July 10-16, 2002
A lawsuit filed by a Republican activist last month has thwarted the county's effort to refinance the County Government Center and a second county building.
"The voters said they didn't want it [the government building], but they went ahead with it anyway," said John Grigsby of Hillsboro. Grigsby referred to the five-story office building the county had built in 1995 with county departments and services moving in a year later. The county failed to obtain a $35.5 million bond referendum in 1993 and instead sought to finance construction through issuing lease-revenue bonds in 1994.
The Board of the Supervisors at the time, including eight Republicans and one independent, asked the contractor to construct the building and lease it back to the county for 20 years after which the county would purchase it for $1. The 1994 bonds, which were used to finance the building's construction and the purchase and renovation of the Shenandoah Building, had an interest rate of 7.1 percent at the time. Both buildings are in Leesburg.
"Because his suit existed we were not able to go to settlement. It's a tremendous black mark on the county to back out of a settlement, even if [the lawsuit] is frivolous," said James "Jim" Burton (I-Mercer).
The lawsuit could jeopardize or increase the interest rating on the bonds, said Chairman Scott York (R-At Large).
THE COUNTY recently negotiated a deal to refinance $23.5 in lease-revenue bonds at a lower interest rate, potentially saving the county $2.21 million. The county obtained a 4.51 percent interest rate on the bonds, which would have been issued through the county's Industrial Development Authority with the deal closing on July 2.
Fairfax attorney Gilbert Davis, who represents Grigsby, filed a lawsuit in the county's circuit court on June 25, stopping the negotiations.
Grigsby alleges in the lawsuit that a nonprofit corporation set up to construct the County Government Center and lease it back to the county owes $6.5 million in taxes to the state, since Gilcorp, the name of the corporation, is not exempt from paying state taxes.
The lawsuit aims to "force" Gilcorp to pay the taxes, Grigsby said. "We can't find out who is benefiting from this," he said. "There are people who hold the bonds. We don't know who they are because Gilcorp is a private corporation. If it was a county [agency], we could demand the information. Who are the people who get paid to hold the bonds?"
THE BOARD of Supervisors voted July 1 to retain outside counsel in the lawsuit. Supervisor Eugene Delgaudio (R-Sterling) abstained himself for personal reasons, saying Grigsby and Davis are his friends.
"I think we are going to find he has no valid ground," said Supervisor Chuck Harris (D-Broad Run). "It's a terrible waste of taxpayers' money."
York agreed. "His lawsuit is a frivolous lawsuit. I don't think there's any basis to the lawsuit," he said.