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Buena Vista: A City in Trouble

The City of Buena Vista has a loan payment due on January 15, a payment it does not intend to make. What will happen after that is unknown at present but one possible result is that local government officials and the police department will receive eviction notices. A look at a financial crisis in this Blue Ridge city of 7,000 residents that's been in the making for more than a decade. 

       

That's the sound of a drive leaving the first tee at Vista Links Golf Course, something that hasn't happened nearly so many times as was expected when Buena Vista built this course to spur economic growth that never came...

All the projections and all of the forecasts and everything that was made back in the late 1990's did not come true.

That's City Attorney Brian Kearney. The city sold revenue bonds in 2005 to pay for the golf course, insuring the bonds through ACA Financial Guaranty for a premium of 400­thousand dollars. City Hall, police headquarters and the golf course went up as security, exposing them to possible foreclosure. Payments on the bonds came to 660­thousand dollars a year. Vista Links was supposed to attract enough development to cover that. It didn't. Kearney says the now city can't handle the 10­million dollar debt and wants to negotiate.

The city would like to meet with ACA and work out an arrangement that makes sense for both parties so that this can be resolved and put behind the city. 

Buena Vista hopes to pay ACA what the golf course and the two buildings are worth and call it a day.

And we would look at trying to be reasonable with ACA and pay them the fair value of that real estate that they have as security in the city. And that's all they have.

That value would be far less than what ACA would have to pay out to bond holders. Kearney understands the company would rather not lose money but...

An insurance carrier takes risks. That's that's what they get paid premiums for. They may very well lose some funds on this but that's part of insurance. We're asking that the insurance company follow through with the policy.

ACA declined to be interviewed but said in an email all its options remain open, including foreclosure. Those options are limited. Under the terms of a revenue bond the company cannot recover from Buena Vista's general funds. The city is betting that ACA would rather cut its losses than foreclose and become a landlord in Buena Vista.

Fred Echols is a producer/reporter for Radio IQ.