorporated, collectively the "Financial Advisors") will verify receipt of each bid submitted through
facsimile transmission by contacting each bidder by telephone once the bid has been received. The City's
Financial Advisors will in no instance correct, alter or in any way change bids submitted through facsimile
transmission. Neither the City nor its Financial Advisors will be responsible for bids submitted by facsimile
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transmission not received in accordance with the provisions of this Official Notice of Sale. Bidders electing
to submit bids via facsimile transmission will bear full and complete responsibility for the transmission of
such bid.
Each bid must be unconditional.
Principal Redemption
The Bonds will be dated July 15, 2000 (the "Dated Date"), and will mature serially or be subject to
mandatory sinking fund redemptions on August 1 in the years and amounts (subject to adjustment as
described in "Bidding Rules; Award of Bonds" below) shown below.
Due Auqustl Amount Due August1
2001 $ 2014
2002 2015
2003 2016
2004 2017
2005 2018
2006 2019
2007 2020
2008 2021
2009 2022
2010 2023
2011 2024
2012 2025
2013
Amount
$
Serial Bonds, Term Bonds and Mandatory Sinking Fund Redemptions
Bidders may provide for all of the Bonds to be issued as serial Bonds or may designate
consecutive annual principal amounts of the Bonds to be combined into not more than two Term Bonds.
In the event that a bidder chooses to specify a Term Bond, each such Term Bond shall be subject to
mandatory sinking fund redemption commencing on August 1 of the first year which has been combined to
form such Term Bond and continuing on August 1 in each year thereafter until the stated maturity of such
Term Bond. The amount redeemed in any year shall be equal to the principal amount for such year set
forth in the amortization schedule above. Bonds to be redeemed in any year by mandatory sinking fund
redemption shall be redeemed at par and shall be selected by lot from among the Bonds of the maturity
being redeemed.
Description of the Bonds; Book-Entry Only System
The Bonds will be issued by means of a book-entry system with no distribution of physical Bond
certificates made to the public. One Bond certificate for each maturity will be issued to The Depository
Trust Company, New York, New York ("DTC"), or its nominee, and immobilized in its custody. The book-
entry system will evidence beneficial ownership of the Bonds in principal amounts of $5,000 or multiples
thereof, with transfers of beneficial ownership effected on the records of DTC and its participants pursuant
to rules and procedures established by DTC and its participants. Bond certificates registered in the name
of Cede & Co. will be deposited with DTC. Interest on the Bonds will be paid semiannually on August 1
and February 1, beginning February 1, 2001, and principal on the Bonds will be paid annually on August 1,
to DTC or its nominee as registered owner of the Bonds. Transfer of principal and interest payments to
beneficial owners by participants of DTC will be the responsibility of such participants and other nominees
of beneficial owners. The City will not be responsible or liable for maintaining, supervising or reviewing the
records maintained by DTC, its participants or persons acting through such participants.
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DTC may discontinue providing its services as securities depository with respect to the Bonds at
any time by giving reasonable notice to the City. Under such circumstances, in the event that a successor
securities depository is not obtained, Bond certificates are required to be prepared, executed and
delivered.
The City may decide to discontinue use of the system of book-entry transfers through DTC (or a
successor securities depository). In that case, either a successor depository will be selected by the City
or Bond certificates will be prepared, executed and delivered.
Optional Redemption
The Bonds that mature or are subject to mandatory sinking fund redemption on or before August
1, 2010, are not subject to optional redemption prior to their stated maturities. The Bonds that mature on
and after August 1,2011, will be subject to redemption beginning August 1, 2010, in whole or in part at
any time, at the option of the City, upon payment of the following redemption prices (expressed as a
percentage of principal amount of Bonds to be redeemed) plus interest accrued and unpaid to the
redemption date:
Period During Which Redeemed
(both dates inclusive)
Redemption Price
August 1, 2010, to July 31, 2011 ................................................. 101%
August 1,2011, and thereafter .................................................... 100%
If less than all of the Bonds are called for redemption, the Bonds to be redeemed shall be selected
by the City's Director of Finance in such manner as may be determined to be in the best interest of the
City. If less than all of the Bonds of a particular maturity are called for redemption, DTC or any successor
securities depository will select the Bonds to be redeemed pursuant to its rules and procedures or, if the
book-entry system is discontinued, will be selected by the Bank of New York, New York, New York, which
has been appointed registrar (the "Registrar"), by lot in such manner as the Registrar in its discretion may
determine. In either case, each. portion of the $5,000 principal amount is counted as one Bond for such
purpose. The City will cause notice of the call for redemption identifying the Bonds or portions thereof to
be redeemed to be sent by facsimile transmission, registered or certified mail or overnight express
delivery, not less than 30 nor more than 60 days prior to the redemption date, to the registered owner
thereof. The City shall not be responsible for mailing notice of redemption to anyone other than DTC or
another qualified securities depository or its nominee unless no qualified securities depository is the
registered owner of the Bonds. If no qualified securities depository is the registered owner of the Bonds,
notice of redemption shall be mailed to the registered owners of the Bonds. If a portion of a Bond is called
for redemption, a new Bond in principal amount equal to the unredeemed portion shall be issued to the
registered owner upon the surrender thereof.
Security
The Bonds will be water and sewer revenue bonds of the City, payable solely from all moneys
received as fees, rates, charges for the use of and for the services furnished by the Water and Sewer
System (the "System"), including connection fees, water resource recovery fees and investment earnings
that are required to be deposited in the Revenue Fund, and any other money from other sources pledged
by the City (see Preliminary Official Statement dated July __, 2000, for a summary of the Master
Resolution and the Sixth Supplemental Resolution, including purchasers' approval of certain amendments
thereto). The Bonds will additionally be secured by a debt service reserve fund, as provided in the
Resolution.
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Bidding Rules; Award of Bonds
Bidders may only bid to purchase all of the Bonds. Bidders are invited to name the rate or rates of
interest per annum which the Bonds are to bear in multiples of one-twentieth (1/20th) or one-eighth (1/8th)
of one percent. All Bonds maturing on the same date must bear interest at the same rate. Any number of
rates may be named provided that (a) the highest rate of interest may not exceed the lowest rate of
interest by more than 3 percentage points, and (b) the highest rate of interest stated for any maturity may
not exceed 7% per annum. No bid for less than 99% of par plus accrued interest (computed on the basis
of a 360 day year and twelve 30 day months) from the Dated Date to the delivery of the Bonds shall be
considered. The City reserves the right to reject any or all bids (regardless of the interest rate bid), to
reject any bid not complying with this Official Notice of Sale and, so far as permitted by law, to waive any
irregularity or informality with respect to any bid or the bidding process. The City also reserves the right to
adjust individual maturity amounts by up to 10% in order to have a level debt service structure. Any such
increase or decrease in the principal amount of particular maturities of the Bonds will be communicated to
the successful bidder by 5:00 pm Eastern Time on the date of sale. The dollar amount bid for the principal
of the Bonds by the successful bidder will be adjusted as necessary to reflect any increase or decrease in
the principal amount of the applicable maturities of the Bonds so adjusted, but the interest rates specified
by the successful bidder for each maturity will not be altered. Such adjusted dollar amount bid will not
change the successful bidder's compensation per $1,000 of par amount of the Bond from that which would
have resulted from the bid submitted. The successful bidder may not withdraw its bid as a result of any
change made within the foregoing limits.
Unless all bids are rejected, the Bonds will be awarded to the bidder complying with the terms of
this Official Notice of Sale and submitting a bid which provides the lowest "true" interest cost to the City.
True interest cost shall be determined for each bid by doubling the semiannual interest rate, compounded
semiannually, necessary to discount the debt service payments from the payment dates to the Dated Date
and to the price bid, such price bid excluding interest accrued to the date of settlement. If more than one
bid offers the same lowest true interest cost, the successful bid will be selected by the City Manager by lot.
Bids for the Bonds shall not be conditioned upon obtaining insurance or any other credit
enhancement. If a bidder proposes to obtain a policy of municipal bond insurance or any other credit
enhancement, any such purchase of insurance or commitment therefor shall be at the sole option and
expense of the bidder, and the bidder must pay any increased costs of issuance of the Bonds as a result
of such insurance or commitment. Any failure by the bidder to obtain such a policy of insurance shall not
in any way relieve such bidder of its contractual obligations arising from the acceptance of its bid for the
purchase of the Bonds.
The successful bidder shall pay accrued interest computed on the basis of a 360-day year of
twelve 30-day months on the Bonds from and including July 15, 2000, to but not including the date of
delivery.
Good Faith Deposit
Each bid must be accompanied by a certified or cashier's check for $400,000 drawn upon an
incorporated bank or trust company authorized to transact business in the Commonwealth of Virginia or in
the City of New York and payable unconditionally to the order of the City of Virginia Beach, Virginia, to
secure the City against any loss resulting from the failure of the successful bidder to comply with the terms
of its bid. The check of the successful bidder will be deposited and credited toward the purchase price,
and no interest will be allowed thereon to accrue to the benefit of the successful bidder. The good faith
money will be retained by the City as liquidated damages in case the successful bidder fails to accept
delivery of and pay for the Bonds. Checks of unsuccessful bidders will be returned promptly upon award
of the Bonds. Bidders must also clearly indicate to whom the check should be returned in the event of an
unsuccessful bid.
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In lieu of the check described above, the deposit may be in the form of a Financial Surety Bond in
the amount of $400,000 payable to the City. The Financial Surety Bond must be from an insurance
company acceptable to the City and licensed to issue such a bond in the Commonwealth of Virginia, and
such Financial Surety Bond must be submitted to the City prior to the opening of the bids and must be in a
form acceptable to the City. The Financial Surety Bond must identify each bidder whose deposit is
guaranteed by such Financial Surety Bond. If the Bonds are awarded to a bidder utilizing a Financial
Surety Bond, then such successful bidder is required to submit its deposit to the City in the form of a
cashier's check or certified check or wire transfer not later than 11:00 a.m., Local Time, on the next
business day following the award. If such deposit is not received by such time, the Financial Surety Bond
may be drawn by the City to satisfy the deposit requirement.
Bidders submitting an electronic or facsimile bid must deliver the good faith check (or, in lieu
thereof, a Financial Surety Bond) by 10:00 a.m., Local Time, on July 25, 2000, to Patricia A. Phillips,
Director of Finance, Virginia Beach Municipal Center, City Hall Building, Room 220, Virginia Beach,
Virginia 23456.
Delivery of the Bonds
The Bonds will be delivered at the expense of the City in New York, New York, through the
facilities of DTC on or about August 9, 2000.
Concurrently with the delivery of the Bonds, the City will furnish to the successful bidder without
cost (a) a certificate dated the date of delivery of the Bonds, signed by the appropriate City officials and
stating that no litigation of any kind is then pending or, to the best of their information, knowledge and
belief, threatened against the City to restrain or enjoin the issuance or delivery of the Bonds and (b)
certificates dated the date of delivery of the Bonds, stating that the descriptions and statements in the
Official Statement (except in the sections entitled "Book-Entry System" and "Tax Exemption" and in the
column "Price/Yield" on the inside cover), on the date of the Official Statement and on the date of delivery
of the Bonds, were and are true and correct in all material respects, did not and do not contain an untrue
statement of a material fact or omit to state a material fact required to be stated therein or necessary to
make such descriptions and statements, in light of the circumstances under which they were made, not
misleading. Such certificates will also state, however, that such City officials did not independently verify
the information indicated in the Official Statement as having been obtained or derived from sources other
than the City and its officers but they have no reason to believe that such information is not accurate.
Certificate of Winning Bidder
The successful bidder must, by facsimile transmission or overnight delivery received by the City
within 24 hours after receipt of the bids for the Bonds, furnish the following information to the City to
complete the Official Statement in final form, as described below:
The offering prices for the Bonds (expressed as the price or yield per maturity, exclusive
of any accrued interest).
Selling compensation (aggregate total anticipated compensation to the underwriters
expressed in dollars, based on the expectation that all Bonds are sold at the prices or
yields described in Subpart A above).
C. The identity of the underwriters if the successful bidder is a part of a group or syndicate.
Any other material information necessary to complete the Official Statement in final form
but not known to the City.
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Prior to the delivery of the Bonds, the successful bidder shall furnish to the City a certificate in
form acceptable to bond counsel, to the effect that the successful bidder has made a bona fide public
offering of the Bonds at the initial public offering prices set forth in such certificate, that the successful
bidder has complied with MSRB Rule G-37 with respect to the City and that a substantial amount of the
Bonds of each maturity were sold to the public (excluding bond houses, brokers and other intermediaries)
at such initial public offering prices. Such certificate shall state that (1) it is made on the best knowledge,
information and belief of the successful bidder and (2) 10% or more in par amount of the Bonds of each
maturity was sold to the public at the initial public offering price (such amount being sufficient to establish
the sale of a substantial amount of the Bonds).
CUSIP Numbers
It is anticipated that CUSIP identification numbers will be printed on the Bonds, but neither the
failure to print such numbers on any Bond nor any error with respect thereto shall constitute cause for
failure or refusal by the successful bidder thereof to accept delivery of and pay for the Bonds in
accordance with the terms of its bid. The City will assume responsibility for the expense of the initial
printing of CUSIP numbers, provided however, that the City assumes no responsibility for any CUSIP
Service Bureau or other charges that may be imposed for the assignment of such numbers. All expenses
in connection with the assignment of CUSIP numbers shall be paid by the successful bidder. It shall be
the obligation of the successful bidder to fumish to DTC an underwriter questionnaire and to the City the
CUSIP numbers for the Bonds within two business days following the date of award.
Official Statement
The City will furnish the successful bidder at the expense of the City up to 500 copies of the final
Official Statement within seven business days from the date of the award of the Bonds, as specified in
Rule 15c2-12 (the "Rule") of the Securities and Exchange Commission (the "SEC") and the rules of the
MSRB provided that minor delays in furnishing such final Official Statement will not be a basis for failure to
pay for and accept delivery of the Bonds. Additional copies will be made available at the successful
bidder's request and expense. The City assumes no responsibility or obligation for the distribution or
delivery of the Official Statement to anyone other than the successful bidder.
The successful bidder, by executing the Official Bid Form, agrees to provide one copy of the
Official Statement to at least one Nationally Recognized Municipal Securities Information Repository
("NRMSlR") within the meaning of the Rule upon receipt of the Official Statement from the City and two
copies of the Official Statement (with any required forms) to the MSRB or its designee no later than ten
business days following the Date of Sale. The successful bidder shall notify the City as soon as
practicable of (1) the date which is the end of the underwriting period (such "underwriting period" is
described in the Rule), and (2) the date of filing the Official Statement with a NRMSIR and MSRB or its
designee.
If the Bonds are awarded to a syndicate, the City will designate the senior managing underwriter
of the syndicate as its agent for purposes of distributing copies of the Official Statement to each
participating underwriter. Any underwriter executing and delivering a bid form with respect to the Bonds
agrees thereby that if its bid is accepted it shall accept such designation and shall enter into a contractual
relationship with all participating underwriters for the purposes of assuring the receipt and distribution by
each such participating underwriter of the Official Statement, unless another firm is so designated by the
syndicate in writing and approved by the City.
Legal Opinion
The approving opinion of Hunton & Williams, Richmond, Virginia, with respect to the Bonds will be
furnished to the successful bidder at the expense of the City and will state that the Bonds constitute valid
and legally binding limited obligations of the City and that the City is required to fix, charge and collect
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such rates, fees and other charges for the use of and for the services furnished by the System so that
such rates, fees and other charges will be sufficient in each fiscal year to pay the cost of operation and
maintenance of the System and the principal of and premium, if any, and interest on the Bonds and Parity
Debt, and to provide certain reserves therefor.
Federal and State Securities Laws
No action has been taken to qualify the Bonds under the federal securities laws or the securities
blue sky laws of any state.
Tax Exemption
The Official Statement relating to the Bonds contains a discussion of the effect of the Internal
Revenue Code of 1986, as amended, on the exclusion from gross income of interest on the Bonds and a
discussion of the opinion of Hunton & Williams insofar as it concerns such exclusion.
Continuing Disclosure
To assist the successful bidder in complying with the Rule, the City has agreed, pursuant to the
Continuing Disclosure Agreement, to provide certain annual financial information and operating data and
notices of the occurrence of certain events, if material. A description of this undertaking is set forth in the
Preliminary Official Statement for the Bonds and will also be set forth in the final Official Statement for the
Bonds (See Appendix G of the Preliminary Official Statement dated July __, 2000).
Change of Date and Time for Receipt of Bids
The City expects to take bids on the Bonds on July 25, 2000. However, the City reserves the right
to postpone the date and time established for the receipt of bids. Any such postponement will be
announced by Thomson Municipal News, or any other such service. If the receipt of bids is postponed,
any alternative date for receipt of bids will be announced via Thomson Municipal News, or any other such
service, at least three business days prior to such alternative sale date. Any bidder must submit a bid for
the purchase of the Bonds on such alternative sale date in conformity with the provisions of this Official
Notice of Sale, except for any changes announced via Thomson Municipal News, or any other such
service, as described therein.
Additional Information
For further information relating to the Bonds and the City, reference is made to the City's
Preliminary Official Statement. The City has deemed the Preliminary Official Statement to be final as of its
date within the meaning of the Rule, except for the omission of certain pricing and other information
permitted to be omitted pursuant to the Rule. The Official Bid Form and the Preliminary Official Statement
may be obtained from the City's Financial Advisors, Government Finance Associates, Inc., 63 Wall Street,
16th Floor, New York, NY 10005 {telephone 212-635-5900) and Government Finance Group, a division of
ARD Incorporated, 1601 N. Kent Street, Suite 800, Arlington, VA 22209 (telephone 703-807-5700).
CITY OF VIRGINIA BEACH, VIRGINIA
By:
James K. Spore
City Manager
City of Virginia Beach, Virginia
Dated: July __, 2000
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