FY 2017 Budget Highlights
G. The County has no intent to issue long-term debt to reduce the unfunded liability of the
Other Post Employment Benefits Trust.
H. Long-term debt may not be used to finance ongoing and recurring operational
expenditures and expenses.
III.
Types of Debt Instruments
A. General Obligation Debt
I. General Obligation Bonds - General Obligation ("G.O.") Bonds are the most
common form of debt instrument for Frederick County. These are generally tax-
exempt and are backed by the full faith and credit of Frederick County. General
Obligation Bonds are issued to finance the purchase and construction of
infrastructure and facilities for a wide variety of functions such as transportation,
public schools, community college, public safety, roads and highways, bridges and
other programs. Frederick County issues General Obligation Bonds pursuant to
chapter laws adopted from time to time by the Maryland General Assembly at the
request of the County ("Chapter Law Authorization"). Pursuant to Chapter 2-13-
13 et seq. of the Frederick County Code of Ordinances (the "Code"), the County
is authorized to issue General Obligation Bonds for the purpose of providing funds
for the design, construction, establishment, purchase or condemnation of water,
sewage, drainage and solid waste systems in Frederick County ("Water and Sewer
Act").
2. Bond Anticipation Notes (BANs) - These are generally short term in nature and
are issued as interim financing for a variety of financial reasons. On occasion BANS
may be issued in one or more smaller amounts before a single larger size G.O.
issue is executed. Proceeds of future G.O. Bond issues would be used to pay off
the BANs. State law permits the issuance of BANs by Frederick County.
3. Agricultural Land Preservation Installment Purchase Agreements (IPAs) - These
are general obligation debt instruments to fund purchases of property development
rights and are backed by the full faith and credit of Frederick County. This is the
same authority the County requests for its G. O. Bond issues.
4. State of Maryland Revolving Loan Programs – The loan programs the County
regularly participates in are those offered by the Maryland Department of the
Environment. Interest rates are generally lower than those for which the County
qualifies on its own merit in the open market. On occasion, loans may be for no
interest. On some loans, the State assesses fees to supplement the low interest
rates.
5. The recently enacted American Recovery and Reinvestment Act ("ARRA")
provides a number of taxable and tax-exempt financing options, some with a
limited duration. Frederick County will review appropriate ARRA options and
utilize them where such an issuance would benefit the County.
B. Other Forms of Debt
1. The County may issue Tax Increment Financing (TIF) Bonds to fund capital assets
located in certain development districts established in connection with the TIF.
The taxes levied on the increase in the assessable base of the properties affected
are pledged to finance the debt issued to complete the capital assets. The County
is not responsible for the debt service in the event that TIF revenues are not
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