Harford County sells $50 million in bonds at 2.64 percent interest

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Harford County borrowed $50 million at 2.64 percent interest at its annual bond sale Tuesday, paying a slightly lower rate than the previous year.

It is the fourth straight year Harford has borrowed below 3 percent to fund a variety of capital projects such as schools, bridges and recreation facilities.

“So, we beat last year,” county Treasurer Robert Sandlass Jr. said after the results of the electronic sale came back, with bid offers from nine financial institutions Tuesday morning.

Sandlass was accompanied by top Harford officials such as County Executive Barry Glassman, Director of Administration Billy Boniface, County Attorney Melissa Lambert as well as Harford’s bound counsel and financial advisor, as he observed bids come in to the treasury office in the county administration building in Bel Air.

The county obtained a 2.78 percent interest rate on $55 million in bonds in 2017, a historically low 2.29 percent on $40 million in 2016 and 2.62 percent on $45 million in 2015.

“You will see, with this bond sale, that our continued emphasis on fiscal constraint and our budgeting practices — that were reaffirmed in our Triple-A bond rating — have indeed produced a lower interest rate this year than last year,” Glassman told the County Council Tuesday afternoon.

The council voted 6-0 in favor of Resolution 002-18, affirming the sale of $50 million in bonds to Citigroup Global Markets Inc. at 2.64 percent. Councilman Curtis Beulah was absent.

“All four of the bond sales that have taken place during this administration, and this council term, were all below 3 percent,” Sandlass said during the council meeting.

Glassman, who was elected to his first term in 2014 and is running for re-election this year, has spent the past three years working to get the county’s finances in order and debt service under control.

He said the capital projects funded with this year’s bond sale are “nothing real flashy, but [they are] the necessities.”

Glassman said his policy of maintaining bond sales of $50 million to $60 million per year “has proved to be not only good for us, but the bond market has been receptive to our offerings under that plan.”

Citigroup offered the lowest interest rate, out of the nine bidders, on the general obligation bonds, which the county will use for the replacement of Youth’s Benefit Elementary School in Fallston and the upcoming replacement of Havre de Grace Middle and High School, among dozens of projects.

The bond sale comes on the heels of the county’s annual meeting with bondholders in New York City. Harford maintained its top Triple-A bond rating.

The top rating means lower borrowing costs for the county, Cindy Mumby, the county government spokesperson, said.

“It saves us money when we go about building these things that build the quality of life in the county,” she said.

Lester Guthorn, managing director of Public Advisory Consultants in Owings Mills and Harford’s financial advisor, said during the sale that the second-lowest bidder, Robert W. Baird & Co. Inc., “put in an aggressive bid.”

Baird bid 2.66 percent, followed by Bank of America Merrill Lynch at 2.662 percent. The rest of the bids ranged from 2.67 to 2.78 percent.

“They were relatively close, which says that the market as a whole saw that we are a good investment opportunity,” Sandlass said after the sale.

He said the county will receive “a good-faith deposit pretty soon, and then within a couple of weeks the bulk of the money will be transferred to us and it’ll be used” for projects such as schools, parks and bridges. Municipal bonds like Harford’s, which mature over 30 years, are frequently resold to investors by the winning bidder.

Guthorn said “the bottom line” is that the county needs “the lowest amount to pay for the debt” in its interest rate, thereby lowering costs to the taxpayer.

“The lower your interest rate is the more money you have for other things, so whether that’s teachers and deputies – there’s no shortage of things to spend the other money on,” Sandlass said.

Councilman James McMahan said he noticed, among the nine bidders, that six offered interest rates within .05 percent of each other, an indication to him that multiple companies “wanted our business.”

“I think that we, sitting here as a County Council and the county executive, sitting on your side of the table, I think we have something to be fairly proud about,” McMahan said.

Guthorn, the financial adviser, said the clustering of offers is “pretty close to superb.”

“Harford County is a highly sought-after credit,” he said. “The consistency of their bid shows you how aggressive they have been, or were willing to be, in buying your bond.”

Sandlass said investors still consider municipal bonds, such as those offered by Harford County, a good buy, despite recent changes in federal tax policy that mean a lower return for investors in those bonds.

“Congratulations to everyone, including everyone up here, and our taxpayers who are getting a lot more bang for their buck right now, so that’s wonderful,” Councilman Chad Shrodes said.

This story has been update from an earlier version.

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