Buena Vista votes to default on $10 million bond

Buena Vista’s city council also voted to seek a settlement with the insurance company that guaranteed the bond.

Posted: Monday, December 8, 2014 7:53 pm
By Luanne Rife luanne.rife@roanoke.com 981-3209

BUENA VISTA — The city council on Monday agreed to stop debt payments on a $10 million bond that was issued in 2005 to finance a municipal golf course.

The council also agreed to seek a settlement with the insurance company that guaranteed bondholders would not lose their investment if Buena Vista ever defaulted. To obtain that insurance a decade ago, the city paid a $400,000 premium and pledged Vista Links, the municipal building and the police station as collateral. The city plans to offer a lump sum that is substantially less than the $10 million it owes to walk away from the deal and keep its real estate.

The insurance company could accept a settlement, or it could foreclose on city hall and possibly force the city into bankruptcy court.

“The bottom line is we made a bad investment, an almost $10 million one, but we weren’t alone,” Mayor Frankie Hogan said, noting that other municipalities bought into the golf boom only to see it bust. ... None, though, has defaulted on a bond.