Kevin Spradlin
Cumberland Times-News
August 29, 2008 11:32 pm
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CUMBERLAND — This week’s sale of a $4.6 million public improvement bond could save Allegany County taxpayers more than $600,000 over the next 10 years.
Director of Finance Jerry Frantz told the county commissioners at Thursday’s public meeting that BB&T, a first-time bid winner with the county, purchased the bond, sold through private placement instead of a competitive open market sale.
Frantz recommended the commissioners accept the 10-year bond at 4.36 percent interest, with a projected savings of $655,429. The commissioners approved the recommendation.
“The 10-year term is well within our means of debt affordability,” Frantz said.
A private placement sale benefits the county by avoiding some $50,000 in closing costs, Frantz said. An open market sale incurs the costs of bond insurance, a bond rater fee, an official statement, a paying agent fee, the time for a financial adviser and bond counsel, and printing costs. It’s the county’s fifth private placement.
The projects and sale are both in compliance with the county’s approved five-year capital improvement projects budget and the fiscal 2009 budget adopted in May, Frantz said.
The Allegany College of Maryland library renovation and addition project, at $1.16 million, heads the list of 13 projects. An upgrade to a computer-aided dispatch system at the Allegany County Joint 911 Communications Center is to cost $702,000, while the acquisition and renovation of the Department of Public Safety building at Mexico Farms — home of the recently expanded Bureau of Police — is to cost $700,000.
Other projects include $538,200 to upgrade fire companies’ radio switch system and $327,000 for the geothermal project at the physical education building at ACM. Flood control projects along Braddock Run and Jennings Run each are estimated to cost $300,000.
The county received offers from four bids with 10-year and 15-year terms. Interest rates ranged from 4.36 percent to 5.452 percent for 10 years and from 4.63 percent to 5.24 percent for 15 years. The lowest total interest to be paid under the 15-year bond rate would be $1,786,365 and the 10-year amount being $1,130,936, or a difference of $655,429, Frantz said.
The settlement is scheduled to take place Sept. 16. The issue will be reflected in the upcoming bond resolution to be presented Sept. 11 during the commissioners’ public meeting. Frantz’s complete report is available online at http://gov.allconet.org.
Contact Kevin Spradlin at kspradlin@times-news.com.
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