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Montgomery County’s strong financial management has resulted in bond rating increases by two top national bond rating agencies, potentially saving the County $1.5 million over 20 years in a planned $77 million bond issuance.
Standard and Poor’s increased the County’s General Obligation bond rating from A+ to AA, two steps up from their current status; the County’s Lease Revenue Bonds jumped from A to AA-, also a two-step increase. Moody’s Investors Service moved the County’s General Obligation bond rating from A1 to Aa3 and the Lease Revenue Bonds from A2 to A1, also boosting their ratings in both categories. “I am pleased that the bond rating agencies acknowledge the County’s strong economy and sound financial practices,” said Board Chairman Annette Perkins. “When the bonds go on sale this month the County should realize significant savings for the construction of these much needed projects.” “The Board of Supervisors’ resolve to plan for the pending capital bond sale and strengthen the County’s financial management practices will result in savings to County citizens for years to come,” County Administrator Clay Goodman added. The good news follows a whirlwind two day trip by County officials to New York last month to present the County’s financial picture to the bond rating agencies before issuing $77 million in borrowing for construction. The County’s construction plans include the new Elliston and Prices Fork elementary schools, a new Courthouse, renovation of the Courthouse for public safety and various other projects. An additional $15 million for the projects will be borrowed from the state’s Literary Fund. The bond rating increases will allow the County to borrow at lower interest rates, reducing debt service payments during the 20-year life of the bonds. The savings may be more than $1.5 million on this bond issue alone, according to Courtney Rogers, Senior Vice President with Davenport & Company LLC. “The upgrade reflects the stability in the economy provided by Virginia Tech, coupled with the positive impact on economic development,” said the Standard & Poor’s report. “The County’s historically solid financial position is also a factor in our upgrade.” Consistent tax-base growth, historically low unemployment, adequate wealth and income levels, sound finances and strong reserves, along with a moderate debt burden also were cited. “The upgrade to Aa3 reflects growth and diversification in the County’s tax base and continued financial management,” Moody’s report states. Other conditions which led to the bond rating upgrade included the Board of Supervisors’ decision to raise taxes in anticipation of the bond issue, the establishment of one penny of the real estate tax rate for fire and rescue in the FY09 budget and the County’s maintenance of a healthy fund balance.
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