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Oct. 7, 2010
The Board of Garrett County Commissioners voted last Tuesday to pay off in its entirety the county’s nearly $2 million outstanding general obligation bond debt, officially known as the County Commissioners of Garrett County Public Facilities Bonds of 1996. There was no penalty for paying the loan off early, according to county officials.
The bonds had a 20-year life and were scheduled to mature on May 1, 2016. As of last Tuesday, the principal remaining was $1.715 million, and interest calculated on the remaining principal totaled $358,265, according to the Garrett County Department of Financial Services.
Commissioner Fred Holliday made the motion to pay off the bonds, and Commissioner Ernie Gregg seconded it. Commissioner Denny Glotfelty was unable to attend the meeting.
“The reason I wanted to do that is to leave the county totally debt free,” Holliday said about his motion. “We have some new funds coming in next year, and I just wanted to have them (the bonds) paid off.”
Except for Enterprise Funds used by the Garrett County Department of Public Utilities, Solid Waste and Recycling, and the airport, the county is now debt free, he and Gregg noted.
The bonds were issued in 1996 for a total of $4 million, and the proceeds were used for construction and improvement of public schools and roads/bridge projects. Specifically, those were construction of Yough Glades Elementary School; the Northern High School classroom addition, auxiliary gymnasium, and stage; Southern High School connecting corridor, gymnasium, foyer, and stage area; Savage River Road and Glendale Road bridges; and Wilson, Rock Lodge, Community College, Shady Dell, and Spring Lick roads.
By redeeming the bonds and paying off this debt, the county will realize a savings of approximately $350,000 in debt service interest, noted county administrator Monty Pagenhardt.
“Furthermore, over the next five fiscal years, the county will have an average of $346,344 in annual principal and interest payments ($1,731,720 in total) that will no longer need to be budgeted for this specific debt and can be directed toward other operating expenditures,” he said.
Also taken into consideration in the decision to pay off this bond were the high coupon rates accompanying this bond ranging from 5.4 percent to 5.75 percent to maturity in 2016, he added.
“If borrowing should become a necessity in the future, the county is confident that a loan with lower interest rates could be obtained,” Pagenhardt said.
Every year during the auditing of the county’s financial transactions, the unrestricted fund balance, or rainy day fund, of the county is evaluated.
