WASHINGTON — Baltimore County on Tuesday expects to competitively sell $371 million of general obligation bonds plus $20 million of qualified school construction bonds.
The transaction, which represents the county’s annual new-money offering to the muni market, comes as the county’s residents next week will vote on a $284.9 million bond referendum, its largest to date, according to the county.
In the transaction Tuesday, underwriters will be able to bid on the bonds as tax-exempt or taxable Build America Bonds. About $124 million of the issue will be metropolitan district bonds that will mature between 2012 and 2040.
The other $247 million will be consolidated public improvement bonds that will mature in two to 20 years. The county’s six-year capital improvement program, beginning in fiscal 2011, will cost about $2 billion, and the county expects to finance 94% of the cost with bonds.
The $20 million of QSCBs will mature in 2029. However, the school projects to be funded by the bonds have not yet been determined. The amount represents Baltimore County’s total QSCB allocation for 2010, which was authorized by the American Recovery and Reinvestment Act of 2009 and allocated by the Internal Revenue Service. The county’s allocation was separate from the allocations for Maryland and Baltimore.
The bonds are rated triple-A by Moody’s Investors Service, Standard & Poor’s, and Fitch Ratings. McKennon Shelton & Henn LLP is bond counsel. Public Resources Advisory Group is financial adviser.
The county’s metropolitan district bonds will finance water and sewer infrastructure projects. These bonds do not need voter approval. The consolidated public improvement bonds will fund a number of projects approved during the past six years, as well as some approved as far back as 1986. Many of these projects were delayed amid the recession, according to Moody’s.
The county’s public improvement projects are approved every two years by referendum, said Robert Burros, the county’s debt and investment administrator.
About 37% of the $284.9 million of bonds voters will decide on next Tuesday will be for school projects. Voters approved $255 million of bonds in 2008. The last bond referendum that failed in Baltimore was in 1990, he said.
The city of Baltimore, which is surrounded by Baltimore County, is a distinct municipality and issues its debt separately. City voters next Tuesday will vote on $100 million of bonds.
Baltimore received an allocation for $53.5 million of QSCBs for its public school system in 2010. These bonds have not been issued yet. About $7.3 million of the city’s 2009 allocation of QSCBs were re-allocated to the state after the city was prevented from issuing the bonds because it ran up against the state’s debt cap.
But the Maryland Board of Public Works voted on Oct. 6 to re-allocate the $7.3 million of QSCBs back to Baltimore after the state General Assembly earlier this year exempted the city’s public school system’s QSCBs from the debt cap.
Baltimore County’s fiscal 2011 budget is about 4.4% below the fiscal 2010 amount. The budget estimates that income tax revenues will increase 2.7% for the year. The county’s fiscal 2010 income tax revenues were about 19.8%, or $102 million, below what was estimated for the year.
Moody’s noted that a bulk of the revenue variance, about $66 million, was due to a income tax payment to the state that was overpaid and has been refunded.
Economically, Baltimore County has managed the recession well. Its August unemployment rate was 8.2%, above the 7% state unemployment rate but below the 9.3% national average.
The county could gain up to 3,900 new jobs as military positions are reassigned to bases in neighboring counties following the Department of Defense Base Realignment and Closure of 2005, Moody’s said.
