CHICAGO — The Cuyahoga County Council this week approved a measure that will allow Ohio’s most populous county to launch a bond-financed program to finance economic development projects.
The county plans to enter the market as soon as December with the first of what will likely be two short-term, $25 million note deals to provide initial financing. County officials expect to return to market later in 2012 with a $100 million borrowing. The first note deal may be privately placed, officials said.
Cuyahoga plans to issue either a request for proposals or a request for qualifications within the next few months to assemble a finance team, said county fiscal officer Wade Steen.
The debt would be payable from a portion of Cuyahoga’s sales tax, which accounts for about half of the general fund. The county has not decided yet whether the debt would feature additional pledges, Steen said.
County Executive Ed FitzGerald made the so-called Fourth Frontier program part of his campaign platform, and touted it during his first state of the county address in April. “This will be the largest investment in this county’s history in emerging industries,” FitzGerald said at the time.
He named it Fourth Frontier after the state’s popular Third Frontier program, in which the state issues general obligation bonds to finance Ohio-based technology companies.
FitzGerald’s plan would set aside 10% of the county’s sale tax revenue to finance the new economic development fund as well as three other initiatives.
The current budget estimates the county will receive $220 million in sales tax revenue. Of that, $8 million would be used to pay debt service on the upcoming bond issue.
Local tax revenue is projected to enjoy a boost starting next year when a new casino opens in Cleveland, the county’s seat and largest city.
An infrequent borrower, the double-A rated county’s plan to issue $100 million would probably mark its largest borrowing next year. Steen said the county hopes to win an upgrade to a coveted triple-A rating ahead of the sale.
“That’s one of the goals the county has and we believe we can achieve this,” said Steen, who joined the county five months ago after serving as the treasurer of triple-A rated Franklin County. “I think we can get a triple-A with all the things that we have going on.”
Cuyahoga County’s unemployment rate was 9.2% in fiscal 2010 and like many governments has struggled with falling revenue over the last few years. Sales tax collections have lately started to rebound, Steen said. “Over the last few quarters, it’s seen some nice increases,” he said.
FitzGerald is the county’s first executive, winning the office last year after voters in 2009 approved a measure to change to a council and executive form of government after years of corruption accusations dogged the previous three-member commission.
