- The Enterprise
- The Recorder
The three major bond rating agencies have affirmed their ratings of Charles County government’s general obligation bonds, which fund education and infrastructure capital projects, the county announced Tuesday.
Moody’s Investors Service assigned an Aa1 rating — its second highest — June 7 to the county’s existing general obligation bond debt, the same as last year.
“The Aa1 rating reflects the county’s satisfactory financial position, characterized by comprehensive fiscal policies and planning and an affordable debt position,” according to Moody’s report on the county’s debt. “The rating also factors in the ongoing expansion of the county’s economic and employment base, prospects for continued growth in the science and technology sector, and above-average socioeconomic factors.”
Standard & Poor’s affirmed its AA+ rating with a stable outlook of the county’s debt in a June 14 report. S&P upgraded the rating from AA in February.
“The stable outlook reflects Standard & Poor’s opinion that the county’s deep and diverse economy will likely continue to experience good development and growth,” the report states. “The stable outlook also reflects our opinion of management’s strong financial performance, bolstered by strong formal practices and policies.”
Fitch Ratings noted the county’s “healthy debt profile and its narrow, stable, and wealthy economy” in assigning the county’s debt a AAA rating, its highest and the same as last year.
“Charles County’s prudent debt policies support a modest tax-supported debt burden even as the county has met capital needs related to its strong population growth over the past decade,” according to Fitch’s report, dated June 11.
The county commissioners voted at their Tuesday meeting to approve the sale of $24.5 million in tax-exempt bonds to J.P. Morgan Securities and $3.7 million in taxable bonds to Robert W. Baird & Co. Both companies submitted winning bids, charging interest rates of 2.83 percent and 3.29 percent for the respective bonds.
Commissioner Ken Robinson (D) congratulated Fiscal and Administrative Services Director Deborah Hudson “for the across-the-board good news that we received from all three ratings agencies.
“We could not have done it without the yearlong advice, guidance and expertise of you and your staff, and I know that there are lots of people who work behind the scenes on this, so thank you,” Robinson said.
County officials met with the three agencies in New York during the last week of May to review the county’s budget, fiscal management policies and economic development.
“It was remarkable to see how well our staff was received because they’re always professional and they always have answers to the questions, and [the agencies] recognize that our county is well managed, so it was awesome,” said Commissioner Debra M. Davis (D), the lone commissioner to attend the New York trip.
Hudson thanked the commissioners for sticking to the “very aggressive” April 30 deadline her department set for passing the county’s fiscal 2014 budget.
“This year was really nice to go to the ratings agencies with our budget adopted,” Hudson said. “I think that was the first time that we’d ever done that, and it just took away all the questions that they had and all the uncertainty on what the commissioners were going to do. So, it solidified your plan of action. We were able to communicate that very effectively because you’d already adopted the budget. It took a lot of weight with us to New York.”
Commissioners’ Vice President Reuben B. Collins II (D) remarked that several of the larger jurisdictions in Maryland with across-the-board AAA ratings have larger commercial tax bases than Charles, and asked Hudson whether it is “feasible for the county to even look at that as a potential goal with the limited returns we have on our revenue sources right now?”
Hudson noted that there are smaller counties with three AAA ratings, “so it’s not necessarily our size.”
Hudson pointed to two issues keeping the county from a AAA sweep — its budget reserves and lackluster commercial development.
She said the ratings agencies would prefer the county to maintain reserves at 15 percent of its budget, versus the current 12 percent.
“They want the county to have a ton of cushion,” Hudson said. “To them, that represents stability. It represents the set-aside you would have to fix unforeseen circumstances.”
Hudson also said that the county’s tax revenue from both residential and commercial properties should be roughly equal. Currently, the county receives about triple the amount of revenue from residential development as it does from commercial.
“I think it’s a matter of time before we get there,” Chief of Budget David M. Eicholtz said of obtaining three AAA ratings. “We would have to do something wrong to steer us away from that course.”