County to ask firms to refinance their IRBs Rates have fallen since issuance

August 03, 1993|By Andrea F. Siegel | Andrea F. Siegel,Staff Writer

Anne Arundel County's economic development officers are about to ask businesses to refinance their tax-exempt bonds -- which not coincidentally would bring thousands of dollars into a fund that makes local small business loans.

About 150 businesses in the county -- ranging from tennis centers to apartment complexes -- have outstanding industrial revenue bonds, known as IRBs, which are backed by company assets and are tax-free, said Michael S. Lofton, executive vice president of the nonprofit Anne Arundel Economic Development Corp.

Interest rates have plummeted since many bonds were issued, or last refinanced, in the 1980s. Federal law allows the county to collect fees on the bonds, fees that go into a fund that makes and backs small business loans of up to $150,000.

"We are going to begin contacting firms that have not refunded and ask if they would like to refinance, or at least come and talk to us about it. Our motive is pretty clear. We would like that fee," Mr. Lofton said.

The approximate fees to the county per $1 million of IRB are $2,500 for a refinancing and $1,500 on a new issue.

The prospect of drawing huge new business projects that fit the recently changed federal requirements for IRBs is nowhere near as great as getting existing bond issuers to refinance their debt at a lower rate, Mr. Lofton said.

He hopes to see the $1.2 million loan fund, which just received an additional $1.5 million in lines of credit from 16 banks, grow through refinancing fees.

"We are going to contact about 10 that look like the best prospect for refinancing," he said.

Last week, the County Council approved a resolution for the refinancing of about $7 million for an apartment complex on Spa Road, Annapolis, among other refinancings.

When those bonds are issued -- at below the existing 7 percent interest bonds -- the county will get about $70,000, Mr. Lofton said. The county collected a total of $58,555 in fees for fiscal 1992-93.

Two recent small business loans have paid for expansions at Chesapeake Bay Sport Fishing & Charters in Deale and the Adheron Corp. in Hanover.

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