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Sticky Article The Value of Regional Cooperation
The Value of Regional Cooperation
Collaboration is at the core of VRA’s mission. Since 1984, VRA’s team of finance professionals has been supporting and promoting partnerships and regional collaborations between local governments aimed at meeting the critical infrastructure needs of Virginia residents and businesses.

Many of the projects financed through VRA provide benefits that extend beyond jurisdictional boundaries. When VRA supports a project to update or enhance infrastructure that safely treats wastewater or provides reliable drinking water, the  service provided by the improvement may extend to residents in adjoining localities or across a broader region. When one thinks about local recreational assets – parks and other facilities – these resources often draw residents from across a wider geographic region. Transportation projects like roads and public transit are also improvements that typically serve multiple jurisdictions. Sustainability projects that improve energy efficiency and generate other environmental gains have benefits that do not recognize physical boundaries because they benefit the broader community. 

 

Regional authorities and districts often borrow for infrastructure projects that benefit member jurisdictions. These projects often represent significant cost savings when compared to cost incurred by a single locality that builds and operates an infrastructure project independently. Such projects, typically of greater than local significance, benefit from the cooperation and shared governance created through regionalism.

 

Supporting regionalism is not just a goal of VRA, it is encouraged by the General Assembly. VRA is the administrator of both the (i) Virginia Water Facilities Revolving Fund (Clean Water) in partnership with the Department of Environmental Quality (DEQ) and the (ii) Virginia Water Supply Revolving Fund (Drinking Water) in partnership with the Department of Health (Health). In both Clean Water and Drinking Water, the General Assembly has expressed that “preference [should be given] to loans and grants for projects that will . . . serve two or more local governments to encourage regional cooperation …” [Sections 62.1-230.1 and 62.1-239.1 of the Code of Virginia, as amended].

 

This guidance from the General Assembly has been important to VRA, DEQ, and Health in encouraging a very small water or wastewater system or both into a merger or other cooperative agreement into an arrangement with a larger system. The cost of adequate water and wastewater infrastructure can become more than a very small system can support as debt financing may not be feasible and grant funding is limited. VRA and its state agency partners have worked with several small town systems in recent years to merge or incorporate themselves into a larger public service authority.

 

There are other areas in which the Legislature encourages regional cooperation. In approaching the credit work on a regional initiative, VRA looks not just at the “strict financials” but also whether the regional group is prepared over the long term to work together. From a purely financial standpoint, VRA will typically ask that individual localities support the debt of a regional group with a moral obligation or even a general obligation pledge. To participate in VRA’s Virginia Pooled Financing Program (VPFP) this level of support from individual local governments to the regional entity is key to enhance long-term debt issued in the public bond market.

 

In the last several years VRA has been encouraged to see regional efforts work and assist in bringing long term sustainable infrastructure for localities and their citizens. However, VRA has also witnessed fractures in regional groups and these fractures can result in litigation, credit concerns and questions on how these infrastructure projects can be sustained. Like the regional groups involved, VRA is learning from these situations and will look for regional commitments to include ways to plan for “bumps in the road” such as mediation before litigation, strategic planning to address changing needs of member jurisdictions of regional groups or other methods to ensure that debt incurred will be paid. 

Many of the projects financed through VRA provide benefits that extend beyond jurisdictional boundaries. When VRA supports a project to update or enhance infrastructure that safely treats wastewater or provides reliable drinking water, the  service provided by the improvement may extend to residents in adjoining localities or across a broader region. When one thinks about local recreational assets – parks and other facilities – these resources often draw residents from across a wider geographic region. Transportation projects like roads and public transit are also improvements that typically serve multiple jurisdictions. Sustainability projects that improve energy efficiency and generate other environmental gains have benefits that do not recognize physical boundaries because they benefit the broader community. 

 

Regional authorities and districts often borrow for infrastructure projects that benefit member jurisdictions. These projects often represent significant cost savings when compared to cost incurred by a single locality that builds and operates an infrastructure project independently. Such projects, typically of greater than local significance, benefit from the cooperation and shared governance created through regionalism.

 

Supporting regionalism is not just a goal of VRA, it is encouraged by the General Assembly. VRA is the administrator of both the (i) Virginia Water Facilities Revolving Fund (Clean Water) in partnership with the Department of Environmental Quality (DEQ) and the (ii) Virginia Water Supply Revolving Fund (Drinking Water) in partnership with the Department of Health (Health). In both Clean Water and Drinking Water, the General Assembly has expressed that “preference [should be given] to loans and grants for projects that will . . . serve two or more local governments to encourage regional cooperation …” [Sections 62.1-230.1 and 62.1-239.1 of the Code of Virginia, as amended].

 

This guidance from the General Assembly has been important to VRA, DEQ, and Health in encouraging a very small water or wastewater system or both into a merger or other cooperative agreement into an arrangement with a larger system. The cost of adequate water and wastewater infrastructure can become more than a very small system can support as debt financing may not be feasible and grant funding is limited. VRA and its state agency partners have worked with several small town systems in recent years to merge or incorporate themselves into a larger public service authority.

 

There are other areas in which the Legislature encourages regional cooperation. In approaching the credit work on a regional initiative, VRA looks not just at the “strict financials” but also whether the regional group is prepared over the long term to work together. From a purely financial standpoint, VRA will typically ask that individual localities support the debt of a regional group with a moral obligation or even a general obligation pledge. To participate in VRA’s Virginia Pooled Financing Program (VPFP) this level of support from individual local governments to the regional entity is key to enhance long-term debt issued in the public bond market.

 In the last several years VRA has been encouraged to see regional efforts work and assist in bringing long term sustainable infrastructure for localities and their citizens. However, VRA has also witnessed fractures in regional groups and these fractures can result in litigation, credit concerns and questions on how these infrastructure projects can be sustained. Like the regional groups involved, VRA is learning from these situations and will look for regional commitments to include ways to plan for “bumps in the road” such as mediation before litigation, strategic planning to address changing needs of member jurisdictions of regional groups or other methods to ensure that debt incurred will be paid. 

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