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City to sell bonds to fund capital improvement projects

June 28, 2009|By DAN DEARTH

HAGERSTOWN -- The City of Hagerstown will issue and sell almost $18 million worth of municipal bonds to help pay for 60 capital improvement projects.

On Tuesday, the Hagerstown City Council voted 4-0 to give City Finance Director Alfred Martin permission to issue and sell the bonds.

Councilman Lewis C. Metzner was absent.

Martin said Wednesday that the sale will occur in mid- or late July. If everything goes as planned, the city should see proceeds by mid-August, he said.

The bonds will be sold in $5,000 denominations to a financial entity, such as a bank or an investment firm, during a competitive bidding process to get the best interest rate, Martin said. The buyer then will receive principal and interest from the city over the next 20 years.

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Martin said that although the interest rate hasn't been determined, the city would prefer it to be 4 percent or lower.

He said that if necessary, city officials will have the option to increase taxes and utility rates to ensure that the city settles its debt.

"We will do what's necessary," Martin said. "The people who buy our debt -- as in any transaction -- want to be paid back."

The city last issued public bonds in December 2006, Martin said. City officials typically decide whether to issue bonds depending on the number of capital improvement projects that need to be financed.

Martin said the bonds being sold next month will pay for capital improvement projects from fiscal years 2008-10.

Some of those projects include the widening of Eastern Boulevard and the reconstruction of Jonathan Street, according to city documents.

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