Wall St. Firm Calls Pr. George's AAA-Okay
Wednesday, June 4, 2008
Unfurling 40-foot-long banners from a high balcony of the County Administration Building and accompanied by a high school marching band, Prince George's officials announced yesterday that the county has been awarded a AAA rating by a Wall Street bond house, an achievement they described as historic for a county they say is often not given the respect it deserves.
Nationwide, 48 counties have been awarded the top ranking from Standard & Poor's Ratings Services, a grade that means the county will be able to borrow money at a lower interest rate. Locally, Prince George's joins three counties in Maryland and three in Virginia to receive the ranking, despite the tightening economy.
The Wall Street firm cited the county's ability to withstand economic downturns, its history of budget surpluses and its "substantial and continually diversifying local economic base" in granting the upgrade from its second-highest AA-plus ranking.
To celebrate, officials threw an enormous party on the steps of the county headquarters in Upper Marlboro. Roads were plastered with signs that read "AAA Go Prince George's County." Three large helium balloons, each adorned with a capital A, floated on long tethers in front of the building.
"The huge advantage to this is in how the world sees us," County Executive Jack B. Johnson (D) said. "When you look at all top-rated places, we are there."
The county will quickly reap the practical gain of the boost during a $110 million bond sale today to raise money for the construction of schools, libraries, police stations and other infrastructure. County officials said the better rate could result in millions of dollars in savings each year.
The deeper effect on the county's reputation and ability to attract business will be felt over time.
County Council Chairman Samuel H. Dean (D-Mitchellville) said the rating provides outside affirmation of the government's stewardship of tax money.
"Even though we had a boom economy for a while and now we have a downturn, we made sure we managed the people's money wisely," Dean said.
Standard & Poor's granted the upgrade after county officials went to New York two weeks ago on an annual pilgrimage to explain the county's finances to executives with three agencies that award bond ratings. Johnson said they were particularly interested in discussing major development projects in the county, including the $4 billion mixed-use National Harbor and Konterra, a 2,200-acre, $3 billion development planned for Laurel.
In the past, Johnson said, the New York managers have expressed skepticism about the county's ability to balance its books while being constrained by some of the nation's strictest limits on taxation. The county's charter caps the property tax rate and requires voter approval for tax increases.
Johnson said he and county managers have worked over several years to convince Wall Street that Prince George's could find ways to raise money in other ways, including surcharges on developers.
Other Maryland counties that have the AAA rating are Montgomery, Howard and Anne Arundel, which received the mark for the first time last year. In Northern Virginia, Arlington, Fairfax and Loudoun counties hold the ranking.
Gov. Martin O'Malley (D) sent his congratulations, calling the new grade an "extraordinary symbol of progress and prosperity for the county."
The other two leading bond agencies, Moody's Investors Service and Fitch Ratings, have given Prince George's their second-highest ratings.
Under a sparkling blue sky, county officials celebrated the AAA rating yesterday. The Oxon Hill High School band played, and the school choir sang. At the conclusion, T-shirts were passed around.
"This is not Montgomery -- wealthy. This is not Howard -- wealthy. This is a big deal for Prince George's County," said Lester Gurthorn, a financial adviser who has consulted for the county for 20 years. "They don't give this out easily."