Cumberland Times-News

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December 15, 2012

County officials move forward with plan to reduce debt

Commissioners introduce bill to finance portion of new school

CUMBERLAND  — Public hearings on refinancing the county’s debt held last week drew no formal comments from citizens, and commissioners may vote later this week to move the refinancing bond bills forward.

In addition, commissioners voted 2 to 1 to introduce a code home rule bill to finance the county’s $9.2 million portion of the new Allegany High School. Commissioner Creade Brodie Jr. voted against the move.

Two portions of debt will be refinanced, said Jason Bennett, the county’s finance director.

The first involves FEMA and other loans, which should result in savings of about $120,000. A much larger general obligation debt will result in “huge savings,” Bennett said, at about $1.2 million.

The interest rates on the larger debts run between 3 percent and 5.75 percent. Bennett’s hope is to get the refinancing at about 2 percent.

“We’re not going to extend the terms ... this does not stretch it out,” Bennett has said.

County officials will have to meet with rating agencies based in New York. The two major agencies are Moody’s and Standard & Poor’s.

The exact amount of the savings is dependent upon interest rates when the bonds are actually put on sale, Bennett said. The hope is that the bonds may go to market in March.

While the financial issues are complex, the idea is simple: the county will issue new bonds at lower interest rates than the higher-rate bonds previously issued.

The county pays less interest on the debt, creating savings and taking a bit of pressure off the county budget.

The move could save $385,000 in 2013 alone.

For Allegany High School, board of education contributions bring the local share of the project to $12.2 million.

The school will be designed to seat 719 students, with some changes in that number possible, county officials said.

Demolition costs for the 500,000 square feet of buildings at the former Braddock Hospital site are estimated at about $2 million. The board is also putting up an additional $1 million for the demolition, which is expected to start next summer.

The current Allegany High School was built in 1925.

The board of education decided to build a new high school after spending more than two years studying how best to reconfigure its secondary schools.

Preliminary estimates show the county would pay a total of about $13 million toward the estimated $34 million project.

In other decisions, commissioners appointed Sarah Bush to the Adult Guardianship Review Board. Her term expires June 30, 2014.

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