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June 13, 2014

Cambria County seeks bond rating through legal counsel

EBENSBURG — The Cambria County commissioners Thursday started the ball rolling on what may result in some type of financial move later this year to ease the tight money situation.

In a unanimous vote, the county leaders agreed to initial steps aimed at determining the county’s bond rating, the figure that looks at its financial stability and ability to repay indebtedness.

Approved was a letter of engagement with law firm Eckert Seamans to provide bond counsel services for a cost not to exceed $11,000 if no bond offering is completed. The cost could reach $40,000 for all customary services through the settlement of a bond issuance.

“The county is going out to get a new bond rating. We’re going to take a look at where we stand,” President Commissioner Douglas Lengenfelder said.

The action is coming as a recommendation from banks.

“They said that this is a good thing for the county to do. We’ll take a look at where the county stands,” Lengenfelder said.

Cambria had long held a AAA rating, one that began slipping about two decades ago. The last rating, done more than five years ago, was BBB, and the county currently has no rating because the debt to which the rating applied has been satisfied, said county Controller Edward Cernic, Jr.

Also approved was an agreement for financial advisory services with Catlin Financial worth $9,000 for services to receive a bond rating.

This second motion also included approval for $7,000 to complete a preliminary official statement or up to $27,000 for all services performed through the settlement of a bond issuance.

The commissioners said the motions do not lock the county into any type of financing, with a maximum cost of about $40,000 for the rating, which would position the county to begin seeking bids.

“The money is well spent to bring bond counsel in early,” county Solicitor Thomas Leiden said. “If we have a good rating, and we anticipate a good rating, it opens the door for better financing.”

A bond rating is beneficial for any number of reasons outside county finances, Leiden said.

“It’s part of the county’s demographics, and one of the things a potential industry looking at the county looks at is the bond rating,” he said.

The move was not without some concerns over costs raised by Cernic, but it is one he supports.

“I’m glad to see the commissioners are finally taking my advice. This needs to be done,” he said. “But I don’t agree with how it’s being done,” he added.

Under the structure approved by the board, Cernic said he feels there is too much up-front money before any decisions are reached about restructuring.

The rating was supported by Commissioner Thomas Chernisky, who said it was about “finding out where we stand.”

Commissioner Mark Wissinger said it is time for the county to move forward.

“This (rating) has the potential for some significant savings,” he said. “Hopefully, the improvement of that bond rating will help when we refinance with banks or whatever.”

Kathy Mellott covers the Cambria County Courthouse for The Tribune-Democrat. Follow her on Twitter at twitter.com/kathymellottttd.

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