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Howard County refinances $255 million in county bonds, saving $5.6 million in interest payments

Howard County announced Wednesday that more than $255 million in county bonds have been refinanced at a lower interest rate, saving more than $5.6 million in interest payments over the next 20 years.

Earlier this month, Howard County received a AAA bond rating from bond agencies for the 23rd year in a row. However, Wednesday’s announcement comes amid economic uncertainty due to the coronavirus pandemic

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“Though Howard County and other jurisdictions are facing unprecedented financial challenges amid the COVID-19 response, we are continuing to practice sound fiscal management and smart stewardship of taxpayer dollars,” County Executive Calvin Ball said in a statement.

“Our team worked thoughtfully to execute a successful bond sale, and this allows us to invest in important community projects while respecting taxpayer dollars.”

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Ball has proposed a $250.4 million capital budget for fiscal 2021 that includes funding for the historic Ellicott City flood mitigation plan, a new cultural center in Columbia and an expansion of the East Columbia 50+ Center. Ball presented his $1.78 billion operating budget less than two weeks ago, proposing $620.3 million for the Howard County Public School System, $4.9 million for road resurfacing across the county and $1.5 million to support Howard County General Hospital’s capital priorities.

According to the county, the bond sale covered the funding of $20 million in school construction projects, $13 million for Ellicott City improvements, $23 million for the watershed protection project and $26 million for the Little Patuxent Water Reclamation Plant.

“The volatility in the markets continues to test the best-laid plans. This year’s bond sale enables the county to replace the short-term borrowing program with long-term debt at a very favorable rate,” Howard County Finance Director Janet Irvin said in a statement.

“The savings achieved in the refunding also allows for a more affordable capital program.”

Karyl Leggio, professor of finance at Loyola University Maryland’s Sellinger School of Business and Management, said that when Howard County refinanced, they requested a longer-term bond, which is helpful in paying for longer-term projects.

The bond rating agencies then had to determine if the county was financially sound, a difficult feat amid the pandemic, according to Leggio.

“Once the bonds are issued [at the lower interest rate], they can’t be recalled unless Howard County chooses to pay them off early,” Leggio said. “In the long run, it saves the taxpayers money because of [the lower] interest payments.”

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