County sells $28 million in bonds for work near Arundel Mills mall

Part of revenue to fund road improvements

November 28, 1999|By Jackie Powder | Jackie Powder,SUN STAFF

Anne Arundel County sold $28 million in revenue bonds last week for infrastructure improvements relating to the Arundel Mills mall project -- getting a 7.1 interest rate described as "a good deal" by an expert in municipal bond sales.

The 30-year bonds -- in large part financing construction of road improvements to accommodate mall traffic -- are backed by tax revenue expected to be generated by the 1.4 million-square-foot development under construction near Route 100 and Baltimore-Washington Parkway.

County officials said the securities were purchased Wednesday by "a diverse group of mutual fund managers."

"That is a vote of confidence in the project because these institutional investors see transactions of all kinds from different localities throughout the country," said Richard O'Brien, senior vice president of the Hunt Valley office of Folger Nolan Fleming Douglas, a brokerage firm.

"They're voting with their money, and saying, `Yes this project is a viable project and we're willing to back it,' " he said.

Such bonds typically carry a higher interest rate than general obligation bonds, which are backed by the county's general funds, officials said.

County officials have promoted the $250 million project as an economic development triumph that will bring tax revenue and jobs to the county. It is located on a 400-acre site two miles west of Baltimore-Washington International Airport.

Its developer, Mills Corp., projects that the 200-store complex will generate more than $4.2 million annually in sales tax for the county and create about 3,000 jobs when it is fully leased.

The County Council paved the way for the mall by approving legislation in August 1998 that permitted the creation of a tax increment district to pay for the $28 million in bonds.

"It's an economic development tool," O'Brien said of the tax district. "Those that benefit from the creation of the district are responsible for paying taxes to support the bond issue."

He said the low interest rate of 7.1 percent is attributable to tax-exempt financing.

"If the bond issue were sold as a taxable, rather than tax-free issue, the rate would have exceeded 10 percent," O'Brien said. "I haven't reviewed the transaction, but on the surface knowing conceptually what it's all about, I'd say it's a favorable rate."

As part of the Arundel Mills financing legislation, the County Council also included a provision to levy an additional property tax on the mall should the tax district fail to raise enough money to repay the bonds.

Mills officials announced the mall's sixth anchor tenant last week -- a 24-screen megaplex theater with child care and valet parking. It will have stadium seating, Egyptian-style decor and red-vested doormen.

Other tenants include a Jillian's entertainment complex with a restaurant and high-technology games and Sun and Ski Sports, a sports retailer featuring a rock-climbing wall and in-line skating demonstration track.

Arundel Mills is scheduled to open by next Thanksgiving.

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