Bond Financing refers to a method of financing capital improvement projects. Arlington County generally sells general obligation bonds. Arlington County seeks voter approval to issue general obligation bonds in November of even-numbered calendar years. Bond financing is generated through the borrowing of funds (principal) at a cost (interest) through the sale of municipal bonds. There are several types of bond financing:
• General Obligation (GO) Bonds - Arlington typically issues general obligation bonds, which must first be approved by the County’s voters and are secured by the full faith and credit of the County. Arlington’s practice is to schedule bond referenda for even-numbered calendar years, which correspond to odd-number fiscal years.
• Revenue Bonds – Arlington has issued low interest rate revenue bonds through the Virginia Water Revolving Loan Fund (VRLF) run by the Virginia Resources Authority for improvements to the Water Pollution Control Plant. Revenue bonds are typically secured solely by user fees or projected revenues and include no pledge from the General Fund. Revenue bonds typically carry a higher interest rate than GO bonds and generally have debt service coverage and other financial restrictions.
• Lease Revenue or Annual Appropriation Bonds – These types of bonds are secured by a “subject to appropriation” pledge by the County Board and do not require voter approval. They generally require the use of a third party to execute the lease transaction, such as the Industrial Development Authority (IDA), Virginia Resources Authority, or Virginia Municipal League / Virginia Association of Counties.
One of the criteria used to determine which projects will be funded with bond proceeds is the useful life of the improvement. Projects funded with bond proceeds generally have a useful life that is similar in length to the repayment schedule of the bonds. Historically, Arlington has issued 20-year general obligation serial bonds and paid the bonds using a two-year step-up schedule of principal repayment, and the average bond principal is outstanding for approximately 11 years. The Board’s financial policies allow for longer term bonds as long as the term of the bonds does not exceed the useful life of the project, and also allows for alternative amortization structures such as level debt service to better match certain revenue streams. Another capital funding source is inter-jurisdictional payments. Arlington has agreed to provide services to other jurisdictions through contractual agreements. For example, wastewater treatment services for some areas of Alexandria, Falls Church, and Fairfax County are provided by Arlington’s Water Pollution Control Plant. These jurisdictions also share in the cost of capital improvements of this facility, thus reducing the cost to Arlington users.
In 2012, for the twelfth consecutive year, Standard & Poor's, Fitch Ratings, and Moody's Investor Services have all rated Arlington County’s debt AAA/AAA/Aaa. Arlington is one of only 36 counties in the United States to carry the coveted triple-A bond rating from all three rating agencies. See the press release.
UPCOMING BOND SALES
RECENT GO BOND SALES