Rehrmann Proposes A 6-year Bond Market Venture

Exec Hopes To Supplement 'Pay-as-you-go' Projects

April 21, 1991|By Carol L. Bowers | Carol L. Bowers,Staff writer

When Harford public schools open four years from now for a new school season, halls and classrooms could be packed by more than 20,000 elementary school students -- about 4,000 more than were enrolled this year.

Ensuring there are enough schools and classrooms to handle that influx in September 1996 is one reason County Executive Eileen M.Rehrmann is proposing that Harford venture into the bond market beginning in the next fiscal year, which starts July 1.

Rehrmann advocates borrowing an estimated $63.8 million on the bond market over the next six years to pay for the county's share of construction costs of new schools and for the high cost of sealing and closing the Tollgate landfill. The executive's plan calls for borrowing $13.1 million on the bond market this fall and an average of $10 million annually for the next five years.

Over the same six-year period, Rehrmann proposes using about $17.8 million in pay-as-you-go dollars or cash for other capital purchases such as furniture and equipment for schools.

Despite the new bond sales, the county's payments on its bond debt -- about $5 million annually now -- wouldn't change much, said James M. Jewell, the county treasurer.

That's becausethe county would be paying off old debts each year as it sold new bonds, Jewell said.

Whether Harford ventures into the market for bonds other than those issued for water and sewer projects -- which are paid back through user charges -- depends on the County Council, which has final say over county bond sales.

Some County Council members have expressed concern about Rehrmann's proposal to borrow money soheavily in the bond market. But Rehrmann and Larry Klimovitz, director of administration, say the county's infrastructure needs are so great that a delay in addressing them might result in higher costs if they are allowed to drift until cash is available.

"We have to provide public schools, open space, gyms used by parks and recreation, economic development and libraries for our growing population, and we've got to maintain what we've got," Klimovitz said.

"We hope that 'pay-go' goes up and the bond usage goes down, but it's hard to project that far in advance."

School construction needs highlight the dilemma.

To provide desks, chairs and room for the projected 24,000 elementary students, county administrators and school officials say, the county, which has 26 elementary schools today, will have to buildseven new elementary schools by 1996.

As it is, half of the county's elementary schools have between one and six relocatable classrooms, each holding about 25 students, to relieve overcrowding.

Because the county pays 35 percent of the cost of building new schools, Harford's share of the cost of seven new elementary schools would be about $2 million for each school. The average cost of building an elementary school is about $6 million.

Instead of paying cash for the county's share of the new schools,as the county has done for the past few years, Rehrmann has proposed borrowing in the bond market.

"By going to the bond market, the people who are creating a strain on services by coming into the county can help pay for a portion of the improvements to the infrastructure," said Rehrmann.

"We have not abandoned 'pay-go' projects. If revenues pick up, then you can begin to use pay-go money. But the revenues just aren't there like they used tobe."

Most of the money Rehrmann wants to borrow on the bond market over the next six years would be used to pay for:

* The county's35 percent share of the construction cost of new schools and the acquisition of new school sites.

* Major environmental projects, suchas the $7 million closing of the Tollgate landfill.

* Renovating and repairing county buildings and roofs.

* Expanding county buildings, such as the $4 million expansion of the county detention center.

Klimovitz said those projects would be paid with bond money because the product -- the new buildings or roofs -- could be used for atleast 20 years -- the average term of a bond issue.

Projects or equipment with a shorter life, such as furniture and equipment for newschools and a recycling center, would be paid for with pay-as-you-gomoney or cash in hand, Klimovitz said.

But instead of relying on a cash surplus at the end of the one fiscal year to pay for pay-as-you-go projects started the following year, as the county has done in the past, Rehrmann has proposed planning ahead for those projects.

Under Rehrmann's plan, the county would set aside about $5.6 million for use as pay-as-you-go money for capital projects for the fiscal year beginning July 1.

Between 1992 and 1997, the county would spendabout $2 million each year on those projects.

Jewell, the county treasurer, said the county's annual debt service will remain in the $5 million to $7 million range as a result of the plan.

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