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Harford County raises nearly $120 million through bond sales

Harford County's new high speed, fiber optic system, called H-Man FOR Harford Metro Area Network, which links government buildings, libraries and schools, is one of several ongoing projects being funded by Tuesday's $45 million sale of public improvement bonds.
Harford County's new high speed, fiber optic system, called H-Man FOR Harford Metro Area Network, which links government buildings, libraries and schools, is one of several ongoing projects being funded by Tuesday's $45 million sale of public improvement bonds. (AEGIS FILE PHOTO / Baltimore Sun Media Group)

Harford County raised $45 million in "new money" to fund ongoing capital projects and $74.08 million to refinance a portion of existing debt through bond sales Tuesday.

In a special session Tuesday afternoon, the Harford County Council unanimously approved resolutions to accept the best bids on both bond sales, which were held electronically Tuesday morning.

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Lester Guthorn, financial adviser to the county, told council members the sale was "very successful."

The county obtained an average 2.62 percent interest rate on the $45 million bond, called a consolidated public improvement bond, which will be used to fund ongoing capital projects, such as the replacement of Youth's Benefit Elementary School in Fallston, a 700 MHz regional emergency radio system that is operational in Harford and the public HMAN fiber optic network.

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The issue was sold to Citigroup Global Markets Inc., which offered the lowest interest rate of five bidders. The highest rate offered was 2.69 percent.

"This $45 million is almost entirely for expenses that have already occurred," Treasurer Robert Sandlass said. "The county will be reimbursing itself."

The treasurer noted after the meeting that the county sold $40 million in bonds last year at 3.04 percent interest, meaning the county was able to borrow more capital money this year at a significantly lower rate.

He said the county's ability to maintain its AAA bond rating, which it received from all three major credit rating agencies – Standard & Poor's, Moody's Investors Service and Fitch Ratings – as well as efforts by County Executive Barry Glassman to streamline finances by delaying major capital projects and instituting an early retirement program for employees, helped give Harford the edge in the bond market.

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Sandlass also highlighted the top rating for the County Council members

"Even though revenues are relatively flat [we found] those efficiencies to carve out additional room within the budget," he said.

The county administration also wanted to raise at least $70 million to repay a $120 million bond sold in 2009 to fund capital projects.

Tuesday's sale of refunding bonds through low bidder Bank of America Merrill Lynch raised the $74.08 million at 2.25 percent interest, a much lower rate than what the county obtained when it originally sold the bonds for an average rate of about 4.5 percent, according to the county's annual financial report.

Sandlass said the county will save $5.7 million in debt service costs on the refunding bond through 2029, or about $200,000 to $400,000 each year. He compared the sale to refinancing a home mortgage.

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