Bacon's Rebellion

  • Atlantic Park Part 11, Epilogue: Costs, Real Costs and Lessons Learned

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    sherlockj

    Atlantic Park Part 11, Epilogue: Costs, Real Costs and Lessons Learned

    Commentary by James C. Sherlock

    People hate to be strung along. Especially for years.

    Atlantic Park wasn’t a “Nigerian prince” scam. No one told us there were millions of dollars unclaimed in a Western Union account. But it was close. A lot of us who do not follow anything but news accounts of City Council activities fell for it repeatedly.

    One of the reasons it has been so hard for citizens to follow the public costs of Atlantic Park is because of the way the city has presented them. We have been misled unfailingly. Still are.

    Consider the city claims made before a council session in 2019 that took public comment on the pending “final” agreement with the developer.

    In an October/November 2019 report by TV 10 news.

    The city’s cost for the project would be roughly $96 million and would be used to construct the parking garages, entertainment venue and common spaces.

    The city would pay off its debt by using the Tourist Investment Program, which is made up of mostly hotel, restaurant, amusement and cigarette taxes. The lead partner, Virginia Beach-based Venture Reality, would secure financing for the remaining $230 million ($282 million in 2024 dollars).

    Developers and city staff have pitched making the dome property a special district to be governed by a “Community Development Authority.” …

    The authority has power to issue bonds, but since it is an “independent authority,” it wouldn’t impact the city debt. Those bonds would be paid through revenues and additional taxes levied on the project.

    Let’s look:

    • Those cost, cost share and sources of payment claims all turned out to be inaccurate in amounts that cannot on the public side be explained by inflation. No cost of capital was mentioned.
    • On the other side of the ledger, developer costs plummeted.
    • And the debt albatross around the neck of the surf park was not on the table.
    (more…)

  • Atlantic Park Part 10: Virginia Small Business Financing Authority

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    sherlockj

    Atlantic Park Part 10: Virginia Small Business Financing Authority

    by James C. Sherlock

    On September 13, 2022, a regular meeting was held of the board of the Virginia Small Business Financing Authority (VSBFA). That board has sweeping responsibilities only one of which is the bond program.

    From its 501(c)3 Tax-Exempt Bond Program.

    • “There is no maximum limit on the dollar amount of bonds which can be issued on behalf of 501(c)3 organizations.”
    • “Financing can provide longer terms than those typically offered through conventional bank loans: average maturity of the bonds can be up to 120% of the economic life of the assets being financed.”
    • “Qualifying non-profits may be able to finance many of the ancillary costs of the project, including site preparation, capitalized interest during construction and some issuance costs.”

    On the agenda of that meeting was authorization of bonds for North Carolina’s 501(c)(3) P3 Foundation to build a surf park in Virginia Beach.

    Minutes show that presentations were made by a VSBFA staff member and by Mssrs. Anderson (McGuire Woods), Coan (Piper Sandler), Culpepper (Venture Realty Group), Fawcett (Secretary, P3 Foundation) and Smith (Piper Sandler).

    A Q&A session was held, but the minutes give no indication that the questioners were curious about the ability of the borrower to repay the debt. Their bylaws did not require them to inquire on that subject.

    Board members voted unanimously to authorize up to $75 million in bonds with coupons as high as 12%. So they knew of the risk.

    (more…)

  • The Governor Seizes the Power

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    Dick Hall-Sizemore

    by Dick Hall-Sizemore

    The Virginia Department of Education (DOE) has issued its “guidance” on the usage of cell phones in schools.

    While there are lots of definitions and clarifications, the policy boils down to this:

    • Elementary schools—”Cell phones and personal electronic communication devices will not be used by elementary students within the school building or on school grounds.”
    • Middle and high schools—”Students shall not have a cell phone or personal electronic communication device during the bell-to-bell school day. If cell phones or personal electronic communication devices are brought to school, they must be stored and turned off during bell-to-bell school day.

    “Guidance” implies “suggested, but not mandatory.” That is not the case here. The document concludes with this directive: “School divisions are expected to review their existing policies and, if necessary, adopt and implement age-appropriate policies and procedures aligned with the guidance on the bell-to-bell cell phone policies by January 1, 2025. School divisions may adopt policies that are more comprehensive than the guidance.”

    (more…)

  • Dismay at Mr. Jefferson’s University

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    Dick Hall-Sizemore

    by Dick Hall-Sizemore

    The sounds you hear coming from Charlottesville are the sounds of hopes being dashed. Critics of the president of the university, Jim Ryan, and what they claim are its bloated DEI bureaucracy, its high tuition, and its “intellectual monoculture” met reality. At its just-concluded meeting, “the Board buttressed the status quo.”

    Jim Bacon’s complaints about the current Board’s failure to stir things up boil down to this: It’s all Ralph Northam’s fault. This is despite the fact that 14 of the 17 board members are appointees of Glenn Youngkin.

    (more…)

  • Dissecting UVA’s High-Tuition/High-Aid Business Model

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    James A. Bacon

    by James A. Bacon

    Scott and Beth Stephenson

    During the University of Virginia Board of Visitors meeting last week, President Jim Ryan made a big announcement: UVA alumnus Scott Stephenson and his wife Beth were donating $10 million to provide financial aid to students pursuing a degree in Data Science. UVA would match the gift with another $10 million from its Strategic Investment Fund for a total of $20 million.

    “With Stephenson Scholarships nurturing the future leaders in data science at the University, their thoughtful and well-timed investment will enable the University to lead the way in this rapidly developing field of study,” Ryan said.

    Stephenson, a 1979 UVA engineering grad, had a successful business career as founder of SGS Capital and CEO of Verisk Analytics. He has served on the School of Data Science board since 2015. The scholarships will meet 100% of students’ demonstrated financial need and allow them to graduate debt free.

    “In our family, we were fortunate that all three of our children emerged from their undergraduate studies debt-free, and we saw how this permitted them to accelerate into their chosen fields,” Stephenson told the Board. “We’re excited to support other young scholars down the same path.”

    This will sound churlish, but I’m going to say it anyway. Stephenson’s philanthropy is inspiring, his motives are beyond reproach, and his generosity excites our admiration. But his benefaction, like the gifts of many others like him, enable the Ryan administration to perpetuate a high-tuition/high-aid financial model for UVA that (a) is financially unsustainable, (b) is pricing out the middle class, and (c) sustains a large and growing administrative caste.

    (more…)

  • Atlantic Park Part 9: P3 Foundation and the Virginia Beach Development Authority

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    sherlockj

    Atlantic Park Part 9: P3 Foundation and the Virginia Beach Development Authority

    by James C. Sherlock

    Virginia Beach’s Atlantic Park entertainment district is under construction on three city blocks of public land. It is a public-private partnership with a $300 million commitment of Virginia Beach cash and property not counting bond interest.

    An investigation has turned up two major story lines, the first in the actions of the City Council during the seven-year procurement of that massive project and the second in public finance.

    Since municipal bonds represent the core of how we pay for public infrastructure, they are a subject worth considering. Most who think about them at all think of municipal bonds, especially Virginia munis, as safe investments, relatively low yield but guaranteed.

    This is the story of four players who worked together to get tax exempt junk municipal bonds for the surf park.

    • A Virginia Beach developer,
    • a North Carolina 501(c)(3),
    • the Virginia Beach Development Authority (VBDA), and
    • the Virginia Small Business Financing Authority (VSBFA).
    (more…)

  • Virginia Federal COVID Bucks Still Flowing, With $2B More to Go

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    Steve Haner

    By Steve Haner

    From SFAC presentation slide.

    Virginia still has $1.7 billion in federal COVID “free money” to spend and two years in which to spend it, from just one of the multiple grant programs President Joe Biden and Congress authorized and paid for with federal debt.

    That first and largest program is for general government expenditures (State and Local Fiscal Recovery Fund or SLFRF), and Virginia was allocated a total of $4.3 billion. There have been three rounds of this funding and fully $441 million still is not even obligated for some future purpose but needs to be soon.

    More than $3 billion in additional grants were targeted only to elementary and secondary schools, with $270 million of that remaining to be spent. That program, mainly Elementary and Secondary School Emergency Relief Funds or ESSER, had quicker deadlines for use. About $70 million was directed to non-public schools, a pittance in comparison, but at least they were not ignored.

    The update came in two presentations Tuesday (here and here) to the Senate Finance and Appropriations Committee. One member, Senator Barbara Favola, D-Arlington, considered the following advice to the Youngkin Administration so important she repeated it after both presentations: “It is incredibly important that we not leave any of these federal dollars on the table.”

    (more…)

  • UVA’s Board: Stacking the Deck for Another Year

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    James A. Bacon

    by James A. Bacon

    When the University of Virginia Board of Visitors convened last week, 13 of 17 voting board members were selected by Governor Glenn Youngkin, marking the first time in his two-and-a-half-year tenure that his appointees comprised a majority. But to all outward appearances, it was business as usual in Charlottesville. None of the issues raised by critics, including some board members, appeared on the two-day docket.

    As always, the tightly scripted board meeting addressed only issues that the Ryan administration wanted to address and left no time for board members to ask probing questions.

    Every year, President Jim Ryan updates his list of priorities. He did so again Friday, and they are essentially unchanged. Recruit and retain top-flight faculty. Improve the student experience. Bring in more sponsored research. Engage with stakeholders. Promote free speech. The main new wrinkle this year is to build on the work of the religious diversity task force.

    There’s nothing wrong with that list. But it’s incomplete. Here are priorities that don’t make the cut: Chop administrative overhead. Lower tuition & fees. Roll back the Diversity, Equity & Inclusion bureaucracy. Reverse the relentless drift toward intellectual monoculture. Promote transparency into finances and decision making.

    (more…)

  • Atlantic Park Part 8: Surf Park Muni Bonds Add to Project Risk

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    sherlockj

    Atlantic Park Part 8: Surf Park Muni Bonds Add to Project Risk

    By James C. Sherlock

    The surf park jumps right out at you. It is meant to.

    It will be the first surf pool in the mid-Atlantic region. The other components of Virginia Beach’s Atlantic Park will depend upon it to create buzz and draw visitors.

    A developer group led by Venture Realty Group initially planned to own it. In September of 2020, prior to formal design plans, the team met a deadline to prove it could secure the necessary financing.

    Costs rose with inflation in 2021 and 2022. Delivery dates were rescheduled with WaveGarden, the Spanish manufacturer of the wave-pool machinery, pushing production of the Virginia Beach equipment behind orders from other customers. Councilman Moss warned the council in public session that the project needed to be reconsidered in the face of inflation in commercial construction costs.

    By 2022, those inflated construction costs were known. Revenues and operations and maintenance costs were estimates. The Virginia Beach surf park is small by industry standards, and thus capacity constrained. Very high utilization rates will be required to pay the bills.

    The developer team missed a financing deadline because of the surf park. they gave the rights to a North Carolina 501(c)(3) to access tax exempt municipal bonds. They formed Venture Waves Surf LLC on September 13, 2022 to deal with the problem before government bond authorities.

    By the time the issue was officially referred to Virginia Beach, Venture Realty’s Mike Culpepper, lead developer spokesperson, already had testified before the Virginia Small Business Financing Authority in a successful attempt to get that public charity state municipal revenue bond financing.

    Mr. Culpepper later told the press that access to tax exempt bonds had been the strategy “for more than two years”.

    After the bond issue was unanimously approved by the state Authority’s board, the Virginia Beach Development Authority passed a resolution that gave city authorization to a state decision that had already been made. It helped satisfy SEC and IRS requirements for the bonds. Mr. Culpepper was there to answer questions.

    (more…)

  • They’re Canceling Little Old Ladies Now

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    James A. Bacon

    by Audrey Carpenter

    A Town Hall meeting will be held Sept. 17 at Smart’s Mill Middle School, 850 North King Street in Leesburg, for the public to weigh in on the issue of renaming Francis Hazel Reid Elementary School. Email comments are also being accepted at: [email protected].

    This Town Hall will be the first of several after the Loudoun County School Board identified nine schools within the district that it says have names associated with slavery and racism.

    The Loudoun County Board of Supervisors has been undergoing an expansive renaming effort in the last few years, most recently renaming Leesburg’s old Loudoun County Courthouse last Monday and also renaming a number of roads across the county that it considered to be a stain on the county.

    (more…)

  • Is Virginia Ready for John Reid?

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    James A. Bacon

    by James A. Bacon

    John Reid, the morning talk show host of Richmond’s WRVA radio, wants to run for Lieutenant Governor of Virginia. He is an outspoken conservative on most issues that animate GOP activists — jobs, taxes, regulations, crime, discipline in schools, and wokeness in the universities. There’s just one catch for a guy seeking the Republican nomination. He’s gay.

    Some voters may be turned off by his personal background, but Reid is optimistic that most won’t. Constant Democratic accusations of homophobia to the contrary, Republicans have undergone a sea-change in attitudes toward gays.

    “It’s very clear from my years on the show where I stand politically,” Reid says. “I’m fiscally conservative and socially responsible. And I’m willing to say what needs to be said.”

    (more…)

  • Tackling Sexual Violence with Woke Bureaucracy

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    James A. Bacon

    by James A. Bacon

    Every perceived problem in America today seems to require a bureaucratic response — either a new government program or, in the case of higher education, a new university program. Accordingly, Virginia Tech is addressing the challenge of sexual violence by creating a Sexual Violence Prevention and Education Office.

    Virginia Tech seeks to foster a campus culture “free from harassment, discrimination, and sexual violence,” states the Sexual Violence Prevention Initiative Strategic Plan Outline 2024. That’s a worthy ideal. I expect that 99.9% of the Virginia Tech community supports it.

    But the bureaucratic organism that is the Virginia Tech administration gravitates, as surely as Newton’s apple to the ground, toward a bureaucratic solution that entails more plans, more rules, more communication, more education, and more onanistic, self-gratifying activity that will accomplish nothing worthwhile.

    (more…)

  • A Trainwreck of Misinformation

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    James A. Bacon

    by Saundra Davis

    The recent Fairfax County Public Schools (FCPS) School Board work session on the new Virginia accountability system could easily become a case study on misinformation in educational policy. FCPS staff and board members were startlingly misinformed on the difference between state accreditation vs. federal accountability, and FCPS staff could not accurately inform board members of benchmarks to other states.

    The discussion was primarily dominated by inaccuracies originating from a blog by 4 Public Education, a Virginia teachers union-supported group run by an FCPS activist who ironically claims expertise in “fake grassroots” and “dark money.” FCPS staff further exacerbated the situation through ignorance and deliberate spin, fueling partisan tensions rather than providing the board and the public with clear, factual information.

    The misinformation also has ties to Anne Holton, a Democratic member of the Virginia Board of Education (VBOE) and the spouse of Senator Tim Kaine. Holton, an advisor to 4 Public Education, could have intervened to correct the blog post. Her efforts to undermine the new accountability system appear driven by a desire to protect her legacy—she was on the 2017 VBOE that approved the current flawed system—regardless of how foolish it makes the FCPS School Board and other Democratic politicians look.

    (more…)

  • Atlantic Park Part 7: The Quest for Surf Park Financing

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    sherlockj

    Atlantic Park Part 7: The Quest for Surf Park Financing

    Commentary by James C. Sherlock

    A last-minute search for surf park financing delayed project construction for a year. Neither bankers nor the City of Virginia Beach wanted any part of it. The developer missed a funding deadline. The city forgave it, but the pressure was on.

    So, with city backing:

    • The developers, organized in this case as Venture Waves Surf LLC, contacted 501(c)(3) P3 Foundation in North Carolina, which is in the business of participating in public private partnerships. It accepted the rights to the venue.
    • P3 and Venture Waves Surf contacted the Virginia Small Business Financing Authority, which is by policy a soft touch for non-profits. It agreed to issue tax exempt junk bonds. The yields were necessarily so high to attract buyers that the P&I debt load for that small surf park is $207 million. There is subsequently a significant risk recognized by the bond press (Bloomberg) that surf park operations and maintenance costs and debt payments together may prove more money than it will generate. They called it a speculative bet. If that happens, the surf park will be in default and put the whole project in financial jeopardy.
    • P3 Foundation established a Virginia 501(c)(3) subsidiary, P3 VB Holdings, to qualify as the borrower. It has no employees.
    • The subsidiary paid the developer to build the venue and will pay them to manage and operate it.

    The journey was so complex and wandering that it needs a graphic to explain it, so the author created one.

    Those players and their interactions will be discussed in following parts. Their participation both revealed and generated issues and actions that were not in the public interest.

    It never needed to happen.

    (more…)

  • UVA Med Faculty Have Been Seeking Redress Since 2021

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    James A. Bacon

    by James A. Bacon

    A group of University of Virginia medical-school faculty members aired their allegations against the University’s medical leadership only after two-and-a-half years of trying fruitlessly to work within the system, according to a new letter distributed by the 128 faculty members.

    In a letter addressed to the Board of Visitors Thursday, the anonymous group added details to complaints contained in a Sept. 5 letter calling for the Board to replace Health System CEO Craig Kent and School of Medicine Dean Melina Kibbe.

    The latest missive, published on the Parrhesiastes Substack account, responded to a Sept. 7 communication by UVA President Jim Ryan to the medical school faculty backing Kent and Kibbe. “Even though it is difficult to investigate generalized and anonymous claims of wrongdoing, without specific details or names to follow up with,” Ryan wrote, “we will do our best to investigate.”

    Writing to “dispel the notion there is no evidence to support the serious allegations,” the dissidents provided a “partial” timeline of meetings and communications between faculty and UVA senior leaders dating back to 2021.

    The distribution of the letter coincided with the UVA Board of Visitors session Thursday on Health System/Medical School matters. The Board took no action relating to the letter. It did meet in an extended closed session, but it is not known if the Parrhesiastes allegations were discussed.

    (more…)

Now Available

Book cover of 'Dust Mites: A Second American Revolution' by James A. Bacon, featuring astronauts planting a flag with a blue and white emblem on a lunar landscape, with Earth visible in the background.
For sale on Amazon.com

The year: 2075. The American colonies on the Moon are getting restless under Washington’s tyrannical rule….

This second edition of “Dust Mites” has a snazzy new cover, includes helpful lunar maps, and is 5,000 words tighter than the original. The sequel, “Trogs,” is scheduled for publication this summer.

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Bacon’s Rebellion is Virginia’s leading politically non-aligned portal for news, opinions and analysis about state, regional and local public policy. Read more about us here.

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