It may be the ultimate “my eyes glaze over” topic.
If you want to clear a room quickly, start by asking: “How about that Triple A bond rating for the county government?”
Everyday people — as opposed to policy wonks — will start checking out mentally and perhaps physically before you finish the sentence.
But stick with us for a minute now. This really is important.
Frederick County Executive Jan Gardner this week announced that the county had secured the lowest interest rate on its bond debt in its history — just 2.16 percent.
That, Frederick County taxpayers, is great news.
The three national financial rating agencies in August renewed the county’s gilt-edged bond rating — AAA, the highest available — after visiting the county.
“We can be proud that Frederick County has received this historic low interest rate,” Gardner said in a news release. “The savings give us money to build another fire station or branch library or to improve a road.
“This low interest rate is a reflection of the market’s recognition that Frederick County is well managed, fiscally conservative in our budgeting, and a great place to do business. The New York rating agencies spoke of our excellent management and expressed their confidence in us.”
An administration spokesman said that in the past, county officials have visited the rating agencies in New York. But this year they invited the agencies to come to Frederick County to take a look for themselves. Obviously, they were pleased with what they saw.
The county sells bonds to private investors to raise money for construction projects. The investors interested in purchasing the bonds bid on the rate they are willing to pay, and they look to the rating agencies for reassurance that the local government will be able to repay the money.
At the bond sale earlier this month, the county sold $106.2 million of new, tax-exempt bonds and $30 million in taxable bonds to refinance some earlier sales.
Eight bids were received for tax-exempt bonds. The investment firm of Raymond James and Associates was the lowest bidder, offering the 2.16 percent interest rate. Raymond James was also the lowest of eight bidders for refinancing the taxable bonds, with an interest rate of 2.29 percent.
County officials noted that the AAA rating was great for taxpayers in several ways.
- “We were charged a lower interest rate on new debt.
- “We refinanced old debt at a lower rate, saving about $2 million.
- “We borrowed less money, thanks to a $12 million premium payment we received from the purchaser of our new bonds.
- “And, by borrowing less, we will pay less in interest over the life of the bonds, which saves even more money.”
They said the $12 million premium payment alone is enough money to pay for a new library and a new fire station. The most recent such projects were the Myersville Library, which opened in August and was budgeted at $4.1million, and the Middletown fire station, which opened in October 2018 and cost $7.3 million.
Gardner and her administration have been working for years to gain the trust of all three rating agencies, finally securing the third approval in 2016. She deserves praise for her work.
Bond ratings may be boring, but saving county taxpayers more than $14 million is a significant achievement.