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Washington Co. secures 3.50 percent interest rate for sale of bonds

Commissioners President Terry Baker voted against the bond issue because it included funds for a road through the Mount Aetna Farms property

May 10, 2011|By HEATHER KEELS | heather.keels@herald-mail.com
  • Baker
Baker

Taking advantage of its AA bond rating, Washington County secured a roughly 3.50 percent interest rate Tuesday for the sale of 2011 public improvement bonds.

The Board of County Commissioners voted 4-1 to approve the sale of $14.17 million in Maryland Public Improvement Bonds to Janney Montgomery Scott Inc., which offered the lowest interest rate of nine bidders.

The bonds are to be used for county projects in fiscal 2011.  

Commissioners President Terry Baker voted against the bond issue because it included funds for a road through the Mount Aetna Farms property, a controversial project Baker has been asking the commissioners to put on hold.

The vote came after the county's financial adviser, Lester B. Guthorn, opened bids for the bonds using an electronic bidding system.

Guthorn said the large number of bidders — "probably close to the largest number of bidders we have ever seen" — and the small margin between bids were a reflection of the county's strong financial position.

The other eight bids ranged from about 3.52 percent from the second-lowest bidder, USB Financial Services Inc., to about 3.62 percent from BB&T.

Washington County is rated AA by the credit-rating agencies Moody's, Standard & Poor's and Fitch Ratings, Guthorn said. The stronger a government's bond rating, the less it costs taxpayers in interest to borrow money for public projects.

The agencies praised the county for its practices such as multiyear forecasting, faster-than-average debt amortization and a low overall debt burden, County Administrator Gregory B. Murray said.

"The only thing, at the moment, that keeps the bond rating somewhat down from a higher rating is the economy, which frankly is the income structure of the incomes of your citizens," Guthorn said. "You can't control that."

Murray said while "people see a lot of zeros" on budgetary figures such as the county debt, those figures are conservative in the larger perspective of county assets.

He illustrated his point with an analogy comparing the county's finances with the size of a household budget.

"If you have a $30,000 car, with the amount of assets the county has and our debt burden, we have $3,000 left (to pay) on that $30,000 car," Murray said. "And that includes maintenance expenses."

Of the $14.17 million in 2011 bonds, about $10.9 million will be tax-supported, while the other $3.2 million will be for landfill projects and self-supporting, according to a report by Debra S. Murray, county budget and finance director.

The list of projects to be funded through tax-supported bonds includes about $1.2 million toward a road project to connect Yale Drive to a new back entrance to Hagerstown Community College.

That project has not been approved by the commissioners, but has been proposed by the county's public works director as a substitution for a smaller-scale project approved last spring that would have connected a different street, Varsity Lane, to the HCC back entrance point.

Baker has argued against building the Yale Drive connection solely with taxpayer funds, saying it will greatly increase the value of the undeveloped "Mount Aetna Farms" property that a local organization is buying for a technology park.

The developer should share responsibility for building roads through that land, Baker has argued.

A county work session on that topic has been scheduled for next Tuesday, Gregory Murray said.

Baker also suggested the county should not borrow money for Southern Boulevard now because of delays in that project. About $2 million of the 2011 bonds are listed as going toward the first phase of Southern Boulevard, a road project intended to create a bypass around Funkstown.

A public hearing on the 2012 county budget and capital improvement plan is scheduled for Thursday at 7 p.m. at Hager Hall.

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How They Voted

Terry Baker: No

John F. Barr: Yes

Ruth Anne Callaham: Yes

Jeffrey A. Cline: Yes

William B. McKinley: Yes

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