County Comment: County's Bond Rating Upgraded
County's Bond Rating Upgraded
by Norman Bassett, Public Information Officer
Washington County, Maryland
Upgrade of the County's Bond status by a major agency has helped save hundreds of thousands of dollars to taxpayers in interest costs.
In the regular meeting of the Washington County Board of County Commissioners on June 3rd, Budget and Finance Director Debra Murray announced that Standard and Poor's Ratings Services (S&P) had increased its standard long-term rating and underlying rating for Washington County's General Obligation (GO) Bonds to 'AA' from the previous rating of 'AA-'.
In addition, S&P assigned its AA rating to the County's 2008 series of Public Improvement Bonds.
The company's announcement, made on its website on May 29th, could be viewed as a key factor in the County receiving one of the lowest bond interest rates in its history. On June 3rd, bids were opened for $19,950,000 in Washington County, Maryland Public Improvement Bonds of 2008. Low bidder was UBS Securities, LLC at 4.018932%.
The lower rate means savings of about $221,000 per year in interest rates over the 20-year life of the bonds.
In its analysis of the GO bonds, S&P said the upgrade reflects continued improvement in the County's financial position, which includes increased reserve levels and strengthened management practices over the past several years, coupled with improved per-capita market values. S&P also said that the County's role, as a regional employment center, its large tax base that continues to exhibit healthy growth and its low debt burden with manageable future capital needs, were contributors to the ratings upgrade.
S&P cited redevelopment of the former Fort Ritchie site as a mixed-use facility as an indicator of positive economic growth.
Washington County's financial performance and position were called strong, and lauded general fund surpluses posted over the past 9 years, as well as steadily increasing levels of cash reserves.
The County's management team was also cited as strong, emphasizing fiscal policies, multi-year forecasting and ongoing monitoring of revenues and expenditures. The 17% of general fund expenditures maintained in reserve was also seen as a positive economic indicator by S&P.
The company gave the County a Financial Management Assessment (FMA) of "strong", which means practices are strong, well embedded and sustainable.
"The County maintains conservative policies and continues to monitor and adjust them as necessary," S&P said.
S&P also liked County investment policies that provide quarterly updates to the Commissioners.
In regard to debt management, Standard and Poor's applauded the County's use of the five-year Capital Improvement Plan for projecting future capital needs.
"While the County's CIP is large, the debt burden is expected to remain manageable, aided by management's debt-affordability guidelines, a currently low debt profile, and faster-than-average amortization of existing debt," the service said.
S&P, along with Fitch's and Moody's give rankings to bonds issued by public agencies as a guide to investors. A higher rating from one agency often has an effect on other services' ratings.
In the meeting, Commissioners' President John Barr commented that at the most recent bond sale trip to New York, it was suggested that future upgrades would take several years, and that the announcement came as a surprise.
Commissioner Jim Kercheval called the upgrade the best independent, no-strings-attached financial audit the County could receive.