FREEHOLD – The Monmouth County Improvement Authority (MCIA), armed with the county’s AAA bond rating, is in a unique position to help municipalities and schools beyond the traditional equipment loan program.

 

Due to an upheaval in the bond insurance market, caused by problems in the subprime mortgage market that is affecting credit ratings and driving up insurance costs, municipalities that want to switch any of their temporary financing into permanent financing, or bond unfunded ordinances or other capital projects, can do so through the MCIA and Monmouth County will guaranty the loans.

 

“In the past, the savings from low-interest rates through these AAA-rated bond insurance companies more than covered the cost of the insurance,” said Mark E. Acker, Monmouth County’s Director of Finance. “But now, 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.”

 

Using the MCIA to refinance debt or finance new projects could have the potential of saving hundreds of thousands of dollars for municipalities and other governmental agencies in the county that will no longer have to pay the higher insurance premiums. In the last 15 years, approximately 40 public entities have participated in this program, totaling in excess of $441 million in new money.

 

This summer, under a separate bond issuance, Brookdale Community College will be bonding up to $25 million to renovate the Collins Arena and the Automotive Technology Department. Rather than purchase bond insurance through a private company, Monmouth County will guarantee the loan for a savings of between $125,000 and $175,000 a year for the next 20 years, Acker said.

“The MCIA is one of the many good news stories in Monmouth County,” said Freeholder Robert D. Clifton, who oversees the Finance Department. “Investors will be pretty comfortable with those bonds because the county is AAA rated.”

 

In prior years, the MCIA program has afforded towns and schools the opportunity to bond for equipment such as police vehicles, fire trucks or first aid apparatus through the MCIA, enabling these participants to benefit from the county’s AAA rating. Because the county is AAA rated, it means the money could be borrowed at a much lower interest rate than had the towns bonded on their own.

 

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