Tuesday, June 11, 2013
Taking advantage of historically low interest rates in the tax-exempt bond market, Dorchester County issued its General Obligation Refunding Bonds, Series 2013A and Series 2013B on May 15 to refinance outstanding debt at a savings to the County. The Series 2013A Bonds refinanced debt issued in 2006 to finance a portion of the transportation improvements being funded by the voter-approved one-cent sales tax. The referendum authorizing the sales tax, which voters approved in 2004, authorized the construction of 22 transportation projects, including Dorchester Road widening, Bacons Bridge Road widening, US Hwy 78 resurfacing and widening, Berlin Myers Parkway Phase 3 (new route), and the paving of 260 miles of dirt roads throughout the county. The voters also approved the issuance of $125 million in bonds to fund the cost of construction of the projects. The County issued bonds in the amount of $68 million in 2006 to begin construction and issued the remaining authorized bonds in the amount of $57 million in 2009. Both series of bonds are paid from transportation sales tax collections. The refinancing of the 2006 transportation bonds resulted in total cash savings of approximately $3,525,000 with average annual savings of approximately $165,000 over the next 16 years.
The Series 2013B Bonds refinanced debt issued in 2006 in the original amount of $12 million to fund the costs of construction of the Dorchester County Courthouse in St. George. The refinancing of these bonds resulted in total cash savings of approximately $700,000 with average annual savings of approximately $40,000 over the next 18 years.
In addition to the favorable interest rate environment, this savings was also a result of the recent upgrade of the County's credit rating. Standard and Poor's Rating Agency upgraded the County's
general obligation bond rating from AA- to AA in November 2012 based on the County’s strong
economic performance despite the nationwide recession and its maintenance of a very healthy financial position. Wells Fargo Securities, Financial Advisor to the County, estimates that this rating upgrade resulted in additional cash savings of $325,000 in the transportation bond refinancing and $75,000 in the Courthouse refinancing.
Dorchester County Council Chairman Bill Hearn said, “This is great news for Dorchester County taxpayers and yet another example of the sound financial practices that have been implemented by the County in recent years. Despite unprecedented financial difficulties nationwide, Dorchester County has been able to not only maintain their credit rating, they continue to improve it and qualify for refinancing of bonds at lower rates that will save millions for taxpayers.”
Dorchester County will save over $4.2 Million by refinancing its 2006 Series A and Series B General Obligation Bonds at historically low interest rates and as a result of its AA bond rating from Moody’s and Standards and Poors.