FREEHOLD – To help municipalities and schools save even more money during the current economic downturn, the Monmouth County Board of Chosen Freeholders has authorized the county’s guaranty of bonds issued by the Monmouth County Improvement Authority (MCIA).
 
The county guaranty will allow the MCIA to avoid purchasing bond insurance at current inflated prices and passing that cost on to the 10 towns participating in the 2008 Pooled Government Loan Revenue Bonds program. Towns that borrow money through the MCIA already benefit by utilizing the county’s AAA bond rating to get the lowest possible interest rate.
               
“Helping municipalities and school districts save money through the MCIA’s pooled loan program can go a long way toward helping local governments in those participating towns keep their taxes low,” Freeholder Deputy Director Robert D. Clifton said. “The less money they spend on interest and insurance, the more money they will have to offset taxes.”
 
The MCIA has offered fixed-rate pooled financing on behalf of various local governmental entities for the past 15 years, saving Monmouth County taxpayers more than $136 million in that time. The financing is designed to pool the local government entities into a single financing to permanently finance outstanding bond anticipation notes and unfunded capital bond ordinances.
 
The county guaranty and the pooling of local government bond notes into a single, larger financing make the MCIA’s bonds attractive to investors. This year, the MCIA has received requests for pooled financing from 10 municipalities and one school district for a total amount of $45 million. This is the first time the county has extended its guaranty to this particular program.

 

In the past, the savings from low-interest rates through AAA-rated bond insurance companies more than covered the cost of the insurance, Monmouth County Finance Director Mark E. Acker said. However, many of these bond insurance companies are losing their AAA ratings due to their subprime mortgage exposure, and those that have not have doubled or tripled their prices.

 

“In normal markets this action by the Board of Chosen Freeholders would result in a cost savings of about $150,000,” he said. “Right now, the MCIA would not be able to get insurance. Back in the early part of the year, the MCIA was seeing insurance costs of between $300,00 and $450,000.”
 
“By eliminating that cost, especially during these difficult economic times when money just isn’t available, there is a direct savings to the participating governmental entities,” Freeholder Director Lillian G. Burry said. “This is just one way in which county government provides a shared service.”
                      
The MCIA, a county agency whose singular focus is on finding alternatives to traditional methods of public finance, has saved Monmouth County taxpayers more than $136 million dollars since it was formed in 1986. The county guaranty and the pooling of local government bond notes into a single, larger financing make the MCIA’s bonds attractive to investors.
 
The bond anticipation note sale is expected to be taken to market before the end of the year by the MCIA on behalf of 10 municipalities.
 
Towns participating in the 2008 program are: Allentown, Eatontown, Freehold Township, Highlands, Holmdel, Keansburg, Manalapan, Middletown, Oceanport and Shrewsbury.

 

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