The Virginia Public Finance Act requires a public hearing be held before local governments take on new debt. David Rose, co-director of public finance for Davenport, said TowneBank’s five-year option gives the town the ability to pay off the loan at any time in whole or in part with no penalty. Provided the council votes to move forward with the borrowing following the public hearing, closing on the new debt would occur May 13.
The proposed borrowing would more than triple the town’s current debt. According to Smithfield’s recently completed fiscal year 2024-25 audit, the town was carrying $2.4 million in debt owed through 2033. Stallings said the addition of $6.7 million would not have “any significant impact” on the town’s legal debt limit, which state law caps at 10% of the town’s total assessed property value, or a hypothetical maximum of $163.2 million.
Stallings said at the end of the five-year interim financing period the town expects to know more about whether an additional loan will be needed depending on how the council decides to use the land.
Council members and town staff have said they have no immediate plans for the land. Councilman Darren Cutler, on April 7 and at a Planning Commission in March, floated several ideas, including leaving it undeveloped, moving forward with the permanent home for the town’s farmers market that would have anchored the Grange’s commercial phase, building a new town hall that could consolidate the town’s currently separate planning and zoning office and town manager’s office, building a new school or selling a portion of the land.
A provision of the sale agreement Stallings and Luter each signed on March 6 gave the town a 45-day window, which elapsed April 20, to back out “for any reason,” including the results of environmental, economic or engineering studies or the inability to obtain sufficient financing. Closing on the land is expected to occur by May 29, at which time 20 parcels comprising the former Grange site would be officially deeded to the town.