County looks at cap­i­tal im­prove­ment plan

Com­mis­sion­ers dis­cuss un­funded projects

Maryland Independent - - Front Page - By MICHAEL SYKES II msykes@somd­

Charles County has many cap­i­tal im­prove­ment projects slated to be­gin over the next five years, but the key for the Charles County Board of Com­mis­sion­ers is choos­ing which projects they ini­ti­ate first and what has to be put on a hold.

The county’s cap­i­tal im­prove­ment bud­get re­quest for this year is $495.3 mil­lion with $263.5 mil­lion of that be­ing pre­vi­ously ap­proved projects. How­ever, $231.8 mil­lion of those projects are un­funded.

“That’s a lot,” David Ei­choltz, the county’s direc­tor of Fis­cal and Ad­min­is­tra­tive Ser­vices, said.

Those costs are spread over a five year pe­riod, Ei­chotlz said, so it all is not funded in one sin­gle year. And the good news, he said, is that 53 per­cent of the ap­proved projects are projects the county can con­tinue to fund.

How­ever, he said, the other 47 per­cent of the to­tal are projects that the county does not have fund­ing af­ford­abil­ity for at this point. The rea­son the county can­not af­ford to com­plete all of the projects at this point, he

said, is be­cause of an 8 per­cent debt ceil­ing the county has.

“We de­vel­oped a strat­egy very sim­i­lar to a mort­gage pay­ment. When you went to a fi­nan­cial in­sti­tu­tion, the first thing they would say is ‘What’s your in­come level? How much can you af­ford to buy a house?,’” he said. “We es­tab­lished 8 per­cent of our op­er­at­ing rev­enue to be ded­i­cated to that ‘mort­gage pay­ment.’ From there we back into the amount of debt we can is­sue to build our house.”

The county’s debt ca­pac­ity to­day sits at just about $30 mil­lion ac­cord­ing to in­for­ma­tion from the depart­ment. But the county has less than $25 mil­lion in debt ab­sorbed this year.

How­ever, Ei­choltz said, the county’s pro­jec­tions from year to year change. It is hard to pin­point what the debt cap will be, he said, be­cause it is hard to project the county’s op­er­at­ing bud­get from year to year.

To project how much fu­ture debt the county can take on, he said, the county uses 3 to 4 per­cent op­er­at­ing in­creases from year to year. The county’s debt ca­pac­ity grows over time, he said, which pushes them closer to its debt ceil­ing and makes it more dif­fi­cult to fund new projects.

The county’s pro­jec­tions cur­rently al­low for $120.9 mil­lion in debt ser­vice is­sued over the next five years, Ei­choltz said, but the county needs $118 mil­lion in debt to fund pre­vi­ously ap­proved projects in that same times­pan.

That would leave the county $2.7 mil­lion to fund any new projects, Ei­choltz said.

Jenifer Ellin, the county’s chief of bud­get, said in or­der to fund some of the projects that were not pre­vi­ously ap­proved the county could ei­ther use the $2.7 mil­lion avail­able to them or be­gin “swap­ping out projects.”

Robin­son said the county does not want to swap out projects that are cur­rently in progress. It would be help­ful, he said, if the com­mis­sion­ers could get a list of projects that are await­ing the be­gin­ning of ac­tual con­struc­tion.

Com­mis­sioner Ken Robin­son (D) asked if there were any re­fi­nanc­ing op­tions avail­able for the county to open up more po­ten­tial fund­ing. Ei­choltz said the county is al­ways look­ing for re­fi­nanc­ing op­por­tu­nity, but have done “ev­ery­thing we can do” at this point in time.

“I re­call at the end of last cal­en­dar year, we were go­ing to do that but then the bond mar­kets just tanked,” Robin­son said.

The mar­kets have re­cov­ered to some de­gree, Ei­choltz said, but not to the de­gree the county is look­ing for. How­ever, he said, they will con­tinue to look out for fu­ture op­por­tu­ni­ties to re­fi­nance.

Ei­choltz said the county may want to take a look at the bud­get and re­work new projects into it while re­mov­ing oth­ers. Projects were not passed over be­cause they were unim­por­tant, he said, but rather the county just could not af­ford them at the time.

There is still time to work with the cap­i­tal im­prove­ment bud­get, he said, and there is an­other bud­get work ses­sion sched­uled for next week. The process will not be com­plete un­til May, he said.

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