WASHINGTON - For the first time in Virginia, triple-A rated Arlington County plans to sell $70.5 million of bonds today and tomorrow to retail investors on a negotiated basis and any remaining bonds Wednesday to institutional clients on a competitive basis.
Issuers typically offer retail buyers first dibs on new bond offerings before selling to institutional buyers. But it is unusual for an issuer to engage in both negotiated and competitive sales.
Officials in Arlington, the fast-growing suburb of Washington, D.C., have been getting questions from residents about how to buy the county's debt, according to Mark Schwartz, director of management and finance for the county.
Typically, the bonds have been bought by institutional clients, he said, but this time the county sought to access retail buyers. All of the bonds could be sold to retail investors eliminating the need for a competitive pricing, Schwartz said.
"The sale of Arlington bonds to individual buyers will greatly help diversify our investor base," Barbara A. Favola, chairman of the Arlington County Board, said in a statement. "We're pleased to be able to respond to the many requests over the years from Arlingtonians who wish to invest further in our community."
The bond proceeds will be used to finance public school construction and land acquisition. The $49.6 million of Series A public improvement and refunding bonds will mature between one and 20 years. The $20.9 million of Series B refunding bonds will mature between one and five years. Any of the Series A and B bonds not sold during the retail period will be designated Series C and D respectively when offered to institutional clients.
The underwriters for the retail portion are Morgan Stanley, Edward Jones, BB&T Capital Markets, and Wachovia Securities LLC.
McGuireWoods LLP will serve as bond counsel and the underwriters will be represented by Troutman Sanders LLP. Arlington residents may be particularly interested in the tax-exempt bonds given the county's high personal incomes.
Arlington was ranked ninth among U.S. counties with the highest median household incomes in 2006, according to the U.S. Census Bureau. Its per capita personal income was $68,270 in 2007, the highest in the Washington metropolitan area, according to the U.S. Bureau of Economic Analysis. That figure compares to $38,615 per capita in the U.S. in 2007.
The economic recession, now in its 18th month, has missed Arlington so far. Overall property values in the county have increased so far this year. Still, the county's general fund revenues are expected to be $14 million, or 1.5% less than projected, for fiscal 2009 partially due to fewer funds from the state.
The government imposed a hiring freeze and cut discretionary spending to avoid a budget shortfall. The general fund budget is expected to increase 0.5% in fiscal 2010, the smallest budget increase in more than 25 years, according to the county, which had $653 million of debt outstanding as of June 30.
