Cumberland Times-News

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March 6, 2013

Allegany bond rating could save $250,000

Organization upgrades county to Aa3

CUMBERLAND — An upgrade to Allegany County’s bond rating by the national rating organization Moody’s in advance of an upcoming bond sale could save the county as much as $250,000 on debt refinancing.

“This day and age, when the United States government is facing a downgrade, for Allegany County to get an upgrade shows our strengths,” said Allegany County Commission President Michael McKay on Wednesday.

Moody’s upgraded the county from A1 to Aa3, a move that could save a quarter of a percent on interest rates.

“We have kept the tax rate low and have lowered it, and reduced the size of government,” McKay said.

Those steps have helped the county’s financial position, he said.

“We hope Standard & Poors will do the same,” McKay said.

Moody’s and S&P are the two most prestigious bond-rating companies in the world.

The upgrade is important because the county has bonds ready to go to market.

Commissioners are refinancing part of the county’s debt by issuing bonds at a lower interest rate.

Commissioners approved a resolution to allow the refinancing to go forward Feb. 14.

The move will refinance various bond issues from 2001, 2004 and 2006, said County Finance Director Jason Bennett.

The terms of the bonds will not be extended and bonds that paid for Mountain Ridge High School may actually be paid off earlier than initially planned.

Two portions of debt will be refinanced, Bennett has said.

The first involves Federal Emergency Management Agency and other loans; the rest is a larger general obligation debt. The interest rates on the larger debts run between 3 and 5.75 percent.

A late-October work session included a presentation by Bennett and the county’s bond counsel, outlining some of the potential savings and the process for putting the bonds on the market.

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 upgrade reflected Moody’s assessment of the county’s financial outlook, including a trend of stable and healthy finances; strong financial management practice; growing reserve levels and a manageable debt burden, McKay said.

Last month, McKay, along with County Finance Director Jason Bennett, and County Administrator David Eberly, traveled to New York to make presentations to the two bond- rating firms.

McKay said there’s lots of credit to go around for the upgrade.

“Hats off to our dedicated staff and the previous board of commissioners who helped the county obtain this rating,” McKay said.

Contact Matthew Bieniek at mbieniek@times-news.com.

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