Carroll government is hoping to take advantage of lower interest rates to save nearly $500,000 during its annual bond sale.

Several members of the Carroll County Board of Commissioners, as well as county finance staff members, are scheduled to go New York in an effort to sell bonds totaling about $28 million to lending institutions. The money is to be used to pay for road work and cover outstanding costs on several completed or projects already underway.


In addition, county officials hope to use part of this year's bond issue to pay off previous bonds issued at higher interest rates, a move that could save the county as much as $490,000.

During a meeting Thursday, the county commissioners unanimously voted to authorize the issuance of the bonds, a move that sets the stage for the trip to New York early next week. While in the business and finance center, the commissioners will present the county's financial standings to several credit rating firms in hopes of attracting interest rate bids.

"The bond sale is a public offering inviting bidders to bid on the bonds," county Comptroller Robert Burk wrote in an email. "We generally receive eight to 12 bids from banks and investment firms such as [last year's purchaser] Citigroup ... Wells Fargo, Bank of America Merrill Lynch, J.P. Morgan Securities, and Morgan Stanley."

Of the $28 million expected to be derived from the bond issue, $12 million will be spent to finance new county projects, including road repairs and improvements, as well as on building maintenance undertakings. In addition, part of the $12 million total would be used to continue the county's policy of buying easements on farmland to preclude development and promote agricultural preservation.

The remaining $16 million will be used to pay back various funds in Carroll government to cover the cost of previous project expenditures, Burk said. Often, Carroll's government will pay for a portion, or the entirety, of a project by borrowing money from various county funds. The $16 million will be used to replenish money that originally had been allocated for specific projects but ended up being borrowed to be used for other projects, Burk said.

Examples of projects that will be reimbursed include the Carroll County Public Safety Training Center, the county's digital radio and 911 system that went into service in May as well road paving needs in fiscal years 2014 and 2015.

The commissioners' vote also authorized county staff to pursue the issuance of between $10 million and $13.38 million in bonds to pay off remaining bonds from 2007, Burk said.

Sam Ketterman, senior vice president of Davenport & Company and financial adviser for the county, said if Carroll were to issue these bonds today — based on current interest rates — it would save roughly $490,000 due to better interest rates.

The aggregate of the five bond issues from 2007 is slightly less than $10 million with interest rates varying between 4 and 4.15 percent, Burk said.

"A bond is made up of one-year, two-year and up to 20-year smaller bonds, and each year we pay off a year's worth of bond debt," he said. "We already know what we owe, so if we can borrow the new money and owe a new amount that's less — and right now it looks like it will be $490,000 less — that frees up that money for something else."

But if the market causes interest rates to increase, the resolution passed by the commissioners in no way obligates Carroll to issue these refinancing bonds, Burk said.

"If the market changes and the savings aren't there then that portion won't be issued," he said.

Commissioner Richard Rothschild, R-District 4, asked Burk and Ketterman how much bond debt the county would be eliminating this fiscal year.

Burk said that number fluctuates year-to-year, as does the amount of bonds issued, and this fiscal year Carroll is expected to retire about $29.5 million in debt service — $1.5 million more than it will be issuing in bonds this year.


Last November, the county issued $73.5 million in bonds, with $58.5 million of that used to pay off existing debt accrued between 2004 and 2008, saving about $4.4 million by taking advantage of lower interest rates.