Fairfax County Sells Bonds Including $136.4 Million for Schools
Office of Public Affairs
12000 Government Center Parkway, Suite 551
Fairfax, VA 22035-0065
703-324-3187, TTY 703-324-2935, FAX 703-324-2010
May 15, 2003
Fairfax County Sells Bonds
Including $136.4 Million for Schools
On Thursday, May 15, Fairfax County sold $206.4 million in
Aaa/AAA/AAA-rated tax-free general obligation one-to-20-year bonds for
public improvements at the lowest rate achieved by the county in 28 years
since the AAA rating was first awarded. The new public improvement bonds
were sold at a savings of $9.954 million to county taxpayers over the
life of the bonds compared to the Bond Buyer Index as a direct result of
the county's triple Triple-A bond rating.
The bonds were sold to Merrill Lynch at a true interest rate of 3.626 percent. This interest rate is the lowest interest rate achieved by Fairfax County since the first AAA was awarded by Moody's in 1975. The lowest rate the county received for 20-year bonds prior to this sale was 4.264 percent in June 2001. The interest rate represents a differential of 87.4 basis points under the Bond Buyer Index which stood at 4.50 percent on May 9, 2002. General obligation bonds maturing in one-to-20 years which were sold during the previous week are used in compiling this index. The total net interest cost on the new public improvement bonds will be approximately $82.57 million.
The county received four bids for the bonds with a high bid of 3.709 percent. Proceeds from the sale of the new public improvement bonds will provide funds for schools ($136.40 million), public safety facilities ($37.6 million), parks and park facilities ($24.45 million), commercial revitalization ($3.3 million), detention facilities ($2.15 million), neighborhood improvements ($1.0 million), transportation improvements and facilities ($0.8 million) and storm drainage facilities ($0.7 million). Voter authorization for the sale of these bonds was given by referenda in elections held from 1989 to 2002.
With this bond issue, Fairfax County maintains its status as a top rated issuer of tax-free securities from Moody's Investor Services, Standard and Poor's Corporation and Fitch Ratings. Fairfax County has the highest credit rating possible for a local government - Aaa from Moody's Investors Service Inc., AAA from Standard and Poor's Corporation and AAA from Fitch Ratings. Only nine states, 19 counties and 10 cities have Triple-A ratings from all three investor services. The credit ratings enable Fairfax County to sell bonds at favorable interest rates compared to those of municipalities not so rated, resulting in substantial savings for county taxpayers over the life of the bonds.
Since 1978, including this sale, Fairfax County has saved approximately $182.9 million in reduced interest costs as a result of the AAA rating when compared to the Bond Buyers index at the time of the sales. The county has refunded more than $1.2 billion of the outstanding general obligation debt since 1989 for a cumulative net present value savings of approximately $60 million. All together the county has saved over $242.9 million through county bond and refunding sales as a result of the AAA rating.