The Town of Ocean City sold $12.7 million dollars of general obligation municipal purpose bonds today at a true interest cost of 2.099 percent, attracting national interest in the municipal market as nine prominent underwriters competed for the bonds. The bids ranged from 2.099 percent to 2.249 percent for the bonds, which mature December 1, 2014 through December 1, 2023.
The bid was awarded by Mayor Rick Meehan to Morgan Stanley & Co. LLC. “The Town’s interest rate speaks highly of the Town’s position in the market,” stated Samuel Ketterman, of Davenport & Company, the Town’s financial advisor for the sale. “Town officials should be proud of the result.”
Proceeds of the new bonds will finance the new Performing Arts Center, Beach Patrol headquarters building, new roofs on the Public Safety Building and Service Center garage, and an effluent disinfection system at the wastewater plant.
“Prior to the sale, Standard & Poor’s Ratings Services raised its rating of Ocean City’s general obligation debt from outstanding to ‘AA/Stable’” said Ocean City Finance Administrator Martha Bennett. “The improved rating is based on the Town’s strong financial management practices, thorough budget preparation and capital improvement planning. In spite of assessment declines, other credit characteristics that support the Town’s rating include its stable, but limited, tourism-based economy coupled with the adequate wealth and income factors, manageable debt burden and the effectiveness of the governing process to manage performance and address problems.”
Moody’s Investors Service affirmed an ‘Aa2’ rating to Ocean City debt. This rating reflects the Town’s sizable tax base that serves as a year-round tourist destination and above average socioeconomic factors. The rating also takes into consideration the Town’s conservative management practices and healthy financial position, affording satisfactory flexibility to offset risks inherent to a tourism-based economy, and an affordable debt position.
Fitch Ratings assigned an ‘AA-’ rating with a stable outlook to the Town’s bonds. They found that the Town’s financial position is sound, with consistently healthy reserve levels and tax raising capacity. Fitch believes that the Town has the financial flexibility to maintain revenue stability.