SNOW HILL – A federal
bond program will reduce interest payments on the Mystic Harbor wastewater
treatment plant funding by 35 percent, at least as long as the program
controller Jennifer Savage told the Worcester County Commissioners Tuesday that
the U.S. Department of Agriculture (USDA), which is supplying loan and grant
funding for the Mystic Harbor sewage plant replacement, approached the county
last month and offered a chance to issue Build America bonds to finance the
The Build America bond
program is part of the 2009 American Recovery and Reinvestment Act.
Build America bonds are
taxable, which generally means that the interest rate will go up as compared to
a tax-exempt bond.
The program offers a
35-percent tax credit for the Build America bonds to offset higher interest
County would not see an increase in interest rates on the 40-year term of the
Mystic Harbor loans, Savage said.
“USDA does not plan on
changing the terms of our agreement with them,” said Savage.
The county is looking at
a reduction in interest, effectively, from 2.625 percent to about 1.7 percent,
under the Build America initiative.
Staff consulted with the
county bond counsel “at length” on the federal bond program.
“It seems it’s to our
benefit to take advantage of this program,” said Savage.
How long the Build
America program will last is unknown, however.
There’s a good chance
the tax credit program will not continue for the entire 40-year term of the
USDA loan, said Savage.
The county would get the
rebate as long as the Build America program continues, Commissioner Virgil
The bonds must be issued
by the end of the year to take advantage of the bond program. Normally, USDA
would close on the financing with the county after the money has been spent,
which requires interim financing for the project.
To allow Worcester
County to take advantage of this program, the USDA will close this fall, Savage
said, which benefits the county because it will not need to find interim
The commissioners agreed unanimously at their
meeting Tuesday to go with the Build America bond approach