June 5, 2012 —
At their meeting on May 31, the Wayne County Commissioners took advantage of two things: a recent upgrade in the county’s Standard and Poor’s rating to A minus and a record-low interest rate.
Based on these two advantages, the commissioners approved a sale of county municipal bonds worth $7.2 million that will be used to pay for capital improvements. The funds will help pay for the county’s recently constructed $13.6 million county prison in Indian Orchard and the construction of the county’s $2.5 million emergency center in Beach Lake.
“Bond issues like this one cannot be put into the general fund in order to pay for daily operations but only for capital improvements,” said commissioner Wendell Kay.
The previous S&P bond rating was BBB plus, one step below A minus, according to Leslie L. Bear, managing director of the Baird Company, the county’s bond counsel. “This is an unusual circumstance since most counties don’t get high ratings like school systems do,” Bear said. “Counties don’t usually get grants like schools do, so they have to work with their tax base only.”
The county government has been pursuing solid financial goals and practices over recent years, living within its means, he said. “That is the reason why S&P has raised your rating one degree,” he said. “You are to be commended and congratulated for receiving this unusual high rating.”
The interest begins at the low rate of 0.65 percent at the beginning of the terms of the sale. Each year, it will, in all probability, rise to a rate of 3.4 percent over 16 years.
“What is most significant and to be emphasized is that the county will save $460,176 under this arrangement,” said Lee Krause, county solicitor who was present at the meeting.
Another important feature that motivates people to purchase municipal bonds is that they are tax-exempt, Kay said.
The bonds will be dated as of July 2, 2012 and will mature, bear interest and be subject to redemption according to a schedule. The bonds, slated to mature on and after November 15, 2018, are subject to optional redemption prior to maturity, Bear said.
The bonds shall be issued as fully registered bonds in denominations of $5,000 and interest on the bonds shall be payable semiannually on May 15 and November 15, Bear said. The underwriter of the bond issue is the Robert W. Baird & Co. of Exton, PA.