HomeMy WebLinkAbout04.12.2016 Agenda Individuals requiring special accommodations are requested to contact the Office of the County Commissioners, 240.313.2200 Voice/TDD, to make arrangements no later than ten (10) working days prior to the meeting.
BOARD OF COUNTY COMMISSIONERS April 12, 2016
Agenda 8:30 a.m. TOUR OF THE WASHINGTON COUNTY ADMINISTRATIVE ANNEX BUILDING LOCATION: 80 WEST BALTIMORE STREET, HAGERSTOWN
9:45 a.m. Depart for 100 W. Washington Street, Room 227
10:00 a.m. INVOCATION AND PLEDGE OF ALLEGIANCE CALL TO ORDER, President Terry L. Baker
APPROVAL OF MINUTES – April 5, 2016
10:05 a.m. COMMISSIONERS’ REPORTS AND COMMENTS 10:15 a.m. REPORTS FROM COUNTY STAFF
10:30 a.m. UNITED STATES ARMY CORPS OF ENGINEERS GRANT
Stephanie Lapole and Julie Pippel 10:40 a.m. PINNACLE FOODS – CONDITIONAL LOAN – Robert Mandley
(resolution)
11:00 a.m. CLOSED SESSION: (To discuss the appointment, employment, assignment, promotion,
discipline, demotion, compensation, removal, resignation, or performance evaluation of appointees, employees, or officials over whom this public body has jurisdiction; or any
other personnel matter that affects one or more specific individuals.) 11:45 a.m. Depart for 100 S. Potomac Street, Hagerstown 12:00 p.m. PRESENTATION AND LUNCHEON WITH THE WASHINGTON
COUNTY FREE LIBRARY BOARD OF TRUSTEES
LOCATION: 100 S. POTOMAC STREET, COMMUNITY ROOM, HAGERSTOWN 1:30 p.m. PUBLIC IMPROVEMENT BONDS OF 2016 AND REFUNDING BONDS OF 2016 – AUTHORIZING RESOLUTION – Lindsey Rader (resolution)
1:45 p.m. CITIZENS PARTICIPATION
Terry L. Baker, President Jeffrey A. Cline, Vice President
John F. Barr
Wayne K. Keefer LeRoy E. Myers
100 West Washington Street, Room 226 | Hagerstown, MD 21740-4735 | P: 240.313.2200 | F: 240.313.2201
WWW.WASHCO-MD.NET
Open Session Item
SUBJECT: Planning Assistance to States Program Grant – Approval to Accept
Funding
PRESENTATION DATE: April 12, 2016
PRESENTATION BY: Stephanie Lapole, Grant Manager, Office of Community
Grant Management and Julie Pippel, Director, Division of Environmental Management
RECOMMENDED MOTION: Move to approve acceptance of the award from the United
States Army Corp of Engineers in the amount of $50,000.
REPORT-IN-BRIEF: The proposed funding is for completion of phase 1 of the
Urbanized Area Stormwater Infrastructure Mapping Project with the United States Army Corps
of Engineers Baltimore District. The project will enable the County to work toward compliance
with the National Pollutant Discharge Elimination System (NPDES) MS4 Phase II General
Permit by mapping and inventorying its stormwater drainage system within the Urbanized Area.
DISCUSSION: The Office of Community Grant Management has reviewed the grant
funding guidelines. There is a 50/50 match requirement which is covered by the Engineering &
Construction Stormwater Retrofit CIP budget.
FISCAL IMPACT: Provides $50,000 for Environmental Management related expenses
which may otherwise be added to the Environmental Management budget. The match
requirement associated with this grant was approved in the Engineering & Construction
Stormwater Retrofit CIP budget.
CONCURRENCES: Director, Office of Community Grant Management, Director,
Division of Engineering & Construction Management and GIS Manager, Information
Technologies
ALTERNATIVES: Deny acceptance of funding
ATTACHMENTS: N/A
AUDIO/VISUAL NEEDS: N/A
Board of County Commissioners of Washington County, Maryland
Agenda Report Form
Board of County Commissioners of Washington County, Maryland Agenda Report Form
Open Session Item SUBJECT: Pinnacle Foods – Conditional Loan
PRESENTATION DATE: April 12, 2016
PRESENTATION BY: Robert Mandley, Business Development Specialist
RECOMMENDED MOTION: Move to approve an offer of up to $500,000 in financial
assistance, in the form of two conditional loans, to Pinnacle Foods Group, LLC to assist with establishing operations and job creation in Washington County.
REPORT-IN-BRIEF: In June 2015, Pinnacle Foods purchased the former Unilever Ice Cream
facility with plans to renovate the building to accommodate the manufacturing of its new frozen food line, Gardenia. Pinnacle Foods anticipates creating up to 300 new fulltime jobs by 2020.
DISCUSSION:
The Maryland Department of Commerce will be offering two conditional loans in the amount of
$500,000 through the Maryland Economic Development Assistance Authority and Fund
(MEDAAF), based on the job creation numbers and the estimated capital investment of
$30,000,000. The loans will be funded in two phases. The initial loan, in the amount of
$312,500, will be funded in 2016, the second loan, in the amount of $187,500, will be available for Phase two of the project’s additional job creation in excess of the original 125 new jobs.
The Department of Business Development is requesting the Board to authorize two conditional
loans in the amount of $500,000 in support of this project subject to the same conditions and
terms as contained in the State’s MEDAAF loan.
FISCAL IMPACT: Any incentive will have an impact on the Hotel/Motel Tax
Revenue balance.
CONCURRENCES: County Administrator Assistant County Administrator Director, Department of Business Development
ALTERNATIVES: Provide no incentives or a lesser amount toward this project.
ATTACHMEVT(S): Resolution
RESOLUTION NO. RS-2016-____
(Endorsement of MEDAAF Loans and Local Incentives)
RECITALS
The DEPARTMENT OF COMMERCE of the State of Maryland (the
“Department”) under the MARYLAND ECONOMIC DEVELOPMENT ASSISTANCE
AUTHORITY AND FUND (“MEDAAF”) has agreed to provide assistance to
PINNACLE FOODS GROUP LLC, in the form of two (2) conditional loans as follows:
(1) Loan A - $312,500, and (2) Loan B – up to $187,500, from the MARYLAND
ECONOMIC DEVELOPMENT ASSISTANCE AUTHORITY AND FUND (the
“MEDAAF Loans”).
The proceeds of the MEDAAF Loans will be used by Pinnacle Foods Group LLC,
for eligible project costs related to the construction or acquisition of a building or real
property and the acquisition, construction, or installation of machinery, equipment,
furnishings, fixtures, leasehold improvements, site improvements, or infrastructure
improvements at the project site (the “Project”).
In accordance with Sections 5-301 through 5-349 of the Economic Development
Article of the Annotated Code of Maryland, the Board of County Commissioners of
Washington County, Maryland (the “County”), is required to endorse the making of the
MEDAAF Loans for the Project.
To complement the State of Maryland’s offer of assistance, the County will also
provide assistance in the form of two (2) conditional loans as follows: (1) Loan A -
$312,500, and (2) Loan B – up to $187,500, on essentially the same terms and conditions
of the MEDAAF Loans (the “County Loans”).
The County has determined and expressly finds that it is in the best interest of
the citizens of Washington County to endorse the making of the MEDAAF Loans for the
Project.
NOW, THEREFORE, BE IT RESOLVED by the Board of County Commissioners
of Washington County, Maryland, that:
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1. The County hereby fully endorses the making of the MEDAAF Loans for
the Project.
2. The County hereby approves the County Loans for the Project.
3. This Resolution shall be effective upon its adoption in accordance with
applicable law.
Adopted and effective this _____ day of ___________, 2016.
ATTEST: BOARD OF COUNTY COMMISSIONERS OF
WASHINGTON COUNTY, MARYLAND
Vicki C. Lumm, Clerk Terry L. Baker, President
Approved as to form
and legal sufficiency:
Kendall A. McPeak
Assistant County Attorney
Mail to:
Office of the County Attorney
100 West Washington Street
Room 202
Hagerstown, MD 21740
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Open Session Item
SUBJECT: County Commissioners of Washington County Public Improvement
Bonds of 2016 and Refunding Bonds of 2016 Authorizing Resolution
PRESENTATION DATE: April 12, 2016
PRESENTATION BY: Lindsey A. Rader, Bond Counsel for Washington County
RECOMMENDED MOTION: Move to approve the resolution authorizing County
Commissioners of Washington County (the “County”) to issue and sell, at public sale, upon its
full faith and credit, two separate series of general obligation bonds in the aggregate principal
amount not to exceed $31,635,000 for the purpose of financing costs of certain public facilities
and projects and refunding certain outstanding County general obligation bonds, as presented.
REPORT-IN-BRIEF: Certain Chapter Laws of Maryland, County Code provisions and
provisions of the Annotated Code of Maryland, as applicable, authorize the County to issue and
sell at public sale, upon its full faith and credit, two separate series of general obligation bonds
for the purpose of (1) financing the cost of certain public facilities and projects (see attachment),
and (2) advance refunding in whole or in part certain outstanding maturities of the Washington
County, Maryland Public Improvement and Refunding Bonds of 2009 (which maturities
correspond to bonds issued for non-refunding purposes in 2009 and constitute all of the
outstanding callable maturities of such 2009 bonds). Bonds issued for financing purposes (also
referred to as for new money purposes) will not exceed $20,635,000 in aggregate principal
amount and bonds issued for refunding purposes will not exceed $11,000,000 in aggregate
principal amount (the amortization schedule for the refunding bonds set forth in the resolution
assumes an aggregate par amount of $9,700,000). Certain details of each series of the bonds are
subject to adjustment based on market conditions, due to legal or tax considerations or for other
reasons identified in the resolution. The Chief Financial Officer is authorized to make certain
determinations and adjustments with respect to each series of the bonds prior to release of the
Preliminary Official Statement provided for in the resolution or following such release but prior
to the sale of the bonds, including (without limitation) adjustments to the aggregate principal
amount of each series, the amortization schedule for each series, and, with respect to the series of
bonds issued for refunding purposes, determining the prior bonds to be refunded, changing the
principal, interest and/or optional redemption dates for such series, and/or determining that none
of the identified prior bonds will be refunded (and, accordingly, that no series of bonds will be
issued for refunding purposes). In addition, authority to award or reject each series of the bonds
at the sale, and to make certain post-sale adjustments to either series contemplated by the
resolution, is delegated to the Chief Financial Officer, who shall act by order.
Board of County Commissioners of Washington County, Maryland
Agenda Report Form
DISCUSSION: Proceeds from the series of bonds issued for financing purposes
will be used to fund costs of certain infrastructure, public safety, public facilities, environmental
and educational public facilities and projects and costs of issuance of such series (see
attachment). There is no additional “new money” being requested other than as was approved in
the 2016 Capital Budget. The refunding bonds will be issued, if at all, in order to achieve debt
service savings.
FISCAL IMPACT: Annual bond issuance has been included in the County’s annual
debt affordability analysis.
CONCURRENCES: Gregory B. Murray, County Administrator, and John M.
Martirano, County Attorney.
ALTERNATIVES: If the resolution is not approved, it will be necessary to eliminate
the public facilities and projects to be funded from the series of new money bonds as detailed in
the Capital Improvement Plan. Also, it will be necessary to determine alternative funding for
such public facilities and projects already in progress. Depending on market conditions at the
time of sale, the County would lose debt service savings if refunding bonds are not issued.
ATTACHMENTS: AVAILABLE ONLINE - Resolution, schedule of public facilities
and projects to be funded from the new money series of bonds, and draft Preliminary Official
Statement.
AUDIO/VISUAL NEEDS: N/A
RESOLUTION NO. RS-2016-____
A RESOLUTION AUTHORIZING AND EMPOWERING COUNTY COMMISSIONERS
OF WASHINGTON COUNTY (THE “COUNTY”) TO ISSUE AND SELL AT PUBLIC SALE, UPON ITS FULL FAITH AND CREDIT, TWO SEPARATE SERIES OF ITS GENERAL OBLIGATION BONDS DESIGNATED, RESPECTIVELY, $20,635,000 “COUNTY
COMMISSIONERS OF WASHINGTON COUNTY PUBLIC IMPROVEMENT BONDS OF
2016” AND $9,700,000 “COUNTY COMMISSIONERS OF WASHINGTON COUNTY
REFUNDING BONDS OF 2016”, SUBJECT TO ADJUSTMENT OR INCREASE AS PROVIDED HEREIN, PURSUANT TO THE PROVISIONS OF, AS APPLICABLE, CHAPTER 205 OF THE LAWS OF MARYLAND OF 2004, CHAPTER 392 OF THE LAWS
OF MARYLAND OF 2007, TITLE 6 OF THE CODE OF PUBLIC LOCAL LAWS OF
WASHINGTON COUNTY (2007), CHAPTER 60 OF THE LAWS OF MARYLAND OF 2013,
AND SECTION 19-207 OF THE LOCAL GOVERNMENT ARTICLE OF THE ANNOTATED CODE OF MARYLAND, EACH AS AMENDED AS APPLICABLE, FOR THE PUBLIC PURPOSES OF (1) FINANCING THE COST OF CERTAIN PUBLIC FACILITIES AND
PROJECTS IN WASHINGTON COUNTY, INCLUDING THE COST OF ACQUISITION,
ALTERATION, CONSTRUCTION, RECONSTRUCTION, ENLARGEMENT, EQUIPPING,
EXPANSION, EXTENSION, IMPROVEMENT, REHABILITATION, RENOVATION, UPGRADING AND REPAIR OF VARIOUS INFRASTRUCTURE, PUBLIC SAFETY, PUBLIC FACILITIES, ENVIRONMENTAL AND EDUCATIONAL PROJECTS, TOGETHER
WITH ANY RELATED ARCHITECTURAL, FINANCIAL, LEGAL, PLANNING OR
ENGINEERING SERVICES, AND (2) SUBJECT TO THE FURTHER PROVISIONS
HEREOF, REFUNDING ALL OR A PORTION OF THE OUTSTANDING CALLABLE MATURITIES OF THE WASHINGTON COUNTY, MARYLAND PUBLIC IMPROVEMENT AND REFUNDING BONDS OF 2009, SUBJECT TO THE FURTHER PROVISIONS OF
THIS RESOLUTION; PRESCRIBING THE TERMS AND CONDITIONS OF EACH SERIES
OF BONDS AND THE TERMS AND CONDITIONS UPON WHICH EACH SERIES OF
BONDS SHALL BE ISSUED AND SOLD AND OTHER INCIDENTAL DETAILS WITH RESPECT THERETO; PLEDGING THE FULL FAITH AND CREDIT AND UNLIMITED
TAXING POWER OF THE COUNTY TO THE PAYMENT OF THE BONDS AND
PROVIDING THAT, IN THE EVENT THAT FUNDS AVAILABLE TO THE COUNTY ARE
INSUFFICIENT TO PAY THE PRINCIPAL OF AND INTEREST ON THE BONDS THAT
THE COUNTY SHALL LEVY AND COLLECT AD VALOREM TAXES UPON ALL THE LEGALLY ASSESSABLE PROPERTY WITHIN WASHINGTON COUNTY SUFFICIENT
TO PROVIDE FOR SUCH PAYMENTS WHEN DUE; PROVIDING FOR THE
DISBURSEMENT OF THE PROCEEDS OF THE BONDS; PROVIDING FOR, AS
APPLICABLE, AN ESCROW DEPOSIT AGENT, AN ESCROW DEPOSIT AGREEMENT, A
BIDDING AGENT AND A VERIFICATION CONSULTANT WITH RESPECT TO THE PROCEEDS OF THE REFUNDING BONDS; APPROVING A PRELIMINARY OFFICIAL
STATEMENT AND AUTHORIZING THE PREPARATION AND DISTRIBUTION OF AN
OFFICIAL STATEMENT IN CONNECTION WITH THE ISSUANCE AND SALE OF SAID
BONDS; MAKING CERTAIN FINDINGS CONCERNING DEBT LIMITATIONS OF
WASHINGTON COUNTY; MAKING OR PROVIDING FOR THE MAKING OF CERTAIN ELECTIONS, COVENANTS OR DETERMINATIONS PERTAINING TO THE TAX-
EXEMPT STATUS OF SAID BONDS; PROVIDING FOR THE REDEMPTON OF THE
REFUNDED BONDS; PROVIDING THAT THE PROVISIONS OF THIS RESOLUTION
SHALL BE LIBERALLY CONSTRUED; AND GENERALLY PROVIDING FOR THE ISSUANCE OF SAID BONDS.
R E C I T A L S
Chapter 60 of the Laws of Maryland of 2013 (the “2013 Act”) authorizes and empowers County Commissioners of Washington County (the “County”) to issue and sell bonds upon its
full faith and credit in an aggregate principal amount not to exceed $60,000,000 to provide funds
to finance the cost of the construction, improvement or development (within the meaning of such
Act) of certain public facilities in Washington County. The County has previously issued $10,162,278 of its County Commissioners of Washington County Public Improvement Bonds of 2015 pursuant to the authority of the 2013 Act.
Title 6 of the Code of Public Local Laws of Washington County, Maryland (2007), as
amended (the “Water and Sewer Act”) authorizes and empowers the County to issue bonds upon its full faith and credit to provide funds for the purpose of paying the cost of a water system, sewerage system or drainage system or any part of such system that the County owns, constructs
or operates (referred to as “projects” in the Water and Sewer Act).
Pursuant to the authority of the 2013 Act and the Water and Sewer Act, as applicable, the County has determined to issue and sell its general obligation bonds in an aggregate principal amount not to exceed $20,635,000 to finance the cost of the construction, improvement or
development (within the meaning of the 2013 Act) of certain public facilities in Washington
County and the cost of certain projects (within the meaning of the Water and Sewer Act) (the
“New Money Bonds”). The New Money Bonds are being issued to finance the cost of certain public facilities and projects as more particularly described in Section 3 herein. The issuance of the New Money Bonds shall not cause the County to exceed the debt limitation provided for in
the Water and Sewer Act.
Pursuant to the authority of Chapter 87 of the Laws of Maryland of 1995 (the “1995 Act”), Chapter 205 of the Laws of Maryland of 2004 (the “2004 Act”), Chapter 392 of the Laws
of Maryland of 2007 (the “2007 Act”), and the Water and Sewer Act, each as amended to the
extent applicable, as supplemented by Section 24 of Article 31 of the Annotated Code of
Maryland (now codified as Section 19-207 of the Local Government Article of the Annotated
Code of Maryland), as amended (the “Refunding Act”) (which permits the issuance of general obligation bonds at any time or times for the purposes of refunding any bonds or evidences of
obligation, by whatever name known, previously issued by the County), the County previously
issued upon its full faith and credit its Washington County, Maryland Public Improvement and
Refunding Bonds of 2009, dated May 15, 2009, in the original aggregate principal amount of
$22,130,000 (the “2009 Bonds”).
Although the 2009 Bonds were issued pursuant to the authority of multiple acts, as
identified above, the portions of the 2009 Bonds that the County may refund as described herein
were issued pursuant to the authority of the 2004 Act, the 2007 Act and the Water and Sewer
Act, as applicable. The County does not intend to refund any portion of the 2009 Bonds issued for refunding purposes.
2
Pursuant to the authority of the 2004 Act, the 2007 Act, the Water and Sewer Act and the Refunding Act, as applicable, the County has determined to advance refund all or a portion of
certain maturities of the 2009 Bonds as set forth on Exhibit A attached hereto, subject to the
further provisions of this Resolution.
The refunded 2009 Bonds will be refunded from proceeds of the issuance and sale of the County’s general obligation bonds in an aggregate principal amount not to exceed $11,000,000
(the “Refunding Bonds”), subject to the further provisions of this Resolution.
The County has determined that the total debt service cost to the County with respect to the refunded 2009 Bonds will be reduced by the County issuing the Refunding Bonds and applying proceeds thereof to discharge and satisfy the indebtedness evidenced by such refunded
bonds, thereby satisfying a requirement of the Refunding Act by realizing savings in the
aggregate cost of debt service on a direct comparison or present value basis.
The New Money Bonds and the Refunding Bonds are together referred to as the “Bonds”.
The 2004 Act, the 2007 Act, the Water and Sewer Act, the 2013 Act and the Refunding
Act are together referred to as the “Acts”.
The Bonds, as authorized to be issued and sold by this Resolution, are two separate series of bonds for the purposes of financing the cost of certain public facilities and projects in
Washington County and refunding certain outstanding obligations, all as described herein.
These Recitals constitute an integral part of this Resolution. Capitalized terms used in these Recitals and not otherwise defined in the following Sections of this Resolution shall have the meanings given to such terms in these Recitals.
NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF COUNTY
COMMISSIONERS OF WASHINGTON COUNTY:
Section 1. The County hereby determines that it is necessary to borrow money and incur
indebtedness pursuant to the authority of the 2013 Act and the Water and Sewer Act, as
applicable, to finance the cost of the public facilities and projects described in Section 3 hereof.
References to “to finance” in this Resolution are deemed to include “to reimburse”.
Pursuant to the authority of the 2013 Act and the Water and Sewer Act, as applicable, the
County shall borrow on its full faith and credit the aggregate sum of not to exceed $20,635,000
in order to provide funds to finance the cost of the construction, improvement or development of
certain public facilities in Washington County (within the meaning of the 2013 Act) and to finance the cost of certain projects (within the meaning of the Water and Sewer Act), as further
described in Section 3 hereof, and shall evidence such borrowing by the issuance of a series of its
bonds in the aggregate principal amount of not to exceed $20,635,000 and designated “County
Commissioners of Washington County Public Improvement Bonds of 2016” (the “Public
Improvement Bonds”).
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The Chief Financial Officer of the County (who constitutes the Director of the Office of Budget and Finance for purposes of the County Code, the “Chief Financial Officer”), on behalf
of the County, with the advice of the financial advisor to the County and bond counsel to the
County, is hereby authorized from time to time prior to the sale of the Public Improvement
Bonds to adjust the aggregate principal amount of the Public Improvement Bonds as set forth in Section 4 hereof upward or downward (so long as such aggregate principal amount, as adjusted, does not exceed $20,635,000), to eliminate one or more of the maturities of the Public
Improvement Bonds provided for in Section 4 hereof and/or to adjust the principal amounts of
each maturity of the Public Improvement Bonds upward or downward, due to tax considerations,
due to market considerations, in order to restructure the amortization schedule for the Public Improvement Bonds to meet financial considerations impacting the County and/or in order to reduce the proceeds of the Public Improvement Bonds to be applied to any of the contemplated
public facilities or projects provided for in Section 3 hereof, and such adjustment (i) shall be
reflected in the Preliminary Official Statement provided for in Section 24 hereof if such
determination is made prior to the release of such Preliminary Official Statement or (ii) shall be communicated in accordance with the provisions of the official Notice of Sale provided for in Section 12 hereof if such determination is made after the release of such Preliminary Official
Statement.
Section 2. Subject to the further provisions of this Resolution, the County hereby determines that it is necessary to borrow money and incur indebtedness pursuant to the authority of the 2004 Act, the 2007 Act, the Water and Sewer Act and the Refunding Act, as applicable, to
advance refund all or a portion of the 2009 Bonds identified on Exhibit A hereto. The final
maturities or portions of maturities of the 2009 Bonds to be so refunded, if any, will be
determined prior to or upon the sale of the Refunding Bonds identified in the next paragraph in accordance with the further provisions of this Resolution. Any such 2009 Bonds that are finally determined to be refunded in accordance with the provisions of this Resolution are referred to
herein collectively as the “Refunded Bonds”. The potential Refunded Bonds are the outstanding
callable maturities of the 2009 Bonds.
Pursuant to the authority of the 2004 Act, the 2007 Act, the Water and Sewer Act and the
Refunding Act, as applicable, the County has determined to borrow on its full faith and credit an
aggregate sum not to exceed $11,000,000 in order to provide for the refunding of the Refunded
Bonds, and shall evidence such borrowing by the issuance of a single series of its bonds in an
aggregate principal amount not to exceed $11,000,000 and designated “County Commissioners of Washington County Refunding Bonds of 2016”, subject to re-designation as further provided
in this Section 2 (the “Refunding Bonds”).
It is the current intention of the Board of County Commissioners of Washington County (the
“Board”), subject to market conditions, to refund all of the currently outstanding potential Refunded Bonds identified on Exhibit A hereto and to redeem such Refunded Bonds on their earliest available
redemption date. Notwithstanding anything to the contrary contained in this Resolution, in the
event the Chief Financial Officer, on behalf of the County, with the advice of the financial
advisor to the County and bond counsel to the County, determines from time to time prior to the
sale of the Refunding Bonds that legal or tax considerations limit the County’s ability to refund a portion of the potential Refunded Bonds identified on Exhibit A hereto, that sufficient savings
cannot be achieved or the goals of the applicable Acts will not be met by refunding a portion of
the potential Refunded Bonds identified on Exhibit A hereto and/or that the amortization
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schedule for the Refunding Bonds should be adjusted in order to maximize debt service savings in any particular fiscal year or years and/or due to market considerations, such official may
adjust the aggregate principal amount of the Refunding Bonds as set forth in Section 4 hereof
upward or downward (so long as such aggregate principal amount, as adjusted, does not exceed
$11,000,000), and correspondingly adjust one or more of the principal amounts of the Refunding Bonds set forth in Section 4 hereof upward or downward, and to the extent necessary, eliminate one or more of the maturities of the Refunding Bonds provided for in Section 4 hereof and/or
add one or more maturities to the Refunding Bonds provided for in Section 4 hereof, in order to
reflect such overall adjustment in the aggregate principal amount of the Refunding Bonds, and
such adjustment (i) shall be reflected in the Preliminary Official Statement provided for in Section 24 hereof if such determination is made prior to the release of such Preliminary Official Statement or (ii) shall be communicated in accordance with the provisions of the official Notice
of Sale provided for in Section 12 hereof if such determination is made after the release of such
Preliminary Official Statement.
In addition, notwithstanding anything to the contrary contained in this Resolution, in the event the Chief Financial Officer, on behalf of the County, with the advice of the financial
advisor to the County and bond counsel to the County, determines from time to time prior to the
sale of the Refunding Bonds that legal or tax considerations limit the County’s ability to refund
any portion of the potential Refunded Bonds identified on Exhibit A hereto and/or that sufficient savings cannot be achieved or the goals of the applicable Acts will not be met by refunding any portion of the potential Refunded Bonds identified on Exhibit A hereto, such official may
determine that the Refunding Bonds shall not be issued, and such determination (i) shall be
reflected in the Preliminary Official Statement provided for in Section 24 hereof if such
determination is made prior to the release of such Preliminary Official Statement or (ii) shall be communicated in accordance with the provisions of the official Notice of Sale provided for in Section 12 hereof if such determination is made after the release of such Preliminary Official
Statement. In such event, all provisions of this Resolution relating to the issuance of the
Refunding Bonds and the refunding and redemption of the Refunded Bonds shall be construed to
be inapplicable.
The final actual maturities or portions of maturities of the potential Refunded Bonds
identified on Exhibit A hereto to be refunded from the proceeds of the Refunding Bonds, if any,
shall be determined in accordance with an order of the Chief Financial Officer delivered in
conjunction with the award of the sale of the Refunding Bonds in accordance with the provisions of Section 13 hereof.
The final aggregate principal amount of the Refunding Bonds, the final maturities of the
Refunding Bonds, and the final aggregate principal amount of each maturity of the Refunding
Bonds, if any, will be determined in accordance with an order or orders of the Chief Financial Officer delivered in conjunction with the award of the sale of the Refunding Bonds in
accordance with the provisions of Section 13 hereof.
The Refunding Bonds, together with the Public Improvement Bonds, are referred to herein
collectively as the “Bonds”.
Section 3. Subject to net original issue discount, if any, and adjustments made in
connection with the sale of the Public Improvement Bonds (including as contemplated in Section
5
1 hereof), the projects and purposes on account of which the Public Improvement Bonds are issued and the approximate amount of the par value of proceeds of the Public Improvement
Bonds allocated to each class of projects are identified as follows:
Proceeds Use
$7,415,000 Infrastructure Projects – Public Improvement Bonds
482,000 Public Facilities Projects – Public Improvement Bonds 500,000 Public Safety Projects – Public Improvement Bonds 8,635,000 Environmental Projects – Public Improvement Bonds
3,506,000 Educational Projects – Public Improvement Bonds
97,000 Public Improvement Bonds Issuance Costs
Notwithstanding the foregoing allocation, the County, without notice to or the consent of the registered owners of the Public Improvement Bonds, may reallocate the approximate amount of the
par value of the proceeds of the Public Improvement Bonds to be spent among the projects
referenced above (as such projects may be further identified in materials provided or available to the
Board or in resolutions of the Board) in compliance with applicable County budgetary procedures or applicable law.
Section 4. Each series of the Bonds shall be dated their dated date and shall be issued in
the denominations of $5,000 each or any integral multiple thereof. Each series of the Bonds
shall bear interest from its dated date. Subject to the further provisions of this Section 4, interest on the Public Improvement Bonds shall be payable on January 1, 2017 and on each July 1 and January 1 thereafter until maturity or, as applicable, prior redemption, and interest on the
Refunding Bonds shall be payable on July 1, 2016 and on each January 1 and July 1 thereafter
until maturity or, as applicable, prior redemption. Each January 1 or July 1 on which interest is
due on either series of the Bonds is referred to herein as an “Interest Payment Date”.
Subject to the provisions of this Resolution, the Public Improvement Bonds shall mature
or be subject to mandatory sinking fund redemption as designated by the successful bidder for
the Public Improvement Bonds, on July 1 of the years and in the amounts as follows:
[CONTINUED ON FOLLOWING PAGE]
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PUBLIC IMPROVEMENT BONDS*
Year (July 1) Principal Amount Year (July 1) Principal Amount
2017 $ 710,000 2027 $1,045,000
2018 740,000 2028 1,080,000
2019 770,000 2029 1,110,000 2020 805,000 2030 1,145,000 2021 835,000 2031 1,180,000
2022 870,000 2032 1,220,000
2023 905,000 2033 1,260,000
2024 940,000 2034 1,300,000 2025 980,000 2035 1,340,000 2026 1,015,000 2036 1,385,000
* The aggregate principal amount of, and aggregate principal amount of each maturity of, the
Public Improvement Bonds, is subject to adjustment prior to sale as provided in Section 1 hereof and in the official Notice of Sale provided for in Section 12 hereof. In addition, the aggregate principal amount of, and/or the aggregate principal amount of each maturity of, the Public
Improvement Bonds is subject to adjustment after receipt of bids in accordance with the
provisions of the official Notice of Sale provided for in Section 12 hereof.
Subject to the provisions of this Resolution, the Refunding Bonds shall mature or be subject to mandatory sinking fund redemption as designated by the successful bidder for the
Refunding Bonds, on January 1 of the years and in the amounts as follows:
REFUNDING BONDS*
Year
(January 1)
Principal Amount
Year
(January 1)
Principal Amount
2017 $120,000 2024 $ 930,000 2018 20,000 2025 980,000
2019 20,000 2026 1,010,000
2020 810,000 2027 1,040,000
2021 840,000 2028 1,060,000
2022 870,000 2029 1,100,000 2023 900,000
* The principal amortization schedule for the Refunding Bonds set forth above provides for the
Refunding Bonds to be issued in the aggregate principal amount of $9,700,000. The aggregate
principal amount of, and aggregate principal amount of each maturity of, the Refunding Bonds, is subject to adjustment or elimination and/or to the addition of maturities as provided in Section
2 hereof and in the official Notice of Sale provided for in Section 12 hereof. In addition, the
aggregate principal amount of, and/or the aggregate principal amount of each maturity of, the
7
Refunding Bonds is subject to adjustment after receipt of bids in accordance with the provisions of the official Notice of Sale provided for in Section 12 hereof.
Notwithstanding anything to the contrary contained in this Section 4, in the event the
Chief Financial Officer determines in accordance with the provisions of Section 2 hereof not to refund one or more maturities of the potential Refunded Bonds at or prior to the date of sale of the Refunding Bonds, the Chief Financial Officer, with the advice of the financial advisor to the
County and bond counsel to the County, is hereby authorized and empowered to (i) change the
principal payment dates for the Refunding Bonds from January 1 to July 1 if such change would
better serve the interests of the County and comply with the provisions of the Code (as defined in Section 15 hereof), (ii) determine the first and last such principal payment dates for the Refunding Bonds, (iii) change the first Interest Payment Date for the Refunding Bonds and (iv)
adjust the dates on which the Refunding Bonds shall be subject to redemption at the option of the
County and any such adjustments (i) shall be reflected in the Preliminary Official Statement
provided for in Section 24 hereof if such determination is made prior to the release of such Preliminary Official Statement or (ii) shall be communicated in accordance with the provisions of the official Notice of Sale provided for in Section 12 hereof if such determination is made
after the release of such Preliminary Official Statement.
The foregoing provisions of this Section 4 are also subject to the provisions of Sections 1, 2, 12 and 13 hereof.
Subject to the provisions of Section 12 hereof, each Bond shall bear interest from its
dated date if no interest payment has been paid or from the most recent Interest Payment Date to
which interest has been paid or duly provided for; provided, however, that each Bond authenticated after the Record Date (as hereinafter defined) for any Interest Payment Date, but prior to such Interest Payment Date, shall bear interest from such Interest Payment Date. Interest
on each series of the Bonds shall be paid at the rate or rates named by the successful bidder for
such series of the Bonds in accordance with the terms of the official Notice of Sale hereinafter
provided for.
The County hereby appoints Manufacturers and Traders Trust Company, a New York
state banking corporation, as bond registrar and as paying agent for each series of the Bonds (the
“Bond Registrar and Paying Agent”).
The principal of and interest on the Bonds shall be payable in such money of the United
States of America as is lawful at the time of payment.
So long as the Bonds of a series are maintained in Book-Entry Form (as hereinafter
defined), payments of principal or redemption price of such series of the Bonds shall be made as described in Section 6 hereof. At any other time, the principal or redemption price of each Bond
of such series shall be paid upon presentment and surrender of such Bond on the date such
principal or redemption price is payable or if such date is not a Business Day (as hereinafter
defined) then on the next succeeding Business Day at the designated corporate trust office of the
Bond Registrar and Paying Agent.
Interest on each Bond shall be payable to the person in whose name such Bond is
registered (the “Registered Owner”) on the registration books for such series of the Bonds as of
8
the close of business on the 15th calendar day of the month immediately preceding each Interest Payment Date (the “Record Date”). So long as a series of the Bonds is maintained in Book-
Entry Form, payment of interest on such series of the Bonds shall be made as described in
Section 6 hereof. At any other time, payment of the interest on each Bond shall be made by
check mailed on the date such interest is payable or, if such date is not a Business Day, then the next succeeding Business Day to the address of such Registered Owner as it appears on said registration books for such series of the Bonds (with respect to each series, the “Bond Register”).
“Business Day” means a day other than a Saturday, Sunday or day on which the Bond
Registrar and Paying Agent is authorized or obligated by law or required by executive order to remain closed.
The interest on any Bond which is payable, but is not punctually paid or duly provided
for, on the appropriate Interest Payment Date shall forthwith cease to be payable to the
Registered Owner thereof by virtue of having been such Registered Owner on the relevant Record Date; and such interest shall be paid by the Bond Registrar and Paying Agent to the person in whose name the Bond (or its predecessor Bond) is registered at the close of business on
a date to be fixed by the Bond Registrar and Paying Agent for the payment of such interest,
notice thereof being given by first class mail (postage prepaid) to said person not fewer than 30
days prior to such record date, at the address of such person appearing on the applicable Bond Register, or may be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which such series of the Bonds may be listed and
upon such notice as may be required by such exchange.
Section 5. Each series of the Bonds shall be issued as fully registered bonds registered on the applicable Bond Register kept for that purpose by the Bond Registrar and Paying Agent, and shall be registered and transferred in accordance with the terms and conditions set forth in such
series of the Bonds. Each series of the Bonds shall be initially issued in the form of separate,
single, authenticated, fully registered Bonds in the amount of each separate maturity of such
series of the Bonds.
Section 6. The provisions of this Section 6 shall apply to each series of the Bonds so
long as such series of the Bonds shall be maintained in Book-Entry Form with a Depository (as
hereinafter defined), any other provisions of this Resolution to the contrary notwithstanding.
A system for registration of each series of the Bonds in Book-Entry Form with a
Depository, which shall initially be The Depository Trust Company, New York, New York
(“DTC”), shall be in effect on the date of the issuance and delivery of the Bonds.
(a) Upon initial issuance and delivery, one fully registered bond for the aggregate principal amount of each maturity of each series of the Bonds will be registered in the name of
Cede & Co., as nominee for DTC, and immobilized in the custody of DTC or held by the Bond
Registrar and Paying Agent on DTC’s behalf through DTC’s “FAST” system.
9
(b) Transfer of ownership interests in each series of the Bonds will be accomplished by book entries made by the Depository and, in turn, by the direct or indirect participants (the
“Participants”) who act on behalf of the ultimate purchasers of such series of the Bonds (the
“Beneficial Owners”). The Beneficial Owners will not receive certificates representing their
ownership in such series of the Bonds, except as hereafter provided. (c) The principal or redemption price of and interest on each series of the Bonds shall
be payable to the Depository, or registered assigns, as the registered owner of such series of the
Bonds, in same day funds on each date on which the principal or redemption price of or interest
on such series of the Bonds is due as set forth in this Resolution and in such series of the Bonds or as otherwise required by the Depository. Such payments shall be made to the offices of the Depository specified by the Depository to the Bond Registrar and Paying Agent in writing.
Without notice to or the consent of the holders of such series of the Bonds, the County, the Bond
Registrar and Paying Agent and the Depository may agree in writing to make payments of
principal and interest in a manner different from that set out herein. Neither the County nor the Bond Registrar and Paying Agent shall have any obligation with respect to the transfer or crediting of the appropriate principal and interest payments to the Participants or the Beneficial
Owners or their nominees.
(d) The County may replace any Depository as the securities depository for any series of the Bonds with another Depository or discontinue the maintenance of any series of the Bonds with any Depository if (i) the County, in its sole discretion, determines that any (A) such
Depository is incapable of discharging its duties with respect to such series of the Bonds, or (B)
the interests of the Beneficial Owners might be adversely affected by the continuation of the
Book-Entry System (as hereinafter defined) with such Depository as the securities depository for such series of the Bonds, or (ii) such Depository determines not to continue to act as a securities depository for such series of the Bonds or is no longer permitted to act as such securities
depository. Notice of any determination pursuant to clause (i) shall be given to such Depository
at least 30 days prior to any such discontinuance (or such fewer number of days as shall be
acceptable to such Depository). Neither the County nor the Bond Registrar and Paying Agent will have any obligation to make any investigation to determine the occurrence of any events that
would permit the County to make any determination described in this paragraph.
(e) If, following a determination or event specified in subsection (d) above, the
County discontinues the maintenance of any series of the Bonds in Book-Entry Form, the County will issue replacement bonds (the “Replacement Bonds”) of such series directly to the applicable
Participants as shown on the records of the Depository or, to the extent requested by any
Participant, to the Beneficial Owners of such series of the Bonds as further described in this
Section. The Bond Registrar and Paying Agent shall make provisions to notify the applicable
Participants and the applicable Beneficial Owners by mailing an appropriate notice to the Depository, or by other means deemed appropriate by the Bond Registrar and Paying Agent in its
discretion, that the County will issue Replacement Bonds directly to the Participants shown on
the records of the Depository or, to the extent requested by any Participant, to Beneficial Owners
of such series of the Bonds shown on the records of such Participant, as of a date set forth in
such notice, which shall be a date at least 10 days after receipt of such notice by the Depository (or such fewer number of days as shall be acceptable to the Depository).
10
In the event that Replacement Bonds are to be issued to the Participants or to the Beneficial Owners with respect to a series of the Bonds, the Bond Registrar and Paying Agent
shall promptly have prepared Replacement Bonds registered in the names of such Participants as
shown on the records of the Depository or, if requested by such Participants, in the names of the
Beneficial Owners of such series of the Bonds, as shown on the records of such Participants as of the date set forth in the notice delivered in accordance with the immediately preceding paragraph. Replacement Bonds issued to Participants or to Beneficial Owners shall be in the
authorized denominations, be payable as to principal and interest on the same dates as the
applicable series of the Bonds, with interest being payable by check or draft mailed to each
registered owner at the address of such owner as it appears on the applicable Bond Register and principal being payable upon presentation to the Bond Registrar and Paying Agent, and be in fully registered form.
Replacement Bonds issued to a Depository shall have the same terms, form and content
as the series of the Bonds initially registered in the name of the Depository to be replaced or its nominee except for the name of the record owner.
(f) The Depository and its Participants and the Beneficial Owners, by their
acceptance of each series of the Bonds, agree that neither the County nor the Bond Registrar and
Paying Agent shall have any liability for the failure of the Depository to perform its obligations to the Participants and the Beneficial Owners, nor shall the County or the Bond Registrar and Paying Agent be liable for the failure of any Participant or other nominee of the Beneficial
Owners to perform any obligation to the Beneficial Owners of such series of the Bonds.
For purposes of this Section 6, the following words have the following meanings: “Book-Entry Form” or “Book-Entry System” means a form or system, as applicable,
under which (i) the ownership of beneficial interests in a series of the Bonds may be transferred
only through a book-entry and (ii) physical bond certificates in fully registered form are
registered only in the name of a Depository or its nominee as holder, with the physical bond certificates “immobilized” in the custody of the Depository or in the custody of the Bond
Registrar and Paying Agent on behalf of the Depository.
“Depository” means any securities depository that is a “clearing corporation” within the
meaning of the New York Uniform Commercial Code and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934, as amended,
operating and maintaining, with its participants or otherwise, a Book-Entry System to record
ownership of beneficial interests in municipal bonds, and to effect transfers of municipal bonds,
in Book-Entry Form, and includes and means initially The Depository Trust Company, New
York, New York.
Section 7. (a) The Public Improvement Bonds that mature on or before July 1, 2026 are
not subject to redemption at the option of the County prior to their maturities. The Public
Improvement Bonds maturing on and after July 1, 2027 shall be redeemable at the option of the
County, in whole or in part, on any date on or after July 1, 2026, in any order directed by the County, at a redemption price of the principal amount of Public Improvement Bonds (or portions
thereof) to be redeemed, plus accrued interest thereon to the date fixed for redemption, without
11
premium or penalty. The particular maturities or portions of maturities of the Public Improvement Bonds to be so redeemed shall be determined in the sole discretion of the County.
(b) Subject to the provisions of Section 4 hereof with respect to the Refunding Bonds,
the Refunding Bonds that mature on or before January 1, 2026 are not subject to redemption at the option of the County prior to their stated maturities. The Refunding Bonds maturing on and after January 1, 2027 shall be redeemable at the option of the County, in whole or in part, on any date
on or after January 1, 2026, in any order directed by the County, at a redemption price of the
principal amount of the Refunding Bonds (or portions thereof) to be redeemed, plus accrued
interest to the date fixed for redemption, without premium or penalty. The particular maturities or portions of maturities of the Refunding Bonds to be so redeemed shall be determined in the sole discretion of the County.
(c) Notwithstanding any provisions contained herein, during any period in which a
series of the Bonds is maintained pursuant to a Book-Entry System, redemption of the Bonds of such series shall occur in accordance with the Depository’s standard procedures for redemption of obligations such as the applicable series of the Bonds.
(d) Additional provisions relating to the optional redemption of either series of the
Bonds and the mandatory sinking fund redemption of either series of the Bonds are provided for in the form of Bond set forth in Section 9 hereof.
The provisions of this Section 7 are also subject to the provisions of Section 12 hereof.
Section 8. Each series of the Bonds, when issued, shall be executed in the name of the County by the manual or facsimile signature of the President or the Vice President of the Board and the seal of, or a facsimile of the seal of, the County shall be imprinted thereon, and the
Bonds shall be attested by the manual or facsimile signature of the County Clerk and
authenticated by the manual signature of the Bond Registrar and Paying Agent.
In the event any official of the County whose signature shall appear on any Bond
described in this Resolution shall cease to be such official prior to the delivery of said Bond,
his/her signature shall nevertheless be valid, sufficient and binding for the purposes herein
intended.
There shall be printed on or attached to each of the Bonds the text of the applicable
approving legal opinion of Bond Counsel with respect to such Bond. Such printed text shall be
certified by the manual or facsimile signature of the President or the Vice President of the Board
to be a true and complete copy of such opinion as delivered to the County on the date of delivery
of the Bonds to the original purchasers thereof.
Section 9. Each series of the Bonds shall be in substantially the following form, which
form together with all of the terms, covenants and conditions therein contained, is hereby
adopted by the County as and for the form of obligation to be incurred by it, and said terms,
covenants and conditions are hereby made binding upon the County, including the promise to pay therein contained, in accordance with said form:
[CONTINUED ON NEXT PAGE]
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(Form of Face of Bond)
Note: Bracketed language is intended to reflect that such provisions apply only to one series
of the Bonds or apply only in certain circumstances, and such language shall be deleted from
or included in the final form of Bond for the series of the Bonds to which it is inapplicable or
applicable, as appropriate.
No. R__-___ $______________________
UNITED STATES OF AMERICA
STATE OF MARYLAND COUNTY COMMISSIONERS OF WASHINGTON COUNTY
[PUBLIC IMPROVEMENT BOND OF 2016]
[REFUNDING BOND OF 2016]
Annual Interest Rate Maturity Date Bond Date Cusip Number
[July 1, ____] ________, 2016 937751___
[January 1, _____] Registered Owner: Cede & Co.
Principal Amount: Dollars
County Commissioners of Washington County, a body politic and corporate organized
and existing under the Constitution and laws of the State of Maryland (the “County”), hereby
acknowledges itself indebted for value received and, upon surrender hereof, promises to pay to
the Registered Owner shown above, or his registered assigns, on the Maturity Date shown above,
unless, to the extent applicable, this bond shall have been called for prior redemption and payment of the redemption price made or provided for, the Principal Amount shown above, and
to pay interest on the outstanding principal amount hereof from the later of the Bond Date shown
above and the most recent Interest Payment Date (as hereinafter defined) to which interest has
been paid or provided for; provided, however, if this bond is authenticated after a Record Date
(as hereinafter defined) for any Interest Payment Date and before such Interest Payment Date, it shall bear interest from such Interest Payment Date.
Interest on this bond shall be paid at the Annual Interest Rate shown above, payable on
[for Public Improvement Bonds--January 1, 2017] [for Refunding Bonds—July 1, 2016] and
semiannually thereafter on [for Public Improvement Bonds--July 1 and January 1] [for Refunding
Bonds--January 1 and July 1] in each year (the “Interest Payment Dates”) until payment of such
Principal Amount shall be discharged as provided in the Resolution (as hereinafter defined).
Such interest shall be paid to the person in whose name this bond is registered on the registration
13
books for the series of bonds of which this bond is one (the “Bond Register”) maintained by the Bond Registrar and Paying Agent (as hereinafter defined) at the close of business on the 15th
calendar day of the month next preceding each Interest Payment Date (the “Record Date”).
Notwithstanding the preceding sentence, interest on this bond which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date shall forthwith cease to be payable to the Registered Owner by virtue of having been such Registered Owner on the relevant
Record Date and such interest shall be paid by the Bond Registrar and Paying Agent to the
person in whose name this bond (or its predecessor bond) is registered at the close of business on
a date fixed by the Bond Registrar and Paying Agent for the payment of such interest, notice thereof being given by first class mail, postage prepaid, to said person not fewer than 30 days prior to such Record Date, at the address of such person appearing on the Bond Register, or may
be paid at any time in any other lawful manner not inconsistent with the requirements of any
securities exchange on which this bond may be listed and upon such notice as may be required
by such exchange. Principal or redemption price of and interest on this bond are payable in such money of
the United States of America as is lawful at the time of payment.
This bond is one of an issue of bonds limited in aggregate principal amount to $________________, all dated the date of delivery and all known as “County Commissioners of Washington County [Public Improvement Bonds of 2016][Refunding Bonds of 2016]” (the
“Bonds”). The Bonds are issued as registered bonds, without coupons, in the denominations of
$5,000 or any integral multiple thereof. The Bonds are numbered consecutively from No. 1
upward and mature on July 1 in the years and in the amounts and bear interest at the annual rates, all as set forth below:
Maturing
[July 1] [January 1]
Principal Amount
Interest Rate
Maturing
[July 1] [January 1]
Principal Amount
Interest Rate
[COMPLETE AMORTIZATION SCHEDULE FOR APPLICABLE SERIES OF THE
BONDS]
14
[Include for either series of the Bonds only to extent successful bidder for such series
designates term bonds--The Bonds maturing on [for Public Improvement Bonds--July 1,][for
Refunding Bonds--January 1,] _____ are subject to mandatory sinking fund redemption at a
redemption price equal to 100% of the principal amount thereof, together with interest accrued to
the date fixed for redemption, on the dates and in the principal amounts set forth below: Mandatory Sinking
Redemption Date Fund Installment]
The Bonds that mature on or before [for Public Improvement Bonds--July 1, 2026][for
Refunding Bonds—January 1, 2026] are not subject to redemption at the option of the County
prior to their respective maturities. The Bonds maturing on and after [for Public Improvement
Bonds--July 1, 2027][for Refunding Bonds—January 1, 2027] shall be subject to redemption prior to their respective maturities, at the option of the County, in whole or in part on any date on
or after [for Public Improvement Bonds—July 1, 2026][for Refunding Bonds—January 1, 2026],
in such order as shall be determined by the County, at a redemption price of the principal amount
of the Bonds (or portions thereof) to be redeemed, plus accrued interest thereon to the date fixed for redemption, without premium or penalty.
If fewer than all of the Bonds of any one maturity shall be called for redemption, then the
particular Bonds of such maturity to be redeemed shall be selected by such means in such
manner as the Bond Registrar and Paying Agent, in its sole discretion, shall determine. Each $5,000 principal amount of any Bond shall be considered a separate Bond for the purposes of selection of Bonds for redemption.
If all or a portion of the Bonds outstanding are to be redeemed, the County shall give
notice of such redemption by first class mail, postage prepaid, at least 30 days prior to the date fixed for redemption to each registered owner of a Bond or portion thereof to be redeemed at the
address of such registered owner appearing on the Bond Register. The failure to mail the
redemption notice or any defect in the notice so mailed shall not affect the validity of the
redemption proceedings. The County may, but shall not be obligated to, publish such notice of
redemption at least once not fewer than 30 days prior to the date fixed for redemption in a newspaper circulating in the City of Baltimore, Maryland and also in a financial journal or daily
newspaper of general circulation published in the City of New York, New York. The
redemption notice shall state (i) whether the Bonds are to be redeemed in whole or in part and, if
in part, the maturities, numbers and CUSIP numbers of the Bonds to be redeemed, (ii) in the case
of a partial redemption of any Bond, the portion of the principal amount which is to be redeemed, (iii) that interest shall cease to accrue on the Bonds (or portions thereof) called for
redemption on the date fixed for redemption, (iv) the date fixed for redemption and the
redemption price, (v) the address of the Bond Registrar and Paying Agent with a contact person
and phone number, and (vi) that the Bonds to be redeemed in whole or in part shall be presented
for redemption and payment on or after the date fixed for redemption at the designated corporate trust office of the Bond Registrar and Paying Agent. Any such notice may be conditioned upon
receipt by the Bond Registrar and Paying Agent of sufficient funds to effect such redemption.
15
From and after the date fixed for redemption, if monies sufficient for the payment of the redemption price of the Bonds (or portions thereof) called for redemption plus accrued interest
due thereon to the date fixed for redemption are held by the Bond Registrar and Paying Agent on
such date, the Bonds so called for redemption shall become due and payable at the redemption
price provided for redemption of such Bonds on such date, interest on such Bonds shall cease to accrue and the registered owners of such Bonds so called for redemption shall have no rights in respect thereof except to receive payment for the redemption price thereof plus accrued interest
thereon to the date fixed for redemption from such monies held by the Bond Registrar and
Paying Agent. Upon presentation and surrender of a Bond called for redemption in compliance
with the redemption notice, the Bond Registrar and Paying Agent shall pay the appropriate redemption price of such Bond plus accrued interest thereon to the date fixed for redemption. If Bonds so called for redemption are not paid upon presentation and surrender as described above,
such Bonds shall continue to bear interest at the rates stated therein until paid.
In case part but not all of a Bond shall be selected for redemption, then, upon the surrender thereof, there shall be issued without charge to the registered owner thereof Bonds of the same series in any of the authorized denominations as specified by the registered owner. The
aggregate principal amount of Bonds so issued shall be equal to the unredeemed balance of the
principal amount of the Bond surrendered, and the Bonds issued shall bear the same interest rate
and shall mature on the same date as the Bond surrendered. [TO BE USED FOR BONDS IN BOOK-ENTRY FORM ONLY THAT ARE SUBJECT TO
REDEMPTION--So long as all of the Bonds shall be maintained in book-entry form with a
Depository (as defined in the Resolution) in accordance with Section 6 of the Resolution, in the
event that part, but not all, of this bond shall be called for redemption, the holder of this bond may elect not to surrender this bond in exchange for a new Bond and in such event shall make a notation indicating the principal amount of such redemption and the date thereof on the Payment
Grid attached hereto. For all purposes, the principal amount of this bond outstanding at any time
shall be equal to the lesser of (A) the Principal Amount shown on the face hereof and (B) such
Principal Amount reduced by the principal amount of any partial redemption of this bond following which the holder of this bond has elected not to surrender this bond. The failure of the
holder hereof to note the principal amount of any partial redemption on the Payment Grid
attached hereto, or any inaccuracy therein, shall not affect the payment obligation of the County
hereunder. THEREFORE, IT CANNOT BE DETERMINED FROM THE FACE OF THIS
BOND WHETHER A PART OF THE PRINCIPAL OF THIS BOND HAS BEEN PAID.
Unless this bond is presented by an authorized representative of The Depository Trust
Company, a limited-purpose trust company organized under the New York Banking Law
(“DTC”), to the County or its agent for registration of transfer, exchange, or payment, and any
bond issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE,
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.]
The Bonds are issued pursuant to the authority of [include only applicable legislative
authority—Chapter 205 of the Laws of Maryland of 2004,] [Chapter 392 of the Laws of
Maryland of 2007,] [Title 6 of the Code of Public Local Laws of Washington County (2007),]
16
[Chapter 60 of the Laws of Maryland of 2013,] [and] [Section 19-207 of the Local Government Article of the Annotated Code of Maryland,] as amended (collectively, the “Act”) and in
accordance with Resolution.
The Bonds will be transferable only upon the Bond Register by the Bond Registrar and Paying Agent. Any Bond presented for transfer, exchange, registration, redemption or payment (if so required by the Bond Registrar and Paying Agent) shall be accompanied by a written
instrument or instruments of transfer or authorization for exchange, in form and with guaranty of
signature satisfactory to the Bond Registrar and Paying Agent, duly executed by the registered
owner thereof or by his duly authorized attorney. Upon any transfer or exchange, the County shall execute and the Bond Registrar and Paying Agent shall authenticate and deliver in the name of the registered owner or the transferee or transferees, as the case may be, a new registered
Bond or Bonds of the same series, in any of the authorized denominations in an aggregate
principal amount equal to the principal amount of the Bond exchanged or transferred and
maturing on the same date and bearing interest at the same rate. In each case, the County and the Bond Registrar and Paying Agent may require payment by the registered owner requesting the exchange or transfer of any tax, fee or other governmental charge, shipping charges and
insurance that may be required to be paid with respect thereto, but otherwise no charge shall be
made to the registered owner for the exchange or transfer.
The Bond Registrar and Paying Agent shall not be required to transfer or exchange any Bond after the mailing of notice calling such Bond or portion thereof for redemption; provided,
however, that this limitation shall not apply to any portion of a Bond which is not being called
for redemption.
It is hereby certified and recited that each and every act, condition and thing required to exist, to be done, to have happened and to be performed precedent to and in the issuance of this
bond, does exist, has been done, has happened and has been performed in full and strict
compliance with the Constitution and laws of the State of Maryland and the Resolution of the
Board of County Commissioners of the County, adopted on April __, 2016 (the “Resolution”), authorizing the issuance of the issue of bonds, of which this bond is one, and that said issue of
bonds, together with all other indebtedness of the County, is within every debt and other limit
prescribed by the Constitution and laws of said State. This bond is an obligation of the County,
payable as provided in the Resolution, and the full faith and credit and unlimited taxing power of
County Commissioners of Washington County are hereby irrevocably pledged to the payment of the principal of this bond and of the interest to accrue hereon at the dates and in the manner
mentioned herein.
This bond shall not be valid or become obligatory for any purpose or be entitled to any
benefit or security under the Resolution until the Certificate of Authentication endorsed hereon shall have been signed by an authorized signatory of the Bond Registrar and Paying Agent.
17
IN WITNESS WHEREOF, the County has caused this bond to be executed in its name by the [Vice] President of the Board of County Commissioners of Washington County and
attested by the County Clerk, and has also caused its corporate seal to be affixed or imprinted
hereon.
(SEAL)
ATTEST: COUNTY COMMISSIONERS OF
WASHINGTON COUNTY By:____________________ By:______________________________________
County Clerk [Vice] President, Board of
County Commissioners of Washington County
18
CERTIFICATE OF AUTHENTICATION
Date of Authentication:
This bond is one of the registered bonds of County Commissioners of Washington County designated “County Commissioners of Washington County [Public Improvement Bonds of 2016][ Refunding Bonds of 2016]”.
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Bond Registrar and Paying Agent
By: ____________________________________________
Authorized Signatory
19
[BONDS IN BOOK-ENTRY FORM ONLY] - PAYMENT GRID
Date of Principal Principal Holder Payment Amount Paid Amount Outstanding Signature
__________ ____________ _________________ ______________
__________ ____________ _________________ ______________ __________ ____________ _________________ ______________ __________ ____________ _________________ ______________
__________ ____________ _________________ ______________
__________ ____________ _________________ ______________
__________ ____________ _________________ ______________ __________ ____________ _________________ ______________ __________ ____________ _________________ ______________
__________ ____________ _________________ ______________
__________ ____________ _________________ ______________
__________ ____________ _________________ ______________ __________ ____________ _________________ ______________
20
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
_________________ (Tax Identification or Social Security No.______________) the within bond and all rights thereunder, and does hereby constitute and appoint _______________ attorney to transfer the within bonds on the books kept for the registration thereof, with full
power of substitution in the premises.
Dated: Signature Guaranteed:
___________________________ ____________________________ NOTICE: Signatures must be (Signature of Registered Owner) guaranteed by a member firm of NOTICE: Signature must correspond
the New York Stock Exchange or with the name of the Registered
a commercial bank or trust Owner of the within bond as it
company appears on the face of the within bond in every particular, without alteration or enlargement or any
change whatever
21
IT IS HEREBY CERTIFIED that the following is a true and correct copy of the complete
legal opinion of Funk & Bolton, P.A., Baltimore, Maryland, with respect to the issue of bonds of
which this bond is one, that the original of said opinion was manually executed, dated and issued
as of the date of delivery of, and payment for, said issue of bonds by the original purchaser thereof, and that an executed copy thereof is on file with the Bond Registrar and Paying Agent.
COUNTY COMMISSIONERS OF
WASHINGTON COUNTY
By: _________________________________________
[President][Vice President], Board of
County Commissioners of Washington County
(Insert or Attach Opinion of Bond Counsel)
(End of Form of Bond)
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Section 10. The President or the Vice President of the Board shall be and is hereby authorized to make such changes in the form of bond set forth in Section 9 hereof as the
President or the Vice President shall deem necessary to carry into effect the provisions of this
Resolution, including, without limitation, to include or remove bracketed provisions set forth in
the form of Bond provided for in Section 9 hereof with respect to a particular series of the Bonds, to reflect matters determined in accordance with Sections 1, 2, 4, 7, 12 or 13 hereof, or to comply with recommendations of bond counsel to the County; provided, however, that the
President or the Vice President shall make no change materially affecting the substance of such
form unless such change is determined by the Chief Financial Officer, with the advice of the
financial advisor to the County, to be in the best interest of the County. The execution of the Bonds of each series by such officer shall be conclusive evidence of
the approval by the County of all changes in the form of such series of the Bonds and of the due
execution of such series of the Bonds by the County.
Section 11. No Bond shall be valid or obligatory for the purpose or entitled to any security or benefit under this Resolution unless and until a certificate of authentication of such
Bond substantially in the form hereinabove provided shall have been duly executed by the Bond
Registrar and Paying Agent and such executed certificate of the Bond Registrar and Paying
Agent on such Bond shall be conclusive evidence that such Bond has been authenticated and delivered under this Resolution. The Bond Registrar and Paying Agent’s certificate of authentication on any Bond shall be deemed to have been executed by it if signed by an
authorized officer or signatory of the Bond Registrar and Paying Agent. It shall not be necessary
that the same officer or signatory of the Bond Registrar and Paying Agent sign the certificate of
authentication on all the Bonds issued hereunder. Section 12. Each series of the Bonds shall be sold at public sale by electronic bids to the
bidder therefor for cash whose bid results in the lowest true interest cost to the County in the
manner and in accordance with the formula set forth in the form of Notice of Sale attached as
Appendix C to the Preliminary Official Statement identified in Section 24 hereof and made a part hereof (the “Notice of Sale”). Electronic bids for the Bonds shall be received by the Chief
Financial Officer on May 3, 2016, subject to the further provisions of this Section 12. The Chief
Financial Officer shall be and is hereby authorized to make such changes in the form of Notice
of Sale set forth in the form of the Preliminary Official Statement provided to the Board with this
Resolution as the Chief Financial Officer shall deem necessary to carry into effect the purposes of this Resolution (including, without limitation, to reflect matters determined in accordance with
Sections 1, 2, 4 or 7 hereof) or to comply with recommendations of bond counsel to the County,
or, with the advice of the financial advisor to the County, to be in the best interest of the County,
including, without limitation, modifying or limiting the premium payable by a bidder for a series
of the Bonds, modifying the manner of adjusting an amortization schedule pre- or post-sale, modifying or eliminating the maximum interest rate for either series of the Bonds, modifying or
eliminating the maximum spread between the lowest and highest interest rates bid with respect to
a series of the Bonds by a bidder, or modifying the amount of or method of delivery for either
good faith deposit. The Chief Financial Officer, upon the advice of the financial advisor to the
County, is authorized to adjust the aggregate principal amounts of either series of the Bonds and the maturities thereof in the manner and in accordance with Sections 1, 2 or 4 hereof and this
Section 12 and the Notice of Sale and to determine which portion, if any, of the Refunded Bonds
identified on Exhibit A hereto shall be refunded in accordance with the provisions of this
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Resolution. The form of the Notice of Sale as contained in the final Preliminary Official Statement shall constitute the official Notice of Sale, subject to modification in accordance with
the provisions thereof.
Notwithstanding any other provision hereof, the Chief Financial Officer shall be and hereby is authorized to accept electronic bids for the Bonds, and to make such adjustments to the official Notice of Sale in the manner provided for therein as she shall deem necessary or
advisable, upon the advice of bond counsel to the County or the financial advisor to the County,
including to accomplish electronic bidding procedures, to change the bid specifications for either
series of the Bonds or to comply with applicable regulations, notices and other official guidance. In view of the desirability of flexibility in the scheduling of the sale of the Bonds to take
full advantage of market conditions to maximize debt service savings, the County determines
that it is in the best interest of the County to authorize and empower the Chief Financial Officer
to change the time of or cancel said sale at any time prior to May 3, 2016, and to reschedule said sale without publishing a new Notice of Sale or advertisement, if (i) the financial advisor to the County has advised her that market conditions are such that it is in the best interest of the County
to do so, and (ii) she concurs in such recommendation to cancel and/or reschedule the sale. The
Chief Financial Officer may cancel and reschedule any rescheduled sale in accordance with
phrases (i) and (ii) of the preceding sentence. If the date of sale is rescheduled as provided above, the Chief Financial Officer may also postpone the expected date of delivery of the Bonds. If the sale is postponed to a date later than May 31, 2016, then the Chief Financial Officer may
also change the dated date of the Bonds (and hence the date from which interest shall accrue), the
dates of the semi-annual interest payments and annual principal payments, the optional
redemption dates, and the mandatory sinking fund redemption dates, if any, accordingly. The Notice of Sale authorized by this Resolution shall be substantially in the form set
forth in Appendix C to the Preliminary Official Statement, and the terms, provisions and
conditions set forth in the final form of the Notice of Sale are hereby adopted and approved as
the terms, provisions and conditions under which each series of the Bonds shall be sold, issued and delivered at public sale. Said Notice of Sale, or an advertisement in substantially the form
attached hereto as Exhibit B, shall be published at least once, at least ten days preceding said
date of sale, in one or more daily or weekly newspapers having a general circulation in
Washington County and may also be published in one or more journals having a circulation
primarily among banks and investment bankers. The Chief Financial Officer, on behalf of the County, is hereby authorized to make any changes to such advertisement before publication to
reflect matters determined in accordance with Sections 1, 2, 3, 4, 7 or 12 of this Resolution
before such publication, if applicable. In addition, the Chief Financial Officer is hereby
authorized to cause to be prepared and distributed or made available to prospective bidders
printed or printable copies of said Notice of Sale, as well as the Preliminary Official Statement hereinafter authorized. The Chief Financial Officer or her designee is hereby authorized and
directed to handle all inquiries in connection with the sale authorized hereby and the Official
Statement hereafter referred to and is further authorized to reschedule any postponed sale with or
without the republication of the Notice of Sale or advertisement.
Section l3. Promptly after the sale of the Bonds, and in accordance with the terms and
conditions of the sale of such series of the Bonds as set forth in the official Notice of Sale, the
Chief Financial Officer, on behalf of the County, with the advice of the financial advisor to the
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County and bond counsel to the County, is hereby authorized and delegated the authority to deliver one or more orders determining the final aggregate principal amounts of each series of
the Bonds (including making any authorized adjustments to the final aggregate principal amount
of each maturity and the amortization schedule therefor following receipt of bids in accordance
with the provisions of the Notice of Sale), fixing the interest rate or rates payable on each series of the Bonds (within the limitations set forth in or provided for in this Resolution), unless the Chief Financial Officer determines to reject all bids for one or both series of the Bonds (any such
rejection also to be made by order of the Chief Financial Officer), and/or determining the
Refunded Bonds, as applicable. The execution and delivery by the Chief Financial Officer of
any such order or orders shall constitute conclusive evidence of the award or rejection of bids for a series of the Bonds and the final determination of the Refunded Bonds. Any such order shall be retained in the records of the County. In order to accommodate market practice, the Chief
Financial Officer may indicate any preliminary or final award, or any rejection of all bids, with
respect to a series of the Bonds on or through the electronic bidding platform on which bids were
received and through any other communication mechanism recommended by the financial advisor to the County. Subsequently, unless all bids for a series of the Bonds are so rejected by the Chief Financial Officer, each series of the Bonds shall thereupon be suitably printed or
engraved and delivered to the successful bidder therefor in accordance with the conditions of
delivery set forth in the official Notice of Sale.
In the event all bids for a series of the Bonds are rejected as provided in this Section 13, all references to such series of the Bonds contained in this Resolution shall be deemed to be
inapplicable.
Section 14. The portion of the proceeds of the Refunding Bonds issued to provide funds to refund any of the Refunded Bonds that constitute 2009 Bonds shall be paid to and held by Manufacturers and Traders Trust Company, the paying agent and bond registrar for the 2009
Bonds, as escrow deposit agent, as further described in this Section 14.
The Chief Financial Officer, with the advice of the financial advisor to the County and bond counsel, is hereby authorized to negotiate an escrow deposit agreement with Manufacturers
and Traders Trust Company, as escrow deposit agent, and that portion of the proceeds of the
Refunding Bonds to be applied to refunding the Refunded Bonds as described in the preceding
paragraph shall be deposited with such escrow deposit agent, invested in accordance with the
provisions of this Section 14 and the further provisions of this Resolution, and applied to the payment and redemption of the Refunded Bonds in accordance with Section 16 hereof. The
President or the Vice President of the Board is each hereby authorized and directed to execute
and deliver any such escrow deposit agreement on behalf of the County.
In connection with the issuance of the Refunding Bonds, the Chief Financial Officer, or her designee, is hereby authorized to provide for the bidding for and/or file on behalf of the
County, as applicable, any necessary investment agreements or any necessary subscriptions and
any amendments thereto to purchase United States Treasury Obligations – State and Local
Government Series, and/or any direct obligations of, or obligations the principal of and interest
on which are unconditionally guaranteed by, the United States of America (the “Defeasance Obligations”) in such amounts and maturing at such times so that sufficient moneys will be
available from such maturing principal and interest and any cash held uninvested to pay interest
on the applicable Refunded Bonds to their respective redemption dates and to redeem the
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applicable Refunded Bonds on their respective redemption dates as further described in this Resolution, and to take any other action or to execute any further instrument on behalf of the
County necessary to purchase such obligations. Any such obligations, and any cash to be held
uninvested in escrow, shall be deposited with the escrow deposit agent provided for in this
Section 14. The Chief Financial Officer, on behalf of the County, is hereby authorized and
empowered, following consultation with the financial advisor to the County and bond counsel to
the County, to select any party or entity to serve as a bidding agent with respect to any bidding
conducted for the selection of the Defeasance Obligations. To the extent any portion of the net premium payable by the purchaser of the Refunding
Bonds is to be applied to pay costs of issuance of the Refunding Bonds, such portion shall be
held by the County.
Section 15. Expenses relating to the issuance and sale of the Public Improvement Bonds, including the cost of printing the Public Improvement Bonds and advertising their sale and the
legal fees of the County, may be paid from the par amount of the Public Improvement Bonds
and, to the extent applicable, from the net premium constituting a portion of the gross proceeds
received from the sale of the Public Improvement Bonds or from any other funds available to the County. Expenses relating to the issuance and sale of the Refunding Bonds, including the cost of printing the Refunding Bonds and advertising their sale and the legal fees of the County, may be
paid from the net premium constituting a portion of the gross proceeds received from the sale of
the Refunding Bonds or from any other funds available to the County. In the event the date of
either series of the Bonds is adjusted in accordance with Section 12 hereof to be a date other than the date of delivery of such series, any accrued interest received on the sale of such series of the Bonds shall be applied to the first interest payment on such series of the Bonds. Any premium
received on either series of the Bonds shall be applied in such manner as shall be determined by
the Chief Financial Officer, subject to applicable limits of the Internal Revenue Code of 1986, as
amended (the “Code”). After providing for payment of costs of issuance from net premium and making such provision relating to premium and accrued interest thereon, as applicable, the
balance of the proceeds of the sale of the Public Improvement Bonds shall be deposited in
separate accounts to be used as described in Section 3 hereof for the purpose of financing the
public facilities and projects as described in Section 3 hereof and the proceeds of the Refunding
Bonds, together with any other funds provided by the County for such purpose, if any, shall be deposited and used as described in Section 14 hereof for the purpose of paying as and when due
the principal or redemption price of and interest on the Refunded Bonds. Any proceeds of the
Bonds not required for the purposes stated in Section 3 hereof or for the refunding of the
Refunded Bonds, as applicable, may be applied in accordance with the provisions of the
applicable Acts, or the extent not provided for therein, as determined by the Chief Financial Officer.
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Pending expenditure as contemplated hereby, the Chief Financial Officer may invest all or part of such balance of the proceeds of either series of the Bonds held by the County in such
manner as may be permitted by law; provided, however, that no such investment shall be made
which would cause the Bonds to be “arbitrage bonds” within the meaning of the Code and the
treasury regulations with respect thereto. Section 16. Prior to the delivery of and payment for the Refunding Bonds, the County
shall have received a report of a verification consultant, nationally recognized in the field of the
refunding of tax-exempt obligations, verifying that the maturing principal amounts of the
obligations held in escrow as described in Section 14 hereof, together with investments thereon and any cash held uninvested, will be sufficient to redeem any refunded 2009 Bonds on January 1, 2019 at a redemption price of 100% of the principal amount thereof, together with accrued
interest thereon, and to pay interest on such Refunded Bonds to such redemption date. The
Chief Financial Officer is hereby authorized and empowered, following consultation with the
financial advisor to the County and bond counsel to the County, to select the verification consultant (which is initially presumed to be The Arbitrage Group, Inc. but may be any other qualified verification consultant selected in accordance with the provisions of this Section 16).
Section 17. Conditional only upon the delivery of and payment for the Refunding Bonds,
and subject to the provisions of Sections 2, 4, 12 and 13 hereof providing for a determination that any particular series of the potential Refunded Bonds shall not be refunded, the County hereby specifically and irrevocably elects to redeem on January 1, 2019 any of the potential Refunded
Bonds finally selected for redemption in accordance with the provisions of this Resolution at the
redemption price of 100% of the principal amount thereof, and to pay interest when due on such
Refunded Bonds to and including such date fixed for redemption, and hereby directs the paying agent for the applicable Refunded Bonds, not fewer than 30 days before the redemption date, to cause a notice of redemption substantially in the form of Exhibit C hereto to be mailed, first class
mail, postage prepaid, to all registered owners of the applicable series of the Refunded Bonds at
their addresses as they appear on the registration books provided for such series of Refunded
Bonds; provided that, failure to so mail such notice shall not affect the validity of the proceedings for redemption.
Section 18. (a) On the date of issuance of the Bonds, the President or the Vice
President of the Board and the Chief Financial Officer shall be responsible for the execution and
delivery to counsel rendering an opinion on the validity of each series of the Bonds of a certificate of the County which complies with the requirements of Section 103 and Sections 141
through 150, inclusive, of the Code and the applicable regulations thereunder. Such officials are
hereby authorized, on behalf of the County, to make in such certificate any elections,
determinations or designations authorized or required by the Code and the applicable regulations
thereunder.
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(b) The County shall set forth in said certificate its reasonable expectations as to relevant facts, estimates and circumstances relating to the use of the proceeds of the Bonds, or of
any moneys, securities or other obligations which may be deemed to be proceeds of the Bonds
pursuant to Section 148 of the Code or the said regulations (collectively, the “Bond Proceeds”).
The County covenants with each of the holders of any of the Bonds that the facts, estimates and circumstances set forth in the said certificate will be based on the County’s reasonable expectations on the date of issuance of the Bonds and will be, to the best of the knowledge of the
persons executing such certificate, true, correct and complete as of that date.
(c) The County covenants with each of the holders of any of the Bonds that it will not use, or permit the use of any of, the Bond Proceeds or any other funds of the County, directly or indirectly, to acquire any securities or obligations, and will not take or permit to be taken or fail
to take any other action or actions which would cause any of the Bonds to be an “arbitrage bond”
within the meaning of said Section 148 and said regulations or that would otherwise cause the
interest on the Bonds to be includable in gross income of the holders of the Bonds for federal income tax purposes.
(d) The County further covenants that it will comply with said Section 148 and said
regulations and such other requirements of the Code which are applicable to the Bonds on the
date of issuance of the Bonds and which may subsequently lawfully be made applicable to the Bonds.
(e) The County will hold and shall invest Bond Proceeds within its control (if such
proceeds are invested) in accordance with the expectations of the County set forth in said
certificate. (f) The County shall make timely payment of any rebate amount or payment in lieu
thereof (or installment thereof) required to be paid to the United States of America in order to
preserve the exclusion from gross income for purposes of federal income taxation of interest on
the Bonds and shall include with any such payment such other documents, certificates or statements as shall be required to be included therewith under then applicable law and
regulations.
(g) The President or the Vice President of the Board and the Chief Financial Officer
may execute a certificate or certificates supplementing or amending said certificate, and actions taken by the County subsequent to the execution of such certificate shall be in accordance with
said certificate as amended or supplemented; provided, however, that the County shall execute
any such certificate only upon receipt by it of an opinion of bond counsel to the County
addressed to the County to the effect that actions taken by the County in accordance with the
amending or supplementing certificate will not adversely affect the exclusion from gross income for federal income taxation purposes of interest on the Bonds.
(h) The County shall retain such records as necessary to document the investment and
expenditure of Bond Proceeds, the uses of Bond Proceeds and of the facilities financed or
refinanced with such proceeds, together with such other records as may be required by the tax certificate or the Internal Revenue Service in order to establish compliance with requirements of
the Code and the regulations thereunder as conditions to the exclusion of interest on the Bonds
from federal gross income.
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Section 19. For the purposes of paying the interest on and principal of the Bonds hereby
authorized as such interest and principal comes due, the County shall include in the levy against
all legally assessable property in Washington County, in each and every fiscal year of the County
that any of said Bonds are outstanding, ad valorem taxes sufficient to provide such sums as the County may deem sufficient and necessary in conjunction with any other funds that will he available for the purpose, to provide for the payment of the interest on the Bonds coming due in
each such year and to pay the principal of the Bonds maturing in each such fiscal year. In the
event the proceeds from taxes so levied in any such fiscal year shall prove inadequate for such
purposes, additional taxes shall be levied in the succeeding fiscal year to make up such deficiency. The full faith and credit and unlimited taxing power of the County are hereby irrevocably pledged to the punctual payment of the maturing principal of and interest on the
Bonds hereby authorized as and when such principal and interest comes due and to the levy and
collection of the taxes hereinabove prescribed as and when such taxes may become necessary in
order to provide sufficient funds to meet the debt service requirements of said Bonds. The County hereby solemnly covenants to take all action as may be appropriate from time to time during the period that any of said Bonds remain outstanding and unpaid to provide the funds
necessary to make said principal and interest payments. The County further covenants and
agrees to levy and collect the taxes hereinabove prescribed.
Subject to any applicable Code limitations, the County may apply to the payment of the principal of and interest on any of the Bonds any funds received by it and available for such
purpose from the State of Maryland, the United States of America, any agency or instrumentality
thereof, or from any other source, and, to the extent any such funds are received or receivable in
any fiscal year, the taxes that required to be levied hereunder may be reduced accordingly. Each series of the Bonds shall be deemed to be paid and no longer to be outstanding
when payment of the principal of such series of the Bonds plus interest thereon to the due dates
thereof (whether such due date be by reason of maturity or upon redemption) either (i) shall have
been made or caused to have been made in accordance with the terms thereof, or (ii) shall have been provided by irrevocably depositing in trust and irrevocably setting aside exclusively for
such payment, moneys sufficient to make such payment, or direct non-callable obligations of the
United States of America, maturing as to principal and interest in such amounts and at such times
as will assure the availability of sufficient moneys to make such payment, or a combination
thereof, and all necessary and proper fees, compensation and expenses pertaining to such series of the Bonds with respect to which such deposit is made shall have been paid or the payment
thereof provided for.
Section 20. If any Bond shall become mutilated or be destroyed, lost or stolen, the
County in its discretion may execute, and upon its request the Bond Registrar and Paying Agent shall authenticate and deliver, a new Bond of the same series in exchange for the mutilated Bond
or in lieu of and substitution for the Bond so destroyed, lost or stolen. In every case of exchange
or substitution, the applicant shall furnish to the County and to the Bond Registrar and Paying
Agent such security or indemnity as may be required by them to save each of them harmless
from all risks, however remote, and the applicant shall also furnish to the County and to the Bond Registrar and Paying Agent evidence to their satisfaction of the mutilation, destruction,
loss or theft of the applicant’s Bond. Upon the issuance of any Bond upon such exchange or
substitution, the County may require the payment of a sum sufficient to cover any tax or other
29
governmental charge that may be imposed in relation thereto and any other expenses, including counsel fees, of the County or the Bond Registrar and Paying Agent. If any Bond which has
matured or is about to mature shall become mutilated or be destroyed, lost or stolen, instead of
issuing a Bond in exchange or substitution therefor, the County may pay or authorize the
payment of such Bond (without surrender thereof except in the case of a mutilated Bond) if the applicant for such payment shall furnish to the County and to the Bond Registrar and Paying Agent such security or indemnity as they may require to save them harmless, and evidence to the
satisfaction of the County and the Bond Registrar and Paying Agent of the mutilation,
destruction, loss or theft of such Bond.
Section 21. Each Bond paid at maturity or upon prior redemption shall be canceled or destroyed by the Bond Registrar and Paying Agent and a certificate of destruction describing the
Bond so canceled or destroyed and evidencing such cancellation or destruction shall be furnished
by the Bond Registrar and Paying Agent to the County.
Section 22. It is hereby determined that the bonded indebtedness previously incurred by the County pursuant to the authority of the 2013 Act is a $10,162,278 principal portion of the
County’s Public Improvement Bonds of 2015.
Section 23. Because the refinancing anticipated hereunder will be undertaken to effect cost savings by replacing the Refunded Bonds with Refunding Bonds bearing lower overall interest rates, it is the intent of the County that such Refunding Bonds be issued under the
applicable Acts and other authority referred to in the resolution authorizing the 2009 Bonds, and
that such Refunding Bonds, if issued, will constitute a reissuance of the indebtedness authorized
by such resolutions and shall not constitute additional indebtedness under such authorizations or under any other authority.
Section 24. The County hereby approves the Preliminary Official Statement relating to
the Bonds (the “Preliminary Official Statement”) substantially in the form presented to the Board
with this Resolution, as evidenced by a copy of such Preliminary Official Statement certified by the County Clerk and filed among the permanent records of the County. With the exception of
such changes therein as may be required or deemed appropriate by the President of the Board or
the Chief Financial Officer, upon the advice of bond counsel to the County or the financial
advisor to the County, including to reflect the provisions of or to conform to the provisions of
this Resolution, certain changes dictated by the terms of the official Notice of Sale, and certain information to be supplied by the successful bidders for the Bonds, the Preliminary Official
Statement is deemed final by the County for the purpose of Rule 15c2-12 of the Securities and
Exchange Commission. The County authorizes the distribution of said Preliminary Official
Statement in connection with its solicitation of bids for the sale of the Bonds. The County
hereby approves the Official Statement in the form of the final Preliminary Official Statement with such changes therein as may be required or deemed appropriate by the President of the
Board or the Chief Financial Officer, upon the advice of bond counsel to the County or the
financial advisor to the County, including, without limitation, to reflect matters determined in
accordance with this Resolution. The execution of the Official Statement by the President of the
Board shall be conclusive evidence of the approval of the County of any and all such changes or modifications in said Official Statement in connection with the issuance, sale and delivery of the
Bonds. The Preliminary Official Statement and the Official Statement shall each be
disseminated in electronic and/or printed form as determined by the Chief Financial Officer, on
30
behalf of the County, with the advice of the financial advisor to the County. The Preliminary Official Statement and/or the Official Statement may be amended or supplemented in such form
as determined by the President of the Board or the Chief Financial Officer, with the advice of
bond counsel to the County or the financial advisor to the County, and any such amendment or
supplement may be disseminated in electronic and/or printed form as determined by the Chief Financial Officer, on behalf of the County, with the advice of the financial advisor to the County.
Section 25. In order to assist any Participating Underwriter (as hereafter defined) for
each series of the Bonds in complying with Securities and Exchange Commission Rule 15c2-
12(b)(5), the County hereby covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Agreement (as hereafter defined). Notwithstanding any other provision of this Resolution, failure of the County to comply with the Continuing
Disclosure Agreement shall not be considered an event of default; however, any bondholder may
take such actions as may be necessary and appropriate, including seeking mandate or specific
performance by court order, to cause the County to comply with its obligations under this Section.
“Continuing Disclosure Agreement” shall mean that certain Continuing Disclosure
Agreement executed by the County and dated the date of issuance and delivery of the Bonds, as
originally executed and as it may be amended from time to time in accordance with the terms thereof. The Continuing Disclosure Agreement shall be in substantially the form set forth as Appendix D to the Preliminary Official Statement as evidenced by its execution by the President
or Vice President of the Board.
“Participating Underwriter” shall have the meaning ascribed thereto in the Continuing Disclosure Agreement.
Section 26. The President and Vice President of the Board, the Chief Financial Officer,
the County Clerk and such other officers, officials and employees of the County as the President
or the Vice President shall designate, are authorized hereby to do any and all things, execute all instruments, documents and certificates, and otherwise take all action necessary, proper, or
expedient in connection with the issuance, sale and delivery of the Bonds. The President and the
Vice President of the Board, the Chief Financial Officer, the County Clerk and all other
appropriate officers, officials and employees of the County are authorized and directed hereby to
do all acts and things required of them by the provisions hereof and of the Bonds for the full, punctual, and complete performance of all of the terms, covenants, provisions and agreements of
this Resolution and the Bonds.
Section 27. The provisions of this Resolution shall be liberally construed in order to
effectuate the transactions contemplated by this Resolution.
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32
Section 28. This Resolution shall take effect from the date of its adoption.
Adopted this _______________ day of __________________, 2016.
(SEAL) ATTEST: COUNTY COMMISSIONERS OF
WASHINGTON COUNTY
__________________________ By:_____________________________ Vicki C. Lumm, County Clerk Terry L. Baker, President Board of County Commissioners
of Washington County
Approved as to form and legal sufficiency:
__________________________
John M. Martirano County Attorney
#185859;50052.030
EXHIBIT A
Refunded Bonds*
Washington County, Maryland Public Improvement and Refunding Bonds of 2009
The 2009 Bonds identified below are subject to optional redemption beginning on January
1, 2019 in whole at any time or in part on any interest payment date at a
redemption price of 100% Maturing January 1 Principal Amount Interest Rate
2020 $ 800,000 3.000%
2021 830,000 3.250 2022 865,000 3.375 2023 900,000 3.500
2024 935,000 3.625
2025 975,000 3.750
2026 1,010,000 3.875 2027 1,055,000 4.000 2028 1,100,000 4.000
2029 1,145,000 4.000
* Preliminary, subject to adjustment based on market conditions at or prior to the time of sale; listed bonds are the outstanding callable maturities of the 2009 Bonds. The County does not
intend to refund any portion of outstanding maturities of the 2009 Bonds that are not subject to
redemption prior to their respective maturity dates.
A-1
EXHIBIT B
Form of Advertisement
SUMMARY NOTICE OF BOND SALE WASHINGTON COUNTY, MARYLAND (County Commissioners of Washington County) General Obligation Bonds Consisting of: $20,635,000*
PUBLIC IMPROVEMENT BONDS OF 2016
$9,700,000*
REFUNDING BONDS OF 2016
NOTICE IS HEREBY GIVEN that County Commissioners of Washington County (the “County”) will receive electronic bids via Parity® for the purchase of the above-referenced
general obligation bonds (respectively referred to as the “Public Improvement Bonds” and the
“Refunding Bonds” and, collectively, as the “Bonds”) on
Tuesday, May 3, 2016
at the offices of the County, 100 West Washington Street, Hagerstown, Maryland 21740, Room
304. Bids for the Public Improvement Bonds will be received until 10:30 a.m. Prevailing
Eastern Time, and bids for the Refunding Bonds will be received until 10:45 a.m. Prevailing Eastern Time. Each series of the Bonds will be dated the date of its delivery, will bear interest payable semi-annually on the first days of July and January, commencing on July 1, 2016 with
respect to the Refunding Bonds and on January 1, 2017 with respect to the Public Improvement
Bonds, and will be issuable in denominations of $5,000 each or multiples thereof. Principal of
the Public Improvement Bonds will be payable on July 1 in each year determined in connection with the sale of such Bonds until maturity or prior redemption in whole. Principal of the Refunding Bonds will be payable on January 1 in each year determined in connection with the
sale of such Bonds until maturity or prior redemption in whole. Each series of the Bonds will be
issued in book-entry form only.
The aggregate principal amount of each series of the Bonds, and the aggregate principal
amount of each maturity of each series of the Bonds, is subject to adjustment both pre- and post-
sale as set forth in the Preliminary Official Statement and the official Notice of Sale. In addition,
the principal and interest payment dates, optional redemption dates and designation of the
Refunding Bonds are subject to adjustment pre-sale as set forth in the Preliminary Official Statement and the official Notice of Sale.
The bid for a series of the Bonds must conform to the applicable terms and conditions set
forth in the official Notice of Sale. This announcement does not constitute the solicitation of
bids to purchase either series of the Bonds. The sale of each series of the Bonds shall be made exclusively pursuant to the terms of the official Notice of Sale. Copies of the official Notice of
Sale and the Preliminary Official Statement will be furnished upon request made to the Director
of the Office of Budget and Finance, Washington County, County Administration Building, 100
West Washington Street, Hagerstown, Maryland 21740, (240) 313-2300 or from the financial
B-1
B-2
advisor to the County, Public Advisory Consultants, Inc., 25 Crossroads Drive, Suite 402, Owings Mills, Maryland 21117, (410) 581-4820.
Terry L. Baker, President
Board of County Commissioners of Washington County, Maryland * Preliminary, subject to adjustment at or prior to time of sale, as applicable.
Dated: TO BE PUBLISHED AT LEAST 10 DAYS PRIOR TO DATE OF SALE
EXHIBIT C
Form of Notice of Redemption
Note: Bracketed language is intended to reflect that such provisions apply only to one series
of the Refunded Bonds or apply only in certain circumstances, and such language shall be
deleted from or included in the final form of redemption notice for the series of the Refunded
Bonds to which it is inapplicable or applicable, as appropriate.
NOTICE OF REDEMPTION [IN WHOLE][IN PART]
WASHINGTON COUNTY, MARYLAND
PUBLIC IMPROVEMENT AND REFUNDING BONDS OF 2009
Dated May 15, 2009 NOTICE IS HEREBY GIVEN of the election by County Commissioners of Washington
County to redeem on January 1, 2019, $____________________ aggregate principal amount of
its outstanding Washington County, Maryland Public Improvement and Refunding Bonds of
2009 stated to mature and bearing interest as follows: Maturing
[January][July] 1
Principal Amount
Interest Rate
CUSIP
2020 $ 800,000 3.000% 937751N68 2021 830,000 3.250 937751N76 2022 865,000 3.375 937751N84
2023 900,000 3.500 937751N92
2024 935,000 3.625 937751P25
2025 975,000 3.750 937751P33 2026 1,010,000 3.875 937751P41
2027 1,055,000 4.000 937751P58
2028 1,100,000 4.000 937751P66
2029 1,145,000 4.000 937751P74
[If bonds are being redeemed in part only, add reference to numbers of the bonds being
redeemed and other appropriate identifying information, including any newly assigned CUSIP
numbers for partially refunded maturities.]
The above CUSIP numbers are included solely for the convenience of the holders of the bonds being refunded [in whole or in part]. The undersigned Paying Agent is not responsible for
the selection or use of CUSIP numbers nor does the Paying Agent make any representation as to
the correctness of such CUSIP numbers as printed on any such bond or as indicated in this notice
of redemption.
The above bonds called for redemption will become due and will be redeemed on January
1, 2019, at the redemption price of 100% of the principal amount thereof, together with interest
accrued to January 1, 2019, upon presentation thereof at the designated corporate trust office of
C-1
C-2
Manufacturers and Traders Trust Company. From and after January 1, 2019, if monies sufficient for the payment of the redemption price of the bonds called for redemption plus accrued interest
thereon to the date fixed for redemption are held by the undersigned on such date, interest will
cease to accrue on the above bonds called for redemption and the registered owners of the bonds
so called for redemption shall have no rights in respect thereof except to receive payment for the redemption price thereof plus accrued interest to the date fixed for redemption from such monies held by the undersigned.
Payment of the redemption price will be made only upon presentation and surrender of
the bonds called for redemption in accordance with this notice. Please send the bonds to be redeemed by appropriate means to insure safe delivery, to the following address:
[INSERT DELIVERY ADDRESS]
Any questions regarding this notice may be addressed to Manufacturers and Traders Trust Company, [INSERT ADDRESS], Attention: ___________________ or by phone to ______________ at (___) ___________.
[M&T TO ADD ANY STANDARD DISCLOSURE RE: WITHHOLDING]
Dated: __________________ COUNTY COMMISSIONERS OF
WASHINGTON COUNTY
By: Manufacturers and Traders Trust Company, Paying Agent
Instructions to Paying Agent for the 2009 Bonds. The foregoing notice shall be completed and
mailed to the holders of the bonds being redeemed at least 30 days prior to the date fixed for redemption, as provided in the Resolution authorizing the issuance of the County’s 2009 Bonds;
provided that, the failure to so mail this notice shall not affect the validity of the proceedings for
redemption.
Washington County, Maryland
Description of 2016 Projects
Tax Supported Self-Supported
Approved Amount Approved Amount Project
Project Name 2016 Bond 2016 Bond Type
Infrastructure
Bridges:
Hopewell Road Culvert 02/01 $287,000
Spur Road Culvert 07/16 241,000
Hopewell Road Culvert 02/02 218,000
Keedysville Road Bridge W5651 59,000
Wright Road Culvert 02/05 220,000
Roads:
Crayton Blvd Extended 71,000
Eastern Blvd at Antietam Drive 367,000
Southern Blvd I 2,034,000
Eastern Blvd Widening Phase I 714,000
Robinwood Corridor II 867,000
Pavement Maintenance and Rehabilitation Program 2,235,000
Highway Maintenance Shop 102,000 7,415,000
Public Safety Projects
Detention Center Building Improvements 500,000 500,000
Public Facilities
County Administration Building Renovations 482,000
Cost of Bond Issuance 97,000 579,000
Educational Projects
Jonathan Hager Elementary School 503,000
Student Center Expansion (HCC)1,483,000
Central Utility Plant Upgrade (HCC)1,219,000
Advanced Technology Center Renovation (HCC)301,000 3,506,000
Environmental Projects
Conococheague WwTP - ENR Upgrades 6,054,000
New Roof At Conococheague WwTP 128,000
Collection System Rehabilitation Project 204,000
General Water Treatment Plant Upgrades 106,000
PO 1 Pump Station Expansion 1,530,000
Pump Station Upgrades 510,000
Landfill Water Collection System Upgrade 77,000
Landfill Leachate Upgrades 26,000 8,635,000
$12,000,000 $8,635,000 $20,635,000
RATINGS: Moody’s:
Standard & Poor’s:
Fitch :
PRELIMINARY OFFICIAL STATEMEMNT DATED APRIL 26, 2016
New Issue-Book-Entry Only
In the opinion of Bond Counsel, assuming continuous compliance with certain covenants described herein, under existing law, the interest on the Bonds (a) will be excludable from gross income for federal income tax purposes, and (b) is not includable in corporate or individual alternative minimum taxable income as an enumerated item of tax preference, but may be included in the calculation of a corporation’s alternative minimum taxable income for federal income tax purposes, and may be subject to the branch profits tax imposed on foreign corporations engaged in a trade or business in the United States of America. It is also the opinion of Bond Counsel that, under existing law, the Bonds, their transfer, the interest payable thereon, and any income derived therefrom (including any profit made in the sale thereof) shall be at all times exempt from State of Maryland, county, municipal, or other taxation of every kind and nature whatsoever within the State, but no opinion is expressed as to Maryland estate or inheritance taxes or any other Maryland taxes not levied directly on the Bonds, their transfer, the interest thereon or the income therefrom. See the information contained herein under the caption “THE BONDS—Tax Matters”.
$30,335,000*
WASHINGTON COUNTY, MARYLAND
(COUNTY COMMISSIONERS OF WASHINGTON COUNTY)
GENERAL OBLIGATION BONDS
Consisting of
$20,635,000*
PUBLIC IMPROVEMENT BONDS OF 2016 $9,700,000* REFUNDING BONDS OF 2016
Dated: Date of delivery
Due: July 1, for the Public Improvement Bonds and January 1 for the Refunding Bonds, as shown on the inside cover page Interest Payable: January 1 and July 1 First Interest Payment Due: January 1, 2017 for the Public Improvement Bonds and July 1, 2016 for the Refunding Bonds Denomination: Integral multiples of $5,000 Form: Registered, book-entry only through the facilities of The Depository Trust Company (“DTC”) Optional Redemption: The Public Improvement Bonds maturing on or after July 1, 2027 and the Refunding Bonds maturing on or after January 1, 2027 are
redeemable prior to maturity at the County’s option as set forth in “THE BONDS—Redemption” herein. Security: The Bonds are general obligations of County Commissioners of Washington County (the “County”) for the payment of which its full faith and credit and unlimited taxing power are pledged (see “THE BONDS—Sources of Payment” herein).
Conditions Affecting Issuance: The Bonds of each series are offered when, as and if issued, subject to, among other conditions, the delivery of such Bonds and the
approving legal opinion of Funk & Bolton, P.A., Bond Counsel, with respect to such series and other conditions specified in the official Notice of Sale. Delivery will occur through the facilities of DTC on or about May 17, 2016.
This cover page contains certain information for quick reference only. It is not a summary of this issue. Prospective bidders and investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision.
Dated:
*Preliminary; subject to change
FOR MATURITY SCHEDULES, INTEREST RATES, PRICES OR YIELDS AND CUSIP NUMBERS SEE INSIDE COVER PAGE
DRAFT
Maturing Principal Interest Maturing Principal Interest
July 1*Amount*Rate**July 1*Amount*Rate**
2017 710,000$ 2027 1,045,000$
2018 740,000 2028 1,080,000
2019 770,000 2029 1,110,000
2020 805,000 2030 1,145,000
2021 835,000 2031 1,180,000
2022 870,000 2032 1,220,000
2023 905,000 2033 1,260,000
2024 940,000 2034 1,300,000
2025 980,000 2035 1,340,000
2026 1,015,000 2036 1,385,000
$20,635,000* County Commissioners of Washington County Public Improvement Bonds of 2016
MATURITIES, PRINCIPAL AMOUNTS, INTEREST RATES, PRICES OR YIELDS AND CUSIPS
Price or
Yield**CUSIP
Price or
Yield**CUSIP
Maturing Principal Interest Maturing Principal Interest
January 1*Amount*Rate**January 1*Amount*Rate**
2017 120,000$ 2024 930,000$
2018 20,000 2025 980,000
2019 20,000 2026 1,010,000
2020 810,000 2027 1,040,000
2021 840,000 2028 1,060,000
2022 870,000 2029 1,100,000
2023 900,000
$9,700,000* County Commissioners of Washington County Refunding Bonds of 2016
MATURITIES, PRINCIPAL AMOUNTS, INTEREST RATES, PRICES OR YIELDS AND CUSIPS
Price or
Yield**CUSIP
Price or
Yield**CUSIP
*Preliminary; subject to change
**The interest rates shown above are those resulting from the successful bid for the Bonds of such series on May 3, 2016 and were furnished by the successful bidder therefor. The prices or yields shown above were furnished by the successful bidder therefor. Other information concerning the terms of the reoffering of the Bonds of each series, if any, should be obtained from the successful bidder for such series and not from the County. (See “MISCELLANEOUS--Sale at Competitive Bidding” herein.) No dealer, broker, salesman or other person has been authorized by the County or the successful bidder for the Bonds of either series to give any information or to make any representations with respect to the Bonds or the County other than those contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon as having been authorized by any of the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of an
offer to buy, nor shall there be any sale of the Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information set forth herein has been obtained from the County and other sources which are deemed to be reliable but it is not to be construed as a representation by the County as to information from sources other than the County.
This Official Statement is not to be construed as a contract or agreement between the County and the purchasers or holders of any of the Bonds.
All quotations from and summaries and explanation of provisions of laws and documents herein do not purport to be complete and reference is made to such laws
and documents for full and complete statements of their provisions. Any statements made in this Official Statement involving estimates or matters of opinion, whether or not expressly so stated, are intended merely as estimates or opinions and not as representations of fact. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale of the Bonds shall, under any circumstances, create any implication that there has been no change in the affairs of the County since the respective dates as of which information is given herein or the date hereof.
In connection with this offering, the successful bidder for a series of the Bonds may over-allot or effect transactions which stabilize or maintain the market price of such series of the Bonds at a level above that which might otherwise prevail in the open market. Such stabilizing, if commenced, may be discontinued at any time. CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global Services, which is managed by S&P
Global Market Intelligence (previously branded in part as S&P Capital IQ), a division of McGraw-Hill Financial Inc., and the County does not take any responsibility for the
accuracy thereof. This data is not intended to create a database and does not serve in any way as a substitute for CUSIP Global Services’s information.
WASHINGTON COUNTY, MARYLAND ADMINISTRATION BUILDING
100 WEST WASHINGTON STREET
HAGERSTOWN, MARYLAND 21740
___________
COUNTY COMMISSIONERS Terry L. Baker, President
Jeffrey A. Cline, Vice President LeRoy E. Myers, Commissioner
John F. Barr, Commissioner
Wayne K. Keefer, Commissioner
ADMINISTRATION Gregory B. Murray, County Administrator
Vicki C. Lumm, County Clerk
John M. Martirano, County Attorney Debra S. Murray, C.P.A., Chief Financial Officer
COUNTY TREASURER Todd L. Hershey
FINANCIAL ADVISOR Public Advisory Consultants, Inc.
Owings Mills, Maryland
BOND COUNSEL
Funk & Bolton, P.A. Baltimore, Maryland
INDEPENDENT AUDITOR
SB & Company, LLC
Hunt Valley, Maryland
BOND REGISTRAR, PAYING AGENT AND ESCROW AGENT Manufacturers and Traders Trust Company Baltimore, Maryland
and Buffalo, New York
TABLE OF CONTENTS
Page Page
I. THE BONDS IV. FINANCIAL INFORMATION
Introduction…………………………………………………… 1 Accounting System……………………………………... 32
Description of Bonds…………………………………………... 1 Fund Structure………………………………………….. 32
DTC and Book-Entry Only System…………………………… 2 Basis of Accounting, Measurement Focus, and Financial
Book-Entry Only System—Miscellaneous……………………. 3 Statement Presentation….……………………….….... 32
Authorization………………………………………………….. 4 Accounting Enterprise System….………………….….... 32
Application of Proceeds…………………….…….…………… 4 Capital Budget Preparation Software…………………... 33
Refunding Plan………………………………………………… 5 Distinguished Budget Presentation Award……………... 33
Redemption…………….………………….…………….……. 5 Budget Process and Schedule…………………….……. 33
Sources of Payment….………………………………………… 7 General Fund Revenues and Expenditures…..……..….. 35
Bondholders’ Remedies.………………………………………. 7 Anticipated Results for Fiscal Year 2015……………….. 37
Tax Matters……………………………………………..….…. 7 Sources of Tax Revenue….……………………………. 37
General Fund Balance Sheet…………………………... 42
Key Financial Statistics………………………………... 43
DEBT AND CAPITAL REQUIREMENTS
II. GOVERNMENT AND ADMINISTRATION V. Debt Management Policy………………………….…… 44
Location………………………………………………………. 10 General Obligation and Revenue Bonds.……………..… 44
Form of Government…………………………..……………... 10 Water and Sewer Bonds…………………………….….. 45
Legislative and Administrative Officials……………….….… 11 Capital Lease Obligations and Other Contracts…….….. 47
Washington County Government Organizational Chart.….…. 14 Special Obligation Bonds………………………………. 47
County Employment…………………………………………. 14 Bonded Indebtedness of Incorporated Municipalities….. 47
Pension and Retirement System……………………………… 14 Direct and Underlying Debt……………………….…… 48
Other Post-Employment Benefits…………………………….. 15 Debt Service Requirements on County Debt.……….….. 49
Insurance……………………………………………………... 16 Capital Requirements…………………………………... 52
Certain Services and Responsibilities……………………….... 16
MISCELLANEOUS
III. ECONOMIC AND DEMOGRAPHIC INFORMATION VI. Litigation………………………………………….……. 53
Department of Business Development…………….………….. 23 Ratings…………………………………………….…..... 53
Business Development…..………….………………………… 24 Continuing Disclosure Undertaking………………..…... 53
Foreign Trade Zone……………….…………………………... 26 Sale at Competitive Bidding……………………….…... 53
Utilities, Transportation, and Communication….………..…… 26 Legal Matters………………………………….……….. 53
Population….……………………..…..………….….………… 27 Independent Auditors……………………………….….. 54
Income …..……………..…………..………………….………. 28 Financial Advisor………………………………….…… 54
Area Labor Supply…..…………………………………..…….. 28 Verification of Mathematical Computations……....…… 54
Employment…………..……………………………………..… 29
Unemployment Rate…..……………………………..………… 29 Appendix A - General Purpose Financial
Construction Activity…..……………………………………... 30 Statements……………………….…….. A
Housing Starts……………………………………………….... 30 Appendix B - Proposed Forms of Opinions of Bond
Agriculture……………………………………………………. 31 Counsel…………………………..…….. B
Appendix C - Notice of Sale …………………..……… C
Appendix D - Proposed Form of Continuing Disclosure
Agreement…………………..……….….. D
TO BE UPDATED
THE BONDS
Washington County, Maryland 1
I. The Bonds
Introduction
The purpose of this Official Statement, including the cover page, inside cover page and appendices, is to provide
information for prospective purchasers and others regarding County Commissioners of Washington County (the “County”) and
its $20,635,000* Public Improvement Bonds of 2016 (the “Public Improvement Bonds”) and its $9,700,000* Refunding Bonds
of 2016 (the “Refunding Bonds”). The Public Improvement Bonds and the Refunding Bonds are referred to herein collectively
as the “Bonds” and individually as a “series” of the “Bonds” or as a “Bond”. As described herein, at or prior to the sale of the
Bonds, the County may determine not to issue the Refunding Bonds.
All estimates and assumptions herein have been based upon information believed to be reliable and correct; however,
statements made involving estimates and assumptions, whether or not expressly so stated, are intended merely as such and not as
representations of facts. Figures herein relating to tax collections, assessed value of property and the financial position of the
County have been taken from official records of the County.
The County has provided the material and information contained in this Official Statement and has authorized the
execution and distribution of this Official Statement.
Any questions concerning this Official Statement or the Bonds should be addressed to the Chief Financial Officer of
the County (the “CFO”), Washington County Administration Building, 100 West Washington Street, Room 304, Hagerstown,
Maryland 21740; telephone: (240) 313-2300; email: dmurray@washco-md.net.
Description of Bonds
The Bonds will be dated the date of their delivery. The Bonds will be issued in the principal amounts and will mature
on the dates in the years and in the amounts set forth on the inside cover page hereof. The Bonds will be legally binding general
obligations of the County to the payment of which the full faith and credit and unlimited taxing power of the County are
pledged. (See “THE BONDS—Sources of Payment” herein.)
Interest on each series of the Bonds, calculated on the basis of a 30-day month/360-day year factor, will be payable at
the interest rates specified on the inside cover page of this Official Statement. For the Public Improvement Bonds, interest will
be first paid on January 1, 2017, and semiannually thereafter on the first day of July and January of each year until the date of
maturity unless redeemed prior to that date. For the Refunding Bonds, interest will be first paid on July 1, 2016, and
semiannually thereafter on the first day of January and July of each year until the date of maturity unless redeemed prior to that
date. Interest payments will be made to the persons who are registered owners of record as of the 15th day of the month next
preceding each such interest payment date. Each Bond shall bear interest from the most recent date to which interest has been
paid or, if no interest has been paid, from its date of delivery.
The Bonds will be issued in fully-registered form without coupons, in denominations of $5,000 and integral multiples
thereof. Each series of the Bonds initially will be issued in book-entry form without any physical distribution of certificates
made to the public. The Depository Trust Company, New York, New York (“DTC”), will act as securities depository for each
series of the Bonds and the Bonds will be registered in the name of DTC’s partnership nominee, Cede & Co. (See “THE
BONDS—DTC and Book-Entry Only System” herein).
So long as the Bonds of a series are maintained in book-entry form, payments of principal of and interest on the Bonds
of such series will be made as described below under “DTC and Book-Entry Only System.” At any other time the principal
amount of the Bonds of a series will be payable at the designated corporate trust office of Manufacturers and Traders Trust
Company (the “Bond Registrar and Paying Agent”).
Interest on the Bonds will be payable by check of the Bond Registrar and Paying Agent mailed to the registered owners
thereof. The principal of and interest on the Bonds will be paid in lawful money of the United States of America in the manner
and at the places hereinabove described.
*Preliminary; subject to change
THE BONDS
Washington County, Maryland 2
So long as the Bonds of a series are maintained in book-entry form, transfers of ownership interests will be made as
described below under “DTC and Book-Entry Only System.” At any other time, any Bond may be exchanged for a Bond or Bonds in authorized denominations of $5,000 or integral multiples thereof in aggregate principal amount equal to the principal amount of the Bond transferred or exchanged and maturing on the same date and bearing interest at the same rate. The transfer of any Bond may be registered upon presentation and surrender of such Bond at the office of the Bond Registrar and Paying Agent, together with a written instrument of transfer duly executed by the registered owner or his attorney or legal representative. The Bond Registrar and Paying Agent may require the person requesting any such exchange or transfer to reimburse it for any tax, fee or other governmental charge, shipping charges and insurance payable in connection therewith.
DTC and Book-Entry Only System
Initially, DTC will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities
registered in the name of Cede & Co. (as DTC’s partnership nominee) or such other name as may be requested by an authorized
representative of DTC. One fully-registered Bond certificate will be issued for each maturity of each series of the Bonds and
will be deposited with DTC.
DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York
Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve
System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency”
registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934, as amended. DTC holds and
provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and
money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC
also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited
securities through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This
eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S.
securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. DTC is a wholly-
owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC,
National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies.
DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S.
and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a
custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard &
Poor’s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission.
More information about DTC can be found at www.dtcc.com.
Purchases of the Bonds under the DTC system must be made by or through Direct Participants, which will receive a
credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond (“Beneficial Owner”) is in
turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation
from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the
transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial
Owners entered into the transaction. Transfer of ownership interests in the Bonds are to be accomplished by entries made on the
books of the Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive physical
certificates representing their ownership interests in the Bonds, except in the event that use of the book-entry only system is
discontinued.
To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of
DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The
deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any
change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect
only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial
Owners. The Direct and Indirect Participants remain responsible for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect
Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among
them, subject to any statutory or regulatory requirements as may be in effect from time to time.
THE BONDS
Washington County, Maryland 3
Redemption notices shall be sent to DTC. If less than all of the Bonds within an issue are being redeemed, DTC’s
practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC’s Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the County as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Bonds are credited on the record date (identified in a listing attached to the
Omnibus Proxy).
Redemption proceeds, payments of the principal of, redemption premium, if any, and interest on the Bonds will be made
to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the County or the Bond
Registrar and Paying Agent on payable dates in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities
held for the accounts of customers in bearer form or registered in “street name”, and will be the responsibility of such Participants, and not of DTC, the Bond Registrar and Paying Agent or the County, subject to any statutory and regulatory requirements as
may be in effect from time to time. Payment of principal, redemption premium, if any, and interest on the Bonds to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the County or the Bond Registrar and Paying Agent; disbursement of such payments to Direct Participants will be the responsibility of DTC; and disbursement of such payments to the Beneficial Owners will be the responsibility of the Direct and Indirect
Participants.
DTC may discontinue providing its services as securities depository for either series of the Bonds at any time by giving
reasonable notice to the County or the Bond Registrar and Paying Agent. Under such circumstances, in the event that a
successor depository is not obtained, Bonds of the applicable series are required to be printed and delivered.
The County may decide to discontinue use of the system of book-entry-only transfers for either series of the Bonds
through DTC (or a successor securities depository). In that event Bond certificates for the applicable series will be printed and
delivered.
The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources the
County believes to be reliable, but the County takes no responsibility for the accuracy thereof.
Book-Entry Only System - Miscellaneous
THE COUNTY AND THE BOND REGISTRAR AND PAYING AGENT WILL NOT HAVE ANY
RESPONSIBILITY OR OBLIGATION TO ANY DIRECT PARTICIPANT, INDIRECT PARTICIPANT OR ANY
BENEFICIAL OWNER OF THE BONDS WITH RESPECT TO: (1) THE BONDS; (2) THE ACCURACY OF ANY
RECORDS MAINTAINED BY DTC OR ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT; (3) THE
PAYMENT OF ANY AMOUNT DUE TO ANY DIRECT PARTICIPANT, INDIRECT PARTICIPANT OR
BENEFICIAL OWNER IN RESPECT OF THE PRINCIPAL OF OR INTEREST ON THE BONDS; (4) THE
DELIVERY BY DTC OR ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT OF ANY NOTICE TO
ANY BENEFICIAL OWNER WHICH IS REQUIRED OR PERMITTED UNDER THE TERMS OF THE BONDS TO
BE GIVEN TO BOND OWNERS; (5) THE SELECTION OF BENEFICIAL OWNERS TO RECEIVE PAYMENT IN
THE EVENT OF ANY PARTIAL REDEMPTION OF THE BONDS; OR (6) ANY CONSENT GIVEN OR OTHER
ACTION TAKEN BY DTC AS BONDHOLDER.
In the event the County determines to discontinue a book-entry only system of registration of the Bonds of either series,
payments of interest, principal and redemption price and transfer and exchange of the Bonds of such series will be made as
described above under “THE BONDS—Description of Bonds”.
THE BONDS
Washington County, Maryland 4
Authorization
The Public Improvement Bonds are issued pursuant to the authority of Chapter 60 of the Laws of Maryland of 2013
(“Chapter 60”) and Title 6 of the Code of Public Local Laws of Washington County, Maryland (2007), as amended (the “Water
and Sewer Act”), as applicable, and in accordance with a resolution adopted by the Board of County Commissioners of
Washington County (the “Board”) on April 12, 2016 (the “Resolution”).
The Refunding Bonds are issued pursuant to the authority of Chapter 205 of the Laws of Maryland of 2004
(“Chapter 205”), Chapter 392 of the Laws of Maryland of 2007 (“Chapter 392”), Title 6 of the Code of Public Local Laws of Washington County, Maryland (2007), as amended (the “Water and Sewer Act”), and Section 19-207 of the Local
Government Article of the Annotated Code of Maryland, as amended (the “Refunding Act”), as applicable, and in accordance with the Resolution. As described in the official Notice of Sale set forth in Appendix C hereto, the County, at or prior to the
sale of the Bonds, may determine not to issue the Refunding Bonds.
Chapters 60, 205, and 392, the Water and Sewer Act, and the Refunding Act are collectively referred to in this Official Statement as the “Act”. Copies of the Act and the Resolution are available at the office of the CFO.
Application of Proceeds Proceeds of the Public Improvement Bonds, exclusive of any premium paid by the successful bidder therefor, will be applied to costs of the following projects and to issuance costs of the Public Improvement Bonds:
Amount*
Environmental Projects 8,635,000$
Infrastructure Projects 7,415,000
Education Projects 3,506,000
Public Safety Projects 500,000
Public Facilities 482,000
Issuance Costs 97,000
20,635,000$
*Preliminary; subject to change
Use*
A portion of the proceeds of the Refunding Bonds, including any premium paid by the successful bidder therefor, will
be used to refund that portion of the County’s outstanding Public Improvement and Refunding Bonds of 2009, dated May 15,
2009 (the “2009 Bonds”), identified below. The specific full or partial maturities of the 2009 Bonds to be refunded, if any, will
be determined prior to or upon award of the sale of the Refunding Bonds. The refunded portion of the 2009 Bonds, if any, are
referred to as the “Refunded Bonds” in this Official Statement.
The Refunded Bonds are as follows:
Redemption
Date
Redemption
Price
2009 Bonds 13,185,000$ January 1, 2019 100%
Bond Issue*
Principal Amount
Outstanding
Principal Amount
Refunded
Maturities
Refunded
*Preliminary; subject to change
THE BONDS
Washington County, Maryland 5
Refunding Plan*
A portion of the proceeds of the Refunding Bonds, together with other available funds, if applicable, will be applied to
refund the Refunded Bonds. The refunding method being used is frequently termed a “net defeasance” in that provision is made
to set aside immediately, from the proceeds of a refunding bond issue and any other funds then available, monies for investment
that, together with the interest to be received thereon, and any cash held uninvested, shall be sufficient to satisfy all payments of
interest on the Refunded Bonds to and including the date on which such Refunded Bonds are redeemed and the principal of and
any premium due upon the redemption of such Refunded Bonds.
That portion of the proceeds of the Refunding Bonds used to advance refund the Refunded Bonds, together with other
available funds, if applicable, will be applied to the purchase of non-callable direct obligations of or obligations the principal and
interest on which are guaranteed by the United States of America (the “Restricted Acquired Obligations”). The Restricted
Acquired Obligations, together with any cash held uninvested, will be held in trust in an escrow fund (the “Escrow Deposit
Fund”) by Manufacturers and Traders Trust Company (the “Escrow Agent”) pursuant to an Escrow Deposit Agreement between
the Escrow Agent and the County. The Restricted Acquired Obligations will mature at such times and in such amounts and will
bear interest payable at such times and in such amounts, together with any cash held uninvested, so that sufficient money will be
available to pay when due, interest on the Refunded Bonds to and including their date of redemption and to redeem the
Refunded Bonds on their date of redemption. (See “MISCELLANEOUS--Verification of Mathematical Computations” herein.)
The Escrow Agent will apply the maturing principal of and interest on the Restricted Acquired Obligations and any cash held
uninvested to the payment of the interest on the Refunded Bonds prior to their redemption date and has been irrevocably
instructed to redeem the Refunded Bonds on their first available redemption date at a price equal to the outstanding principal
amount thereof plus accrued interest. The Restricted Acquired Obligations will be pledged only to payment of the principal of
and interest on the Refunded Bonds and are not available for the payment of principal and premium, if any, of or interest on the
Bonds or any other obligations of the County.
Redemption
Optional Redemption
The Public Improvement Bonds that mature on or before July 1, 2026 are not subject to redemption at the option of the
County prior to their maturities. The Public Improvement Bonds that mature on or after July 1, 2027 are subject to redemption at
the option of the County as a whole or in part at any time on or after July 1, 2026, in any order directed by the County, at a
redemption price of the principal amount of the Bonds (or portions thereof) to be redeemed, plus accrued interest thereon to the
date fixed for redemption, without premium or penalty. The Refunding Bonds that mature on or before January 1, 2026 are not
subject to redemption at the option of the County prior to their maturities. The Refunding Bonds that mature on or after January
1, 2027 are subject to redemption at the option of the County as a whole or in part at any time on or after January 1, 2026, in any
order directed by the County, at a redemption price of the principal amount of the Bonds (or portions thereof) to be redeemed,
plus accrued interest thereon to the date fixed for redemption, without premium or penalty.
*Preliminary; subject to change
THE BONDS
Washington County, Maryland 6
[Mandatory Sinking Fund Redemption
The Public Improvement Bonds maturing on July 1, ____ are subject to mandatory sinking fund redemption at a
redemption price equal to 100% of the principal amount to be redeemed, together with interest accrued to the date fixed for redemption, on the dates and in the principal amounts set forth below:
Redemption Date
(July 1)
Principal
Amount
Redemption Date
(July 1)
Principal
Amount
The Refunding Bonds maturing on January 1, ____ are subject to mandatory sinking fund redemption at a redemption
price equal to 100% of the principal amount to be redeemed, together with interest accrued to the date fixed for redemption, on
the dates and in the principal amounts set forth below:
Redemption Date (January 1) Principal Amount Redemption Date (January 1) Principal Amount
The foregoing subsection will be completed with respect to each term bond of the Public Improvement Bonds and the Refunding Bonds, if any, designated by the successful bidder for such series of the Bonds in accordance with the official Notice of Sale. See Appendix C hereto.] Selection of Bonds for Redemption; Notice of Redemption
If fewer than all of the Bonds of a series of any one maturity shall be called for redemption, the particular Bonds or
portions of Bonds of such series to be redeemed shall be selected by the Bond Registrar and Paying Agent in such manner as in
its discretion it shall determine; provided that, so long as the Bonds of such series are maintained in book-entry form, the
selection of individual ownership interests in such Bonds to be credited with such partial redemption shall be made by DTC in
accordance with DTC’s then existing procedures.
If all or a portion of the Bonds of a series outstanding are to be redeemed, the County shall give a redemption notice by
first class mail, postage prepaid, at least 30 days prior to the date fixed for redemption to the registered owner of each Bond to be
redeemed in whole or in part at the address of such registered owner appearing on the bond register maintained by the Bond
Registrar and Paying Agent, provided, however, that the failure to mail the redemption notice or any defect in the notice so
mailed shall not affect the validity of the redemption proceedings. The County may, but shall not be obligated to, also publish
such notice of redemption at least once not less than thirty (30) days prior to the date fixed for redemption in a newspaper
circulating in the City of Baltimore, Maryland, and also in a financial journal or daily newspaper of general circulation in the
City of New York, New York. The redemption notice shall state (i) whether the applicable Bonds are to be redeemed in whole
or in part and, if in part, the maturities, numbers and CUSIP numbers of the Bonds to be redeemed, (ii) in the case of a partial
redemption of any Bond, the portion of the principal amount which is to be redeemed, (iii) that the interest on the Bonds (or
portions thereof) to be redeemed shall cease on the date fixed for redemption, (iv) the date fixed for redemption and the
redemption price, (v) the address of the Bond Registrar and Paying Agent with a contact person and phone number, and (vi) that
the Bonds to be redeemed in whole or in part shall be presented for redemption and payment on the date fixed for redemption at
the designated corporate trust office of the Bond Registrar and Paying Agent. Any such notice may be conditioned upon receipt
by the Bond Registrar and Paying Agent of sufficient funds to effect such redemption.
From and after the date fixed for redemption, if funds sufficient for payment of the redemption price plus accrued interest thereon to the date fixed for redemption are held by the Bond Registrar and Paying Agent on such date, the Bonds (or
portions thereof) so called for redemption shall become due and payable at the redemption price provided for redemption of such Bonds on such date, interest on such Bonds shall cease to accrue and the registered owners of such Bonds shall have no rights in respect thereof except to receive payment of the redemption price thereof plus accrued interest thereon to the date fixed for redemption from the monies so held by the Bond Registrar and Paying Agent. Upon presentation and surrender for redemption, the Bonds to be redeemed shall be paid by the Bond Registrar and Paying Agent at the redemption price plus accrued interest thereon to the date fixed for redemption. If Bonds so called for redemption are not paid upon presentation and surrender, the Bonds designated for redemption shall continue to bear interest at the rates stated therein until paid.
THE BONDS
Washington County, Maryland 7
Sources of Payment
The Act provides that the Bonds constitute an irrevocable pledge of the full faith and credit and unlimited taxing power
of the County to the payment of the maturing principal of and interest on the Bonds as and when they become payable. The Act
further provides, and the County has covenanted in the Resolution, that in each and every fiscal year that any of the Bonds are
outstanding, the County shall levy or cause to be levied ad valorem taxes upon all assessable property within the corporate limits
of Washington County in rate and amount sufficient to provide for or assure the payment, when due, of the principal of and
interest on all Bonds maturing in each such fiscal year and, if the proceeds from the taxes so levied in such fiscal year prove
inadequate for such payment, additional taxes shall be levied in the succeeding fiscal year to make up any deficiency.
Bondholders’ Remedies
It is the opinion of Funk & Bolton, P.A., Baltimore, Maryland, Bond Counsel, that the County may be sued in the event
that it fails to perform its obligations under the Bonds and the Resolution to the registered owners and that any judgments
resulting from such suits would be enforceable against the County. Nevertheless, a registered owner of a Bond who has
obtained any such judgment may be required to seek additional relief to compel the County to assess, levy and collect such taxes
as may be necessary to provide the funds from which such judgment may be paid. Although there is no Maryland law with
respect to this issue, it is the opinion of Bond Counsel that the appropriate courts of Maryland have jurisdiction to entertain
proceedings and power to grant additional relief, such as a mandatory injunction, if necessary, to enforce the levy and collection
of such taxes and payment of the proceeds thereof to the holders of general obligation bonds, pari passu, subject to the inherent
constitutional limitations referred to below.
It is also the opinion of Bond Counsel that, while remedies would be available to the registered owners of the Bonds
and while the Bonds are entitled to constitutional protection against the impairment of the obligation of contracts, such
constitutional protection and the enforcement of such remedies would not be absolute.
Enforcement of a claim for payment of the principal of or interest on the Bonds could be made subject to the provisions
of federal bankruptcy laws or of any statutes that may hereafter be constitutionally enacted by the United States Congress or the
Maryland General Assembly extending the time for payment or imposing other constraints upon enforcement.
Tax Matters
State of Maryland and Local Income Tax
In the opinion of Funk & Bolton, P.A., Bond Counsel, under existing law, the Bonds, their transfer, the interest payable thereon, and any income derived therefrom (including any profit made in the sale thereof) shall be at all times exempt from State of Maryland, county, municipal, or other taxation of every kind and nature whatsoever within the State, but no opinion is expressed as to Maryland estate or inheritance taxes or any other Maryland taxes not levied directly on the Bonds, their transfer, the interest thereon or the income therefrom. Interest on the Bonds may be subject to state or local income taxes in jurisdictions other than the State of Maryland under applicable state or local tax laws. Prospective purchasers of the Bonds should consult their tax advisors regarding the taxable status of the Bonds in a particular state or local jurisdiction other than the State of Maryland. Federal Income Tax
In the opinion of Bond Counsel, interest on the Bonds will be excludable from gross income for federal income tax purposes under existing statutes, regulations and decisions as enacted and construed on the date of initial delivery of the Bonds, assuming the accuracy of certain certifications of the County and continuing compliance with the requirements of the Internal Revenue Code of 1986, as amended (the “Code”). Interest on the Bonds is not a tax preference item directly subject to the alternative minimum tax imposed on individuals, corporations or other taxpayers pursuant to the Code; however, interest on the Bonds held by certain corporations may be indirectly subject to federal alternative minimum tax because of its inclusion in the
adjusted current earnings of a corporate holder. Interest on the Bonds may be subject to the branch profits tax imposed on foreign corporations engaged in a trade or business in the United States of America.
THE BONDS
Washington County, Maryland 8
Bond Counsel will issue a separate opinion with respect to each series of the Bonds. Bond Counsel’s opinions will be
given in reliance (without independent investigation) on certifications, covenants and agreements by representatives of the
County as to certain facts material to both the opinions and the requirements of the Code. The County will covenant and agree
to comply with the provisions of the Code regarding, among other matters, the use, expenditure and investment of the proceeds
of the Bonds, the use of the projects financed or refinanced from Bond proceeds, as applicable, and the timely payment to the
United States of America of any arbitrage rebate amounts with respect to the Bonds or payments in lieu thereof. Bond Counsel
assumes no responsibility for, and will not monitor, compliance with the covenants and agreements of the County. In the event
of noncompliance with such covenants and agreements, available enforcement remedies may be limited by applicable provisions
of law and, therefore, may not be adequate to prevent interest on the Bonds from becoming includable in gross income for
federal income tax purposes retroactively to the date of issue.
Ownership of the Bonds may result in other federal income tax consequences to certain taxpayers, including, without
limitation, financial institutions, property and casualty companies, certain recipients of social security or railroad retirement
benefits and certain S corporations. Prospective purchasers of the Bonds should consult with their own tax advisors as to any
collateral federal income tax consequences.
Certain of the Bonds may be offered and sold at a discount (“original issue discount”) equal generally to the difference
between their public offering price and principal amount. For federal income tax purposes, original issue discount on a Bond
accrues periodically over the term of the Bond as interest with the same tax exemption and alternative minimum tax status as
regular interest. The accrual of original issue discount increases the purchaser’s tax basis in the Bond for determining taxable
gain or loss upon disposition (including sale, redemption or payment at maturity). Purchasers of Bonds at a discount should
consult their tax advisors regarding the determination and treatment of original issue discount for federal income tax purposes,
and with respect to any state or local tax consequences of owning such Bonds.
Certain of the Bonds may be offered and sold at a purchase price over the stated redemption price of such Bonds at
maturity. This excess constitutes premium on such Bonds. For federal income tax purposes, original issue premium is
amortizable periodically over a Bond’s term through reductions in the owner’s tax basis for the Bond for determining taxable
gain or loss upon disposition (including sale, redemption or payment at maturity). An owner of a premium Bond cannot deduct
amortized original issue premium relating to that premium Bond. Purchasers of any Bonds at a premium, whether at the time of
initial issuance or subsequent thereto, should consult their tax advisors with respect to the determination and treatment of
premium for federal income tax purposes, and with respect to any state or local tax consequences of owning such Bonds.
The foregoing is only a general summary of certain provisions of the Code as enacted and in effect on the date
hereof and does not purport to be complete or to identify all aspects of federal income taxation that may be relevant to a
particular purchaser of the Bonds in light of his or its particular circumstances and income tax situation. Prospective
purchasers of the Bonds should consult their own tax advisors as to the effects, if any, of the Code in their particular
circumstances. Bond Counsel will express no opinion regarding other federal tax consequences arising with respect to the
Bonds.
Effects of Future Enforcement, Regulatory or Legislative Actions
The Internal Revenue Service (the “Service”) has a program to audit state and local government obligations to
determine whether the interest thereon is includable in gross income for federal income tax purposes. If the Service audits the
Bonds, under current Service procedure, the Service will treat the County as the taxpayer and the owners of the Bonds will have
only limited rights, if any, to participate in the process. Any selection by the Service of the Bonds or of tax-exempt obligations
similar to the Bonds for audit could affect the marketability or market value of the Bonds.
The Service and the U.S. Department of the Treasury have ongoing programs to promulgate regulations to interpret and
apply the provisions of the Code. In addition, from time to time regulatory actions are announced or proposed and litigation is
threatened or commenced which, depending on its conclusion, could modify or impact federal or state tax treatment of tax-
exempt obligations such as the Bonds and could have an adverse effect on the marketability or market value of the Bonds.
From time to time, there are Presidential proposals, proposals of various federal committees, or legislative proposals
in the United States Congress or various state legislatures that, if enacted, could alter or amend the federal tax matters
referred to above, state treatment of the tax status of the Bonds or adversely affect the market value of the Bonds.
Furthermore, such proposals may affect the marketability or market value of the Bonds merely by virtue of being proposed.
THE BONDS
Washington County, Maryland 9
It cannot be predicted whether or in what form any such proposal may be enacted or whether, if enacted, it would apply to
tax-exempt obligations, including the Bonds, issued prior to enactment. In addition, legislation enacted after issuance of the
Bonds may directly or indirectly cause interest on the Bonds to be subject to federal or state income taxation or reduce the
benefit of the excludability of interest on the Bonds under existing law. Each purchaser of the Bonds should consult with his
or its own tax advisor regarding any pending or proposed federal or state tax legislation. Bond Counsel will not express any
opinion regarding pending or proposed federal or state enforcement actions, regulations, litigation or legislative actions.
See Appendix B hereto for the proposed respective forms of opinions of Bond Counsel to be delivered with respect
to the Bonds upon issuance.
GOVERNMENT AND ADMINISTRATION
Washington County, Maryland 10
II. Government and Administration
Location
Washington County is situated in northwestern Maryland, bordered by Pennsylvania to the north and West Virginia to
the south. It is bordered on the east by Frederick County, Maryland and on the west by Allegany County, Maryland. Washington
County is approximately 460 square miles in area. The County seat, Hagerstown, is 70 miles northwest of Washington, D.C. and
72 miles west of Baltimore, Maryland. Two major highways, Interstate 81 – running north and south, and Interstate 70 – running
east and west, cross within Washington County’s borders.
The major part of Washington County is fertile valley with rolling terrain. The lowland belt known as the Hagerstown
Valley lies between the Blue Ridge Mountains to the east and the Appalachian Highlands to the west.
Form of Government The County is a body politic and corporate, which performs all local governmental functions in Washington County except those performed by the nine incorporated municipalities within Washington County. The executive offices of the County are located at 100 West Washington Street, Hagerstown, Maryland 21740. The County’s central telephone number is (240) 313-2210 and its website is www.washco-md.net. Under the Code of the Public Local Laws of Washington County (2007 Edition), as amended, being Article 22 of the Code of Public Local Laws of Maryland (the “County Code”), both the executive and legislative functions of the County are vested in the elected, five-member Board of County Commissioners of Washington County (the “Board”). The Board may only exercise such powers as are conferred upon it by the General Assembly of Maryland, including authorization to issue debt to finance its capital projects. County Commissioners are elected on a countywide basis and serve four-year terms. Each member of the Board has one vote and a simple majority of the Board is sufficient to take action subject to the authority vested in the Board by the County Code. Emergency action also requires a simple majority vote. The Board elects its own officers. The General Assembly of Maryland must authorize powers not specifically authorized by the County Code. As authorized by the County Code, the Board appoints a County Administrator. The County Administrator is selected on the basis of his or her executive and administrative abilities, including his or her knowledge and experience in public administration. The County Administrator is responsible for the proper administration of the Board’s affairs. He is charged with the supervision of the departments and agencies of the County, and is responsible for the day-to-day operations of the County government in conformity with public local laws and other laws applying to the County. County financial matters are administered in part through the office of the Treasurer of Washington County. The County Code establishes the elective office of County Treasurer. The County Treasurer is constituted the collector of County and State taxes, charges and assessments and is charged with the enforcement of collection of taxes in the manner provided by law. As authorized by the County Code, the Board appoints the CFO on the basis of his or her experience in financial
administration. The CFO is charged with assisting the Board in the preparation and administration of the County budgets and
other accounting and fiscal matters as the Board deems necessary. In addition, the CFO is responsible for the study of the
organization, methods and procedures of each office, department, board, commission, institution, and agency of County
government.
GOVERNMENT AND ADMINISTRATION
Washington County, Maryland 11
Legislative and Administrative Officials
Board of County Commissioners
TERRY L. BAKER, a third-term County Commissioner, was first elected in 2006, and serves as President of the
Board of County Commissioners. He is a 1973 graduate of Williamsport High School, a 1975 graduate of Hagerstown Community College and a 1978 graduate of Auburn University, with a Bachelor’s degree in Education. Mr. Baker retired in
2015 from the position of Washington County Students Trades Coordinator for the Washington County Technical High School after being an educator for 34 years. Prior to being elected a County Commissioner he served from 2002 to 2004 as a
member of the Council for the municipality of Clear Spring, Maryland, and as Assistant Mayor for such municipality from 2004 to 2006.
JOHN F. BARR, a third-term County Commissioner, was first elected in 2006. He was raised in Boonsboro, Maryland
and is a Master Electrician in five states. In high school, Mr. Barr worked for his father as a field electrician at M/L Electric, Inc.,
founded in 1927. In 1979 he formed the management team overseeing the service department. In 1984 Mr. Barr bought the
company from his father and changed the name to Ellsworth Electric, Inc. He has built the company from 75 to 150 employees.
Mr. Barr is active in various service organizations and community projects. He currently serves as President of the Maryland
Association of Counties.
JEFFREY A. “JEFF” CLINE, a second-term County Commissioner, serves as Vice President of the Board of County Commissioners and is a Williamsport, Maryland, resident. He is a graduate of Williamsport High School and
Hagerstown Community College. Mr. Cline has experience as a realtor since 2003. He graduated from the Maryland Association of Realtors’ 2008 Leadership Academy and received the Graduate of Realtor Institute (GRI) designation. Mr.
Cline served on the Williamsport Town Council from 2005 to 2009.
LEROY E. MYERS, JR., a first-term County Commissioner, was born in Washington County and has lived in the Clear Spring, Maryland, area his entire life. He is a three term Maryland State Delegate serving District IC from 2003-2014.
He graduated from Clear Spring High School and attended Hagerstown Community College for two years. Mr. Myers is the owner and president of Myers Building Systems, Inc., a general contracting firm.
WAYNE K. KEEFER, a first-term Commissioner, appointed by Governor Hogan on March 25, 2016 to fill a
vacancy on the Board of County Commissioners. He is a lifelong resident of Hancock and a 2004 graduate of Hancock Middle-Senior High School. Mr. Keefer holds an A.S. degree in Management from Hagerstown Community College and a
B.S. degree in Business Administration and an M.B.A. from Frostburg State University. He has over a decade of experience as a commercial banker and is currently a small business owner and an adjunct instructor with Frostburg State University and
the University System of Maryland at Hagerstown. He is active in the community including the Hancock Chamber of Commerce and Rural Children’s Fund.
County Treasurer
TODD L. HERSHEY, County Treasurer, was first elected to his position in November 1986. He holds a Bachelor of
Science degree, majoring in Sociology, from Guilford College and a Master of Science degree in Management and Administration
from Hood College. He was formerly a commercial banker.
GOVERNMENT AND ADMINISTRATION
Washington County, Maryland 12
Administrative Officials
GREGORY B. MURRAY, County Administrator, is a summa cum laude graduate with a B.S. degree in Business Administration and is currently enrolled in the Master of Public Administration program at the University of Baltimore, a University System of Maryland college. He is a native of Washington County, a credentialed manager through the International
City/County Management Association (ICMA-CM), and was appointed County Administrator on February 27, 2007 after 10 years as the Director of the County’s Department of Water Quality. Mr. Murray has over 30 years of public administration
service and leadership, giving him an extensive knowledge of the County’s infrastructure needs, planning and regulatory issues. He is a member of the American Society of Public Administration, the American Public Works Association, the County
Engineers Association of Maryland, the American Water Works Association, and the Water Environment Federation as well as numerous advisory boards and commissions. Mr. Murray also holds several environmental licenses for management of public utilities and was appointed by Maryland’s Governor as Chair of the Chesapeake Bay Restoration Fund Advisory Committee. He has worked closely with the U.S. Environmental Protection Agency, the Maryland Department of the Environment, and the
Maryland Department of Planning to help guide policy decisions that improve the quality of available resources in the State. Mr. Murray has also served as an international ambassador to China and South Korea on behalf of Washington County.
DEBRA S. MURRAY, C.P.A., Chief Financial Officer, holds a B.S. degree in Accounting from Frostburg State University. She is a Certified Public Accountant and a Certified Global Management Accountant. She was appointed Director of the Office of Budget and Finance in 1995 and appointed Chief Financial Officer in 2014. She served as Assistant Director of the
Office of Budget and Finance from 1993 until her appointment as Director. Prior to her employment with Washington County she held the position of audit manager with a regional public accounting firm. Ms. Murray currently fills the Western Maryland
position as a board member on the Maryland Government Finance Officers Association and serves as Treasurer on the Maryland Theatre Board. She is a member of the American Institute of Certified Public Accountants, the Maryland Association of Certified
Public Accountants, the Government Finance Officers Association of the United States and Canada (“GFOA”) and the Maryland Government Finance Officers Association.
KIMBERLY K. EDLUND, C.P.A., Director of Budget and Finance, is a summa cum laude graduate from Shepherd
University with a B.S. degree in Accounting. She earned a Master of Business Administration degree from Frostburg State
University. Mrs. Edlund was hired by Washington County in 1995 as the Assistant Director of Budget and Finance and was
promoted to Director in 2014. Prior to her employment with Washington County she was a Senior Accountant with a regional
public accounting firm. She is a member of the American Institute of Certified Public Accountants, the Maryland Association of
Certified Public Accountants, and the Maryland Government Finance Officers Association.
JOHN M. MARTIRANO, County Attorney, holds a B.A. degree, cum laude, from West Virginia University and a J.D.
degree from the University of Pittsburgh School of Law. He was admitted to the Maryland Bar in 1990 and to the West Virginia
Bar in 1994. He was in private practice with Miles & Stockbridge from 1990 to 1993 and with Steptoe & Johnson from 1993 to
1996. He was a Senior Surety Claim Attorney with The St. Paul Companies, Inc. (formerly USF&G) from 1996 to 1999. Mr.
Martirano was appointed Assistant County Attorney for Washington County in 1999 and Deputy County Attorney in 2004. He
was appointed County Attorney in 2005. He is a 2010 graduate of Leadership Maryland and a 2006 graduate of Leadership
Hagerstown (now known as Leadership Washington County). Mr. Martirano is active in numerous community organizations,
including serving on the boards of directors of Hospice of Washington County and the United Way of Washington County. He is
also a member of the American, Maryland and Washington County Bar Associations.
R. DAVID HAYS, Director of Emergency Services, was hired by Washington County in February 2016. He is a career
administrative and executive Command Officer. Additionally, he is a firefighter and a paramedic with over 30 years experience.
Mr. Hays is a nationally certified Fire Officer III, Fire Fighter III, Instructor Level II, and a nationally registered EMT/Paramedic.
Prior to his employment with Washington County, he was the Assistant Chief of Operations for Community Rescue Service, Inc.
located in Hagerstown, Maryland. Mr. Hays now serves as a volunteer paramedic/firefighter with this organization.
GOVERNMENT AND ADMINISTRATION
Washington County, Maryland 13
JULIE A. PIPPEL, Director of Environmental Management, is a licensed Water and Wastewater Operator in
Maryland and a certified Manager of Landfill Operations with the Solid Waste Association of North America. Ms. Pippel holds an A.A. degree in Ecology and Environmental Technology from Paul Smith College and a B.S. degree in Business
Administration from the University of Maryland University College. She is currently pursuing a Master’s degree in Public Administration from the University of Baltimore. Ms. Pippel was promoted to the Director position in July of 2007 after 18
years of experience with the Washington County Department of Water Quality. Ms. Pippel is the Chair of the State Water Quality Advisory Committee, Chair of the Maryland Upper Potomac Tributary Team, President of the Maryland Association
of Municipal Wastewater Authorities, Treasurer of the Stormwater Association of Maryland, and a member of various other professional associations.
JAMES L. STERLING, Director of the Division of Public Works, has held different positions with Washington County beginning as a Construction Inspector, working as an Assistant Supervisor with the Highway Department, and subsequently as Assistant Superintendent overseeing the operation of the Highway Department. Mr. Sterling was promoted
in 2000 to the Director of Parks and Facilities. Mr. Sterling was promoted to his current position in 2015, where he is responsible for the departments of Highways, Parks and Facilities, and Transit, Washington County Regional Airport and
Black Rock Golf Course. He is a member of numerous professional organizations and serves as a liaison for the County with various State agencies, advisory boards and the County’s municipalities.
ROBERT J. SLOCUM, Director of the Division of Engineering and Construction, is a licensed professional
engineer in the State of Maryland. Mr. Slocum holds a Bachelor of Science degree in Civil Engineering from the University
of Arizona. His 20 years of engineering experience includes several years with a private consulting firm and a state
department of transportation. Mr. Slocum has served Washington County for 14 years. His first position with the County
was Deputy Chief Engineer, where he was primarily responsible for capital improvement projects. In 2008, Mr. Slocum was
promoted to Deputy Director of Public Works with additional responsibilities including oversight of code inspection staff and
operations. In 2013, he was promoted to his current position, and is responsible for the Engineering, Construction
Management and Inspections, and Plan Review and Permitting Departments. Mr. Slocum is the Building Code Official for
Washington County, a long standing member of various professional organizations and he also serves Washington County as
a member of various boards and committees.
GOVERNMENT AND ADMINISTRATION
Washington County, Maryland 14
Washington County Government Organizational Chart
County Employment
As of June 30, 2015 the County employed 760 full-time employees and 456 part-time employees, including seasonal positions. The County has a compensation and classification plan, which is complemented by a performance evaluation system. There are 145 employees of the County’s Division of Public Works, Division of Emergency Services, and Division of Environmental Management represented by a collective bargaining agreement that expires on June 30, 2018. The County has not
experienced a work stoppage due to labor relation disputes and considers its relationships with employees to be good.
Pension and Retirement System
Employees of the County government are provided retirement benefits through a pension plan (the “Plan”). Participation
in the Plan is mandatory and there were 1,073 participants as of June 30, 2015. All full-time County employees are eligible to
participate in the Plan. The Plan also provides death and disability benefits. The employees and the County fund the guaranteed
allowance. Approximately 50% of the non-uniformed participants contribute to the Plan at the rate of 5.5% of their annual salary
and the remaining non-uniformed and uniformed employees contribute 6% of their annual salary.
The County’s contribution is comprised of two parts: (i) contribution to cover current service costs and (ii) annual
accrued liability contribution to liquidate the County’s unfunded accrued liability by June 30, 2029. Contributions for items
(i) and (ii) above are based on an assumed investment rate of 7.75% compounded annually. Contributions for items (i) and (ii) are
currently funded at 18.28% of total salary expense. Salaries are assumed to increase at an annual rate of 3.0%. Contributions
from participants and from the County are pooled to provide the guaranteed allowance for each member.
GOVERNMENT AND ADMINISTRATION
Washington County, Maryland 15
The following table presents the pension and retirement contributions and unfunded liabilities of the County and certain
County agencies for completed fiscal years 2012 through 2015 and for fiscal year 2016. The County has already paid the $6,621,156 amount reflected in the “Total” column in the table below, which payment is the aggregate of the amounts reflected in
the “Current Service Costs” and “Recommended Payment for Unfunded Accrued Liability” for fiscal year 2016, which began on July 1, 2015.
As of
July 1
Current
Service Costs
Recommended
Payment for Unfunded
Accrued Liability Total
Unfunded
Accrued Liability
2015 $1,411,897 $5,209,259 $6,621,156 $53,172,860
2014 1,727,349 4,417,936 6,145,285 47,088,710
2013 3,779,971 2,662,116 6,442,087 27,333,395
2012 3,402,453 2,570,315 5,972,768 27,826,378
2011 2,940,903 2,151,124 5,092,027 24,178,332
Source: CBIZ Benefits & Insurance Services, Inc.
As a result of the implementation of GASB Statement 68–Accounting and Financial Reporting for Pensions, the County modified its actuarial cost method for determining contributions to the Plan. For fiscal years prior to fiscal year 2015, costs and liabilities were based on a blend of the Projected Unit Credit and Aggregate actuarial cost methods. For fiscal year 2015 and later,
the funding costs and liabilities are based solely on the Projected Unit Credit cost method. The new method produces higher liabilities but lower normal costs than the previous method. However, both methods produce actuarially sound contribution amounts intended to fully fund the Plan by 2029.
Other Post–Employment Benefits The County implemented the provisions of Governmental Accounting Standards Board (GASB) Statement 43,
Financial Reporting for Post-Employment Benefit Plans Other Than Pension Plans (“OPEB”) and GASB 45, Accounting and Financial Reporting by Employers for Post-Employment Benefits Other Than Pensions in fiscal year 2008. The County’s OPEB plan is a single employer defined benefit healthcare plan. The County established a trust for administering the plan assets and paying healthcare costs and death benefits on behalf of the participants. There is no vesting in the post-employment health benefits and they are subject to change at any time. All employees who retire from the County may participate in the program. In order to be eligible, the retiree must have (i) a minimum of five years of County service, and (ii) immediately preceding retirement, been enrolled in a medical, vision, or prescription drug insurance plan offered to active employees in the County. The retirees pay 50% of the health insurance premium. Retirees are also covered by a death benefit equal to their final annual salary, not to exceed $100,000. These benefits cease when the retiree attains age 65 or becomes Medicare eligible. As of June 30, 2015, 44 retirees were receiving OPEB benefits and 73 employees were retirement-eligible. The County intends to fund any annual short-fall between the OPEB annual required contribution and actual pay-go expense into a legally executed trust fund. The trust fund is invested as a long-term pension trust, using an appropriately
balanced portfolio of equities and debt instruments, to prudently maximize long-term investment returns.
$ 1,185,434
$ (94,017)
$ 78,498
$ 1,169,915
$ 1,724,567
$ (554,652)
$ (1,213,123)
$ (1,767,775)
Source: CBIZ Benefits & Insurance Services, Inc.
Net OPEB Asset - Beginning of Year
Net OPEB Asset – End of Year
Components of Net OPEB Obligation
Annual Required Contribution
Interest on Net OPEB Obligation
Adjustment to Annual Required Contribution
Annual OPEB Cost (Expense)
Contributions Made or Accrued
Increase in Net Obligation
GOVERNMENT AND ADMINISTRATION
Washington County, Maryland 16
Insurance
The County maintains commercial insurance for general liability, automobile, excess workers’ compensation, law
enforcement, public officials’ liability, and catastrophic coverage. The County is required to provide unemployment insurance
coverage for County employees.
Certain Services and Responsibilities Education The Board of Education of Washington County (the “Board of Education”) implements all educational policies and programs for public schools in Washington County under the administration of the State Board of Education. The Board of Education, composed of seven members elected for four-year terms, oversees 22,303 students (including 579 in pre-kindergarten), in 46 elementary and secondary schools, which include middle and combined schools. The staff to student ratio in 2014-15 averaged better than one staff member for every 22.25 pupils; the average unrestricted pupil expenditure was $11,911 for the 2014-15 school year. The largest General Fund appropriation by the County in its adopted budget for fiscal year 2016 is $94,844,030 for the Board of Education, which represents 45.91% of the General Fund budget. This appropriation is for operating expenditures, including amounts for a portion of the Teacher Pension System provided by the State of Maryland. In addition, the County appropriated $2,738,000 in its capital budget for fiscal year 2016 for Board of Education projects. Washington County’s high school graduation rate for the 2014-2015 school year as compared to other selected peer group counties and the State of Maryland is as follows:
Washington Frederick Cecil Carroll Charles St. Mary’s State of
County County County County County County Maryland
91.16%93.47%87.75%95.00%92.36%94.26%86.98%
Source: Maryland Board of Education Training/Higher Education
Within a 70-mile radius of the County seat, the City of Hagerstown, there are more than 30 institutions of higher
learning. There are numerous opportunities in Washington County for residents to obtain education and training beyond the high
school level. The following describes certain programs and schools within Washington County.
Training
Western Maryland Consortium provides a wide range of workforce development services for jobseekers and employers.
Employer services include referral of applicants, customized training, financial aid for on-the-job training, recruitment, and
screening assistance. Services are generally provided at no cost to employers.
Washington County Technical High School is a two-year public high school that is under the administration of the
Washington County Public Schools. It offers 32 academic courses and 19 career and technology programs. These programs
prepare students for professional/technical careers based on current industry skill standards. Enrollment is open to qualified 11th
and 12th grade students, and tuition paying adults.
Barr Construction Institute, an education division of Associated Builders and Contractors, Inc., offers management
education and professional industrial, commercial and apprenticeship trade training. Construction and maintenance training is
recognized by the U.S. Department of Labor, Bureau of Apprenticeship & Training, and is accredited by the National Center for
Construction Education and Research (an affiliate of the University of Florida).
GOVERNMENT AND ADMINISTRATION
Washington County, Maryland 17
Pittsburgh Institute of Aeronautics (“PIA”) established the Federal Aviation Administration (FAA) - approved Aviation Maintenance Technician (AMT) education program at the Hagerstown Regional Airport. With the skills PIA graduates acquire from the program, they are equipped to work in many industries including aviation, mechanical systems, hydro-mechanical systems and the green technology field. Higher Education
Hagerstown Community College (“HCC”), founded in 1946, offers more than 100 programs of study for university
transfer or for immediate career preparation, as well as continuing education courses, workforce development, and adult basic
education. Associate degrees, certificates and letters of recognition are awarded, including degrees and certificates in
biotechnology, alternative energy technology and cyber security. HCC’s business incubator, the Technical Innovation Center
(“TIC”), is the largest, most comprehensive technology-based business incubator in Western Maryland. It provides space and
other services and amenities to entrepreneurs, start-ups, and existing companies. TIC’s facilities consist of office space,
conference rooms and 4,000 square feet of biotech research labs. The college has a five-story, 65,000 square foot Science,
Technology, Engineering and Math (STEM) Building, the recently renovated Kepler Theater and a Performing and Visual Arts
Education Center.
The County appropriated $9,265,010 in its fiscal year 2016 operating budget for HCC. HCC receives the balance of
its funding from student tuition, State grants, and other miscellaneous sources. In addition, the County appropriated
$3,003,000 in its capital budget for fiscal year 2016 for HCC projects.
Kaplan University-Hagerstown, a private institution since 1938, offers 21 master degree programs, 21 bachelor degrees,
eight associate degrees and 27 certificate programs in the areas of business, allied health, criminal justice, paralegal studies,
graphic design, human services and information technology. Online and traditional, on-campus courses are available.
University System of Maryland at Hagerstown (“USMH”) opened in January 2005 and is located in Hagerstown’s
historic City Center. USMH is part of a regional system offering more than 20 undergraduate and graduate degree programs from
six respected universities within the Maryland system: Frostburg State University, University of Maryland University College,
University of Maryland College Park, Towson University, Coppin State University and Salisbury University. Students can
complete a bachelor’s degree or earn a master’s degree. USMH also offers access to on-site academic advising, computer labs,
and a full-service library.
GOVERNMENT AND ADMINISTRATION
Washington County, Maryland 18
Planning and Zoning
The Washington County Planning Commission was created in 1957. The Planning Commission consists of seven
members appointed by the Board and is supported by the County’s Planning and Zoning Department with a staff of 10. The Planning Commission has authority to approve subdivision and site development plans. The plans are required by the
Subdivision and Zoning ordinances and managed by the County’s Division of Engineering and Construction. Another of the primary responsibilities of the Planning Commission is the Comprehensive Plan for the County. The Planning Commission
first recommended the adoption of a Comprehensive Plan for Washington County in 1971. Major updates to the Comprehensive Plan were completed in 1981 and in 2002. The adoption of the Comprehensive Plan in August 2002 was the
culmination of a multi-year effort. An update of the Comprehensive Plan is in progress, with adoption expected in late spring 2017.
From the original adoption in 1973 and through amendments in 2002, 2005 and 2012, the Zoning Ordinance provides seven classifications for industrial development: (i) “Industrial General” which encompasses heavy manufacturing plants requiring extensive transportation, water and sewerage facilities; (ii) “Industrial Restricted” which encompasses light
manufacturing such as processing or assembly of previously processed materials; (iii) “Planned Industrial” which encompasses the planned development of industrial park locations; (iv) “Airport” which permits industrial uses that have a
need to be located near the airport or provide airport related services and include height limitations located around the Hagerstown Regional Airport; (v) “Highway Interchange District” which allows light industrial uses in the vicinity of
interstate interchanges to take advantage of transportation needs and opportunities; (vi) “Office, Research and Technology” which is geared toward the development of corporate offices, research facilities, and high-tech communication land uses; and
(vii) “Office, Research and Industry” which allows a mix of technology and selected industries with increased performance standards. The zoning regulations as well as the newly adopted 2015 Maryland Building Performance Standards, the 2015
International Existing Building Code, trade codes and local amendments administered by the Division of Engineering and Construction govern the development of these areas.
The Planning and Zoning Department continues to update and revise the Subdivision Ordinance, the Zoning
Ordinance and other ordinances and functional plans that relate to land development in Washington County. In keeping with
the recommendations of the 2002 Comprehensive Plan, major revisions were made in July 2005 to the zoning regulations that
govern the rural areas of Washington County. In July 2012 the County adopted major revisions to the zoning text and map
for the Urban and Town Growth areas to implement the recommendations of the Comprehensive Plan. Those revisions are
designed to create a more desirable and efficient urban living environment. The amendments include improvements to the
design guidelines in the industrial districts mentioned above. A new educational zone, called Education, Research and
Technology is designed specifically to allow Hagerstown Community College to partner with emerging high-tech industries
and expand its role as business partner in the community. In an effort to coordinate development and infrastructure needs,
staff is continuing to review the Adequate Public Facilities and Excise Tax Ordinances for possible improvement.
The Water and Sewerage Plan, the Solid Waste Plan and the Land Preservation, Parks and Recreation Plan are other
plans prepared and administered by the Planning and Zoning Department to assist in the development of the County in an
orderly fashion. The State of Maryland requires the County to update each of these plans, as well as the Comprehensive
Plan, at regular intervals.
Land use control and planning within the County’s nine incorporated municipalities is under the jurisdiction of the
municipalities. Each of the municipalities has adopted its own zoning and land development regulations.
GOVERNMENT AND ADMINISTRATION
Washington County, Maryland 19
Hospital and Medical Care
Meritus Health
Meritus Health, located in Hagerstown, Maryland, is the largest healthcare provider in Western Maryland. Its programs
span the continuum of healthcare, ranging from inpatient care to occupational health services to physician practices and outpatient
care.
Meritus Medical Center, which opened in 2010, is an acute care hospital with 243 licensed beds in single patient rooms.
Services offered include a regional trauma center, a cardiac catheterization lab, and a certified primary stroke center. State-of-the-
art medical technologies at Meritus Medical Center include advanced magnetic resonance imaging (MRI), single-photo-emission
computed tomography (SPECT) scanners, and cardiac interventions. Hospital services that address outpatient needs include the
John R. Marsh Cancer Center, Total Rehab Care, the Center for Breast Health, and Meritus Cancer Specialists.
Meritus Health provides complementary branches of care including primary care physicians’ practices, specialists in
disciplines ranging from obstetrics to cardiology and satellite services including diagnostics and durable medical equipment. Washington County Health Department
The Washington County Health Department, which provides various health services to the citizens of Washington
County, is budgeted to receive a total of $2,339,270 in fiscal year 2016 from the County. Along with the main headquarters, it has
staff and programs based at eight other sites. The Health Department employs a total of 183 full-time and part-time personnel in
five divisions.
The Environmental Health Division of the Health Department engages in food inspection, well and septic services,
community services, transient and non-transient water analysis, rabies control, complaint and outbreak investigations, and
emergency response. The Nursing Division is responsible for maternal and child health programs, communicable disease
surveillance and control, tuberculosis control, refugee and migrant health services, reproductive health services, STD screening
and treatment, HIV and AIDS services, immunizations, Maryland Children’s Health Insurance Program, cancer screening, vision
screening, adult evaluation and review services, and WIC services. The Health Planning and Strategic Initiatives Division is
responsible for relaying of public information, community relations, emergency preparedness, as well as developing and
maintaining agency partnerships and providing chronic disease prevention and control initiatives. The Division of Behavioral
Health Services provides a comprehensive system of care, including prevention, intervention, referral and treatment services for
substance use and mental health disorders in a variety of settings. The Administration Division, which includes Personnel,
Information Technology, and Health Officer Staff, provides management support for all programs within the agency.
Other Medical Facilities
The George W. Comstock Center for Public Health Research and Prevention is a facility of the Johns Hopkins Bloomberg School of Public Health and was established in 1962 as a joint enterprise of the Maryland Department of Health and Mental Hygiene, Washington County Health Department and The Johns Hopkins University. The center has expertise and capacity in the conduct of large community health surveys, as well as a close working relationship with the County Health Department. Funding, sponsored through research grants by the National Institutes of Health as well as private foundations, supports 20 to 30 staff members in the Comstock Center. Research includes heart disease surveillance and epidemiology of cancer, heart disease, lung disease, diabetes, sleep and other conditions. Prevention research results are
disseminated nationally and internationally primarily through numerous journal publications.
There are nine privately owned licensed skilled nursing facilities with a total of 1,075 beds and one State-owned licensed skilled nursing facility with 63 beds in Washington County. All of these facilities are dually certified by Medicare and Medicaid. In addition there are 18 privately owned assisted living facilities with a total of 725 beds. Other medical facilities include the
Western Maryland Center, a 123 bed State-owned, chronic care facility, and the Brook Lane Psychiatric Center, a privately-owned psychiatric facility. None of these facilities receives funds from the County.
GOVERNMENT AND ADMINISTRATION
Washington County, Maryland 20
Safety
Law Enforcement
The Washington County Sheriff’s Office, the Maryland State Police, and municipal police agencies provide police protection in Washington County. The Sheriff’s Office has 99 sworn personnel and 92 radio-dispatched vehicles. The Sheriff’s Office is responsible for the operation of the Detention Center, which has a capacity of 450 inmates. The State Police has 36
troopers assigned to the local barrack, which is located just south of Hagerstown. The Hagerstown Police Department has a full-time force of 106 officers. The Hancock Police Department employs three full-time and two part-time officers. In addition, the Smithsburg Police Department employs four officers and the Boonsboro Police Department employs five police officers.
Emergency Services
The County’s Division of Emergency Services (“DES”) oversees Emergency Communication/911, Emergency
Management, Fire Department Special Operations, Fire Department Support Services, and the Emergency Medical Services
Operations Program. DES is led by a full-time career Director and five full-time department heads who oversee the daily
operational components of Emergency Services in Washington County. The division has 86 full-time and part-time
personnel working directly within the division and approximately 40 volunteers who provide dedicated service to the citizens
of Washington County.
Emergency Communications
The Emergency Communications Center is overseen by an assistant director with three full-time executive support staff. The Emergency Communications Center processes all of the 911 and non-emergency calls for the City of Hagerstown, the County, and all of the municipalities through one central dispatch location. The call center and new digital radio system enables first responders to communicate in a safe, seamless and compatible way, enhancing their ability to respond to emergencies and save lives. The call center also integrates Hagerstown’s and Washington County’s non-emergency responders, allowing them to serve the community quickly and efficiently.
Emergency Management
Emergency management activities are overseen by an assistant director with support from a full-time emergency
planner. Emergency Management includes mitigation, planning, response and recovery from natural and technical disasters.
Washington County has a Local Emergency Planning Committee, overseen by Emergency Management that coordinates
disaster planning, conducts drills to exercise the County Emergency Operations Plan, and oversees a community outreach
program consisting of home chemical safety training, citizen preparedness, and pertinent educational programs.
Fire Department Special Operations
The department’s activities are overseen by an assistant director. The County has a vision to become the regional leader
in providing and coordinating efficient public services. In response to that vision the Special Operations Team has both volunteer
and career personnel who complete extensive training in various technical and/or specialized areas including hazardous materials,
trench rescue, rope rescue, water rescue, structural collapse and confined space rescue.
Emergency Medical Services
The Emergency Medical Services (“EMS”) section provides leadership, direction, support and coordination to the
County’s EMS system in order to continuously improve the efficiency and quality of medical services being provided to
those who reside and travel within the County. EMS is overseen by an assistant director and includes eight full-time
advanced life support (“ALS”) technicians and five part-time ALS technicians. This team deploys two highly specialized
ALS chase units which support the eight independent EMS companies in the delivery of the highest quality pre-hospital care.
Additionally, three ALS support vehicles and a reserve ambulance are available for supplemental staffing to the independent
companies and are available to provide additional resources for high risk events and large public gatherings.
GOVERNMENT AND ADMINISTRATION
Washington County, Maryland 21
Fire and Rescue
Fire and rescue protection is coordinated through DES by an assistant director. Working collaboratively with the
Washington County Volunteer Fire and Rescue Association (the “WCVFRA”), DES coordinates the services provided by 14
volunteer fire companies and eight volunteer ambulance companies throughout Washington County. All volunteer companies
belong to the WCVFRA. The association has approximately 700 volunteers who provide a combination of firefighting, rescue,
emergency medical and administrative services to the community. Several volunteer companies have hired career personnel to
supplement the volunteer staff during times of low volunteer availability.
Fire protection within the City of Hagerstown is provided by a combination career and volunteer fire department. The
department includes six stations with five engines and two ladder trucks. The department is led by a career Fire Chief, a Fire
Marshall, two Assistant Fire Marshalls, and six Shift Commanders. The department has 84 full-time career firefighters and 43
trained volunteer firefighters. Environmental Management The Division of Environmental Management (“DEM”), which includes the Department of Water Quality, the
Environmental Engineering Department, the Solid Waste Department, the Stormwater Management Department and the
Watershed Department, was created in fiscal year 2007. The State and federal environmental initiatives as they pertain to
water, wastewater, stormwater, solid waste and nutrients are all jointly related. DEM is responsible for integrating the
regulations and applying them to the operations of these departments.
Solid Waste
The Washington County Solid Waste Department is responsible for a solid waste disposal system that protects the
environment and public health. Currently the County disposes of solid waste at the 40 West Landfill, which opened in 2000. At
current disposal rates, this site could meet the County’s estimated disposal needs until 2120. In 2013, the County entered into an
agreement with a private firm to begin construction of a new solid waste facility to handle this material in a more environmental
friendly manner. This new facility will sort the solid waste materials collected into recyclables, materials that can be processed
into a refuse derived fuel (RDF) pellet and materials which need to be land-filled. The processing of suitable materials to RDF
pellets will be the first phase of operation with this product being sold as a fuel source to industries. In phase two of the new
facility, the RDF pellets will be further processed to generate a synthetic diesel product which can be sold on the open market.
Once this facility is in operation, it is anticipated that less than 10% of the solid waste materials received by the County will need
to be land-filled. The Department operates five solid waste convenience centers that are strategically located throughout
Washington County. Supporting and strengthening individual and community self-reliance and responsibility in the areas of
waste reduction, recycling, and proper disposal of solid waste is the mission of the Solid Waste Department. The Department
operated as a special revenue fund until fiscal year 2002, when it was reclassified as an enterprise fund.
Water Supply and Wastewater Facilities
The County has a master water and wastewater plan, which assigns service priority designations for all areas within
Washington County. These designations range from “No Planned Service” to “Existing and Under Construction”. The plan
serves as a guide for the orderly development and expansion of water and wastewater facilities, both within Washington County
and in those incorporated municipalities owning and operating their own systems, requiring the County or incorporated
municipality to obtain a proper service designation before constructing or expanding water or wastewater services.
The County is authorized to provide public water and wastewater service to areas outside the incorporated municipalities and may provide service within a municipal corporation located in Washington County with the consent of the municipality. The County currently provides water and/or wastewater services to nearly all of the immediate densely populated area surrounding the City of Hagerstown (except the Dual Highway corridor), the areas of Highfield, Elk Ridge, Sandy Hook, and the towns of Sharpsburg and Smithsburg. The incorporated municipalities of Hagerstown, Boonsboro, Clear Spring, Funkstown, Hancock, Keedysville, Smithsburg and Williamsport all own their water/wastewater facilities, or portions thereof. In addition to providing the wastewater service described above, the County operates the water and wastewater systems for the Town of Clear Spring, and provides operational assistance to the Town of Williamsport.
Five treatment plants serve the County water system with an aggregate capacity of 419,000 gallons per day, with
individual plant capacities from 4,000 to 230,000 gallons per day. The County wastewater system is served by five treatment
plants with an aggregate capacity of 5,393,000 gallons per day, with individual plant capacities from 21,000 to 4.1 million
GOVERNMENT AND ADMINISTRATION
Washington County, Maryland 22
gallons per day. The County is in the process of upgrading its wastewater facilities to comply with the State’s enhanced
nutrient removal (“ENR”) strategy. The Winebrenner Treatment Plant ENR upgrade began construction in fiscal year 2015,
with anticipated completion in the fall of 2016. The Conococheague Wastewater Treatment Plant ENR upgrade will be under
construction in fiscal year 2017.
Usage of water and wastewater systems is measured in Number of Services and Number of Equivalent Dwelling
Units (“EDUs”). Number of Services refers to the number of actual connections and EDU is a unit of measure, which
equates the consumption, or flow of commercial or industrial connections, to the average flow of a residential dwelling unit.
The County bills its customers quarterly except for those for which wastewater treatment service is provided by the
City of Hagerstown, in which case the County’s charges are billed and collected on its behalf by the City of Hagerstown.
The following table shows the total Number of Services and EDUs of the County’s water and wastewater systems and the
annual residential user rates effective July 1, 2015. For customers receiving County collection services only, treatment is
provided by the City of Hagerstown.
Residential
No. of No. of Annual (Avg)
Services EDUs User Rate
Full Service……………...……1,336 1,550 $632.28
Residential
No. of No. of Annual (Avg)
Services EDUs User Rate
Full Service …………...………6,995 10,620 $594.92
Collection Service Only .….…3,667 4,889 $214.20
Wholesale ………………….…5 3,665
Total……………………..…..…10,667 19,174
Source: Washington County Department of Budget and Finance
WATER SYSTEM
WASTEWATER SYSTEM
The County provides wastewater “treatment only” services to its wholesale customers, which are the towns of Williamsport and Smithsburg, the Conococheague Pretreatment Facility (the “Pretreatment Facility”), Fort Ritchie and the City of
Hagerstown. The only major wastewater treatment facility for public use in Washington County other than those operated by the County is the Hagerstown Wastewater Treatment Plant, owned and operated by the City of Hagerstown, which has a capacity of 10.5 million gallons per day. The Pretreatment Facility serves all of Washington County by providing pretreatment of non-hazardous industrial
wastewater, landfill leachate and metals-bearing waste streams, and has a capacity of 125,000 gallons per day (current average
usage is 50,000 gallons per day). The Pretreatment Facility was privatized in 2006 through a long-term lease to a private
corporation.
ECONOMIC AND DEMOGRAPHIC INFORMATION
Washington County, Maryland 23
III. Economic and Demographic Information
Department of Business Development
The Washington County Department of Business Development (the “DBD”) is dedicated to expanding economic opportunities for the citizens of Washington County. It works to promote Washington County as a place of business and
improve the overall business climate of the community.
The Washington County Economic Development Commission Board of Directors (the “EDC”) is comprised of 12 unpaid volunteers and seven ex-officio members. As representatives of the local business community, the EDC is responsible
for evaluating and recommending policies affecting the County’s ability to attract, nurture, and sustain employment, and to further promote economic growth and change in a managed environment.
The DBD currently has five full-time employees to conduct the day-to-day operations of the office. The staff works to fulfill the strategic priorities recommended by the EDC.
Throughout the year the DBD meets with representatives of existing companies in need of assistance. Discussions include appropriate funding programs, enterprise zone benefits, training, and other sources of business support. The DBD has formed strategic partnerships with such organizations as the Maryland Department of Commerce, Tri-County Council for
Western Maryland, Maryland Small Business Development Center, Western Maryland Consortium, and Maryland One Stop Job Center in order to better serve the needs of businesses in Washington County. The DBD distributes the following publications to promote economic development by providing current, relevant
information to the business community: Business & Industry Directory, Business Development Guide, Economic Data
Summary, and an Annual Report. The DBD also distributes listings of available buildings and sites. The DBD maintains a web-site, www.hagerstownedc.org, and an online reference guide for economic development allies, partners, site selection consultants, clients, and the general public. The site includes statistical data on Hagerstown-
Washington County’s Community Demographics, Quality of Life, Business Climate, Incentives, Local Business Resources, Property Search, Maps, and Recent News. Online publications include the DBD’s Economic Data Summary, the Business
and Industry Directory, and the Annual Report. Visitors to www.hagerstownedc.org can access a database that highlights available commercial/industrial buildings and sites within Washington County. The database includes each property’s
pertinent information and describes its development potential.
The DBD administers the Enterprise Zone Program, identifying eligible businesses that qualify for local real property tax credits and State income tax credits in the City of Hagerstown, the Town of Hancock, and elsewhere in Washington County. For tax year 2015-16, the City of Hagerstown, the Town of Hancock, and the County granted $96,669, $1,205, and $388,508, respectively, in real property tax credits for private capital investment. The State of Maryland is expected to reimburse $48,335 to the City of Hagerstown, $602 to the Town of Hancock, and $194,254 to the County for these credits.
ECONOMIC AND DEMOGRAPHIC INFORMATION
Washington County, Maryland 24
Business Development
New and Expanding Businesses
In 2015 the County experienced new and expanding businesses highlighted by the creation of more than 380 new
jobs and known new investments of approximately $48.7 million. Many of these achievements are a result of incentive
packages provided through partnerships of the County and State to provide training programs, State financing, and Enterprise
Zone tax credits. Significant projects announced in 2015 and 2016 that are expected to provide an additional 165 new jobs
and an additional $4.4 million of new investments are noted in the following table:
Completed/
Expected Project #New
Company Name Business Type Completion Cost (1)Jobs (1)
Tractor Supply Inc.Warehousing/Distribution 1Q15 $2,000,000 108
Baltimore Mack Transportation 2Q15 $5,000,000 30
Sharrett Collision Center Retail 2Q15 $1,000,000 0
America's First Incorporated Energy Manufacturing 3Q15 $12,000,000 70
Primanti Brothers Hospitality 3Q15 $1,200,000 30
Tempur Sealy International Manufacturing 3Q15 $5,000,000 120
Lanco-Pennland Sales and Repair 4Q15 $11,500,000 13
Truck Enterprises, Inc.Sales and Repair 4Q15 $11,000,000 13
Cycle Aviation Maintenance and Repair 2Q16 $150,000 40
Pinnacle Foods, Inc.Manufacturing 4Q16 $4,200,000 85-125
$53,050,000 549
Source: Washington County Department of Business Development(1) Estimates based on company announcements.
Type of
Activity
Hagerstown-Washington County, Maryland -- Significant Business Activity for 2015/2016
Completed Projects Announced in 2015
Projects Under Development Announced in 2015/2016
New Construction
New Jobs/Equipment
Totals for Projects Announced in 2015/2016:
New Construction
New Jobs/Constrution
New Jobs/Renovation
New Jobs/Construction
New Jobs/Construction
New Jobs/Construction
New Jobs/Renovation
New Jobs/Construction
ECONOMIC AND DEMOGRAPHIC INFORMATION
Washington County, Maryland 25
Business Parks and Sites
Through the DBD, the County promotes the development of both private and non-profit business parks and sites. The County also successfully obtains financing for necessary infrastructure through various State and federal agencies to support these developments as locations for new and expanding businesses. The County offers prospective businesses a selection of sites
in planned industrial/business parks, which include:
Park Total Available Ownership
Acreage Acreage
City of Hagerstown—Washington County
Valley Business Park ………………………...…..……………….188 125 Private
Town of Hancock Enterprise Zone:
Hancock Industrial Park………………………………………..…38 38 Town
Other Locations:
Airport Business Park …………………….…….….……..………39 30 Nonprofit
Friendship Business Park ………………….…....……………..…450 300 Private
Gateway Business Park………………………..…………….……65 12 Private
Hub Business Park………………………………….……………..80 80 Private
Hunter’s Green Business Center…………..……..………………631 90 Private
Light Business Park …………………….……….………...………27 14 Private
Mount Aetna Technology Park at Hagerstown (MATH)……..179 179 Nonprofit
Newgate Industrial Park………………………….………………..245 20 Nonprofit
Showalter Road Center…………………..……….………………..88 88 Private
Vista Business Park………………………………………………..200 200 Private
Washington County Business Airpark ………………...…...…..67 30 County
Westgate Industrial Complex……………………………………..175 175 Private
Source: Washington County Department of Business Development
Enterprise Zone:
New Jobs Tax Credit Program
The “New Jobs Tax Credit” is a program initiated by the County in November 2002. The credit was created to help
attract companies to the local business community that are involved in a high-tech industry and that offer well-paying jobs. The program provides a six-year tax credit for businesses that either expand or relocate in Washington County and qualify under the program’s guidelines. The credit applies to Washington County’s tax that is imposed on real property owned or leased by the business and the tax imposed on personal property owned by that business. Enterprise Zones
Approximately 5,500 acres in Washington County are within two State-designated Enterprise Zones. The City of Hagerstown/Washington County Enterprise Zone was renewed and expanded by the State in 2012. This zone now encompasses approximately 4,000 acres located within the City of Hagerstown and Washington County. The zone has more than doubled in
size and includes Hopewell Valley Industrial Park, Washington County Business Park, CSX Valley Park, the City of Hagerstown Business Park, and the Central Business District in downtown Hagerstown. The Hancock Enterprise Zone was renewed in 2015.
This 1,500 acre zone surrounds the Town of Hancock, stretching from the Pennsylvania border to the Potomac River. The zone includes commercial and industrial development opportunities in select areas of Hancock as well as commercial frontage along
Main Street. Local and State incentives are available to new or expanding companies in these zones to promote growth of the industrial and commercial base. Qualified businesses can receive local property tax credits for capital investment and State
income tax credits for the creation of new jobs. Each Enterprise Zone is approved by the State for a 10 year period.
ECONOMIC AND DEMOGRAPHIC INFORMATION
Washington County, Maryland 26
Pad-Ready Commercial Stimulus Program
The Board adopted the “Pad-Ready” Commercial Stimulus Program on October 25, 2011. The program is designed to encourage developers/builders to bring undeveloped land to a shovel-ready state, but is also intended for sites with existing buildings in need of redevelopment. Under the program, undeveloped parcels of land, demolitions, renovations and expansions of existing buildings qualify for incentives. Qualifying projects are entitled to priority plan review by the Washington County
Development Advisory Committee, deferral of County site-plan application and review fees, and a real-estate tax credit issuance once buildings are constructed and occupied. The tax credit is to be four tenths of one percent (.004) of the construction cost of the new improvement as determined by the DBD and will apply for three consecutive years. High Performance Building Tax Credit Program
On February 7, 2012, the Board established the High Performance Tax Credit Program. Under the program, property tax
credits are available for buildings that receive silver, gold or platinum certification in the national LEED (Leadership in Energy and Environmental Design) ranking system. The amount of the credit will depend on which level of certification the building
receives and the increase in its assessed value after construction. Silver buildings will be credited 20 percent of the taxes due on that increase; gold buildings, 25 percent; and platinum buildings, 30 percent.
Foreign Trade Zone
Washington County’s Foreign Trade Zone (“FTZ”) status was approved by the United States Department of
Commerce’s Foreign Trade Zone Board on July 3, 2002. More than 1,866 acres from seven different sites throughout
Washington County are eligible. The sites are ideally zoned for manufacturing, distribution, and warehousing activities. FTZs
have been shown to provide direct benefits to local businesses involved in foreign trade. Through the reduction, elimination,
and deferral of tariffs, firms located within Washington County’s FTZ are able to be more competitive in international markets.
Utilities, Transportation and Communication
Utilities
Electricity: Potomac Edison, a FirstEnergy Company, with its Western Maryland headquarters located in Washington
County, serves the County with a system of transmission and distribution lines of various voltages connected to its generating
stations. The City of Hagerstown distributes electricity to many parts of the City.
Telecommunications: State-of-the-art communications infrastructure, including hybrid cable, digital, fiber optic,
wireless data, and cellular 4G LTE services are provided via national and regional vendors. AT&T, Sprint, T-Mobile, US Cellular
and Verizon operate within Washington County.
Natural Gas: Columbia Gas of Maryland serves the area with natural gas. Propane is also readily available.
Transportation
Highways: Washington County is served by Interstate Highways I-81, I-70, and I-68, complemented by U.S. 40 and
U.S. 11, and State Routes 60, 64, 65 and 68. These highways put Washington County businesses within a day’s drive of one-third of the U.S. population and half of all retail trade. The Baltimore and Washington, D.C. beltways are an hour’s drive from central Washington County. Air: Hagerstown Regional Airport (HGR) is a Part 139 Facility which provides daily scheduled commercial service to Dulles International Airport and Pittsburgh International Airport via Sun Air Express, twice weekly service to Orlando Sanford International and twice weekly service to St. Pete-Clearwater International Airport on Allegiant. The airfield also offers fixed base operation services to general aviation, corporate and military aircraft. There are 15 businesses offering clients a variety of aviation services for all types of aircraft. Approximately 1,400 people are employed at the airport in various aviation-related businesses. In addition, Dulles International, Baltimore/Washington Thurgood Marshall International, and Ronald Reagan Washington National airports are located within 70 miles of Hagerstown.
ECONOMIC AND DEMOGRAPHIC INFORMATION
Washington County, Maryland 27
Rail: CSX Transportation and Norfolk Southern Corporation Railways provide economical shipment anywhere on
the Atlantic seaboard. CSX, with a public siding, operates daily trains and connects with other major carriers for long-distance shipping. The Norfolk Southern mainline is just outside of Hagerstown and a CSX interchange with Norfolk
Southern is in Hagerstown for nationwide access. In January 2014, Norfolk Southern Rail opened a 200 acre intermodal terminal in Greencastle, Pennsylvania, immediately adjacent to Washington County. The County is also only 19 miles from
CSX’s 85 acre intermodal terminal in Chambersburg, Pennsylvania. Daily Amtrak and weekday MARC passenger services are available from Martinsburg, West Virginia (23 miles south of Hagerstown). MARC passenger service from neighboring
Frederick County to Washington, D.C. is also available. Local Transportation: Washington County Commuter provides local bus service throughout Washington County. Local taxi service and auto rental and leasing services are available within Washington County.
Communication
Newspapers: The daily newspaper, The Herald-Mail, has a circulation of 27,000. Two weekly local newspapers,
The Hancock News, with a weekly circulation of 2,000, and The Picket News, with a weekly circulation of 10,000, also serve
Washington County. Several metropolitan newspapers, including the Washington Post and The Baltimore Sun, are available
daily to residents.
Television: WHAG and Herald-Mail (HMTV6) provide local news, weather, community information, sports coverage and programming to the tri-state area. Antietam Cable Television and Comcast offer cable and digital television services.
Satellite television is available through private vendors. Internet: There are numerous private vendors providing local dial-up, wireless, and broadband Internet access. The Washington County Free Library provides access to the Internet through SAILOR, the State of Maryland’s Online Public
Information Network. Information about Washington County, including economic data, can be accessed on the World Wide Web:
www.washco-md.net (Washington County) www.hagerstownmd.org (City of Hagerstown)
www.washcolibrary.org (Washington County Free Library)
Population
The following table illustrates the population growth of Washington County, the State of Maryland, and the United
States from 1970 to 2015.
Percent Percent Percent
Year Population Change Population Change Population Change
2015 149,573 1.5 6,006,401 3.8 321,418,820 4.1
2010 147,430 11.8 5,787,988 9.0 308,845,538 9.7
2000 131,923 8.7 5,296,486 10.8 281,421,906 12.7
1990 121,393 7.3 4,781,753 13.4 249,633,000 10.2
1980 113,086 9.9 4,216,000 7.4 226,505,000 11.4
1970 103,829 —3,923,897 —203,302,000 —
Source: U.S. Department of Commerce, Bureau of the Census for 1970, 1980, 1990, 2000, 2010;
Maryland Department of Labor, Licensing and Regulation for 2015
Population Growth
State of Maryland United StatesWashington County
ECONOMIC AND DEMOGRAPHIC INFORMATION
Washington County, Maryland 28
Income
Median household Effective Buying Income (“EBI”) in Washington County was estimated at $56,477 for the year 2015.
The median household EBI for Washington County, the State of Maryland and the United States are estimated as follows:
2015 2014 2013 2012 2011
Washington County $56,477 $55,700 $54,239 $48,984 $40,614
State of Maryland 74,149 72,345 71,707 52,108 52,627
United States 53,482 52,176 51,771 41,644 41,368
Source: MD Brief Economic Facts for 2013, 2014 and 2015; Nielsen-Claritas, Inc. for 2011 and 2012
Median Household Effective Buying Income
Comparative statistics relating to the distribution of EBI are presented in the following table:
Households By
EBI Group Washington County State of Maryland United States
Under $25,000 21.7% 15.4% 23.2%
$25,000 - $49,999 23.1 17.9 23.7
$50,000 - $74,999 19.9 17.2 17.8
$75,000 - $99,999 14.0 13.4 12.2
$100,000 - $149,999 13.3 18.1 13.0
$150,000 - $199,999 4.4 8.9 5.1
$200,000 and over 3.5 9.1 5.0
Distribution of Effective Buying Income (2014)
Source: MD Brief Economic Facts based on U.S. Bureau of the Census released in 2015
Area Labor Supply
Washington County has an available civilian labor force of approximately 75,709. In addition, businesses draw
employees from Allegany and Frederick counties in Maryland; Franklin and Fulton counties in Pennsylvania; and portions of
Berkeley, Jefferson and Morgan counties in West Virginia. The civilian labor force for all these counties totals more than
408,600.
ECONOMIC AND DEMOGRAPHIC INFORMATION
Washington County, Maryland 29
Employment Within Washington County there are more than 3,450 businesses. The following table shows the employment
statistics for the 15 largest employers in Washington County as of December 2015.
Employer Employment
Washington County Public Schools……………………………3,100
Meritus Medical Center…………………………………………2,740
State of Maryland …………………………………………………2,385
Citi…………………………………………………………………2,300
First Data……………………………………………………………2,183
Washington County Government………………………………1,352
Volvo Group………………………………………………………1,300
FedEx Ground………………………………………………………900
Hagerstown Community College…………………………………890
Bowman Group, LLP (The)………………………………………745
Federal Government………………………………………………567
Merkle Response Management Group…………………………545
City of Hagerstown………………………………………………486
Brook Lane Health Services………………………………………485
Dot Foods, Inc.……………………………………………………441
Source: Washington County Department of Business Development
Unemployment Rate
Unemployment in Washington County averaged 7.7% between 2011 and 2015. The following table indicates the
County’s average unemployment rate as compared with the State of Maryland for the five most recent calendar years.
2015 2014 2013 2012 2011
Washington County 5.8%6.9%7.4%8.6%9.8%
State of Maryland 5.2%5.8%6.1%6.8%7.0%
Unemployment Rate – Annual Average
Source: Maryland Department of Labor, Licensing and Regulation
ECONOMIC AND DEMOGRAPHIC INFORMATION
Washington County, Maryland 30
Construction Activity
Construction activity during the years 2011-2015 in Washington County is provided below:
Year Ended
Dec. 31 Number Value Number Value Number Value
2015 202 $52,305 2,065 $97,055 2,267 $149,360
2014 168 37,720 1,615 98,942 1,783 136,662
2013 228 48,547 1,654 93,245 1,882 141,792
2012 152 32,660 1,536 47,306 1,688 79,966
2011 159 26,941 1,632 57,509 1,791 84,450
Building Permits
(Value in Thousands)
Source: Washington County Department of Permits and Inspections
Residential New Other Permits Total
Housing Starts
The number of single family housing starts in Washington County for the past five years is listed below:
Single Family (One and
Two‑Unit Structures)
177
158
207
133
128
Source: Washington County Department of Permits and Inspections
2011
Year Ended
December 31
2015
2014
2013
2012
During the year ended December 31, 2015, there were five, 24-unit multi-family buildings constructed. Prior years’ multi-family housing starts were nominal.
ECONOMIC AND DEMOGRAPHIC INFORMATION
Washington County, Maryland 31
Agriculture
Agriculture is an important part of Washington County’s economy. Approximately 129,600 of Washington County’s
293,223 acres (44%) are considered farmland by the U.S.D.A. Agricultural Statistical Service. By far the greatest contributors to
agriculture are the livestock and dairy industries. Livestock and dairy products account for approximately 58% of the total farm
sales.
Washington County is the heart of the fruit industry in Maryland. Apple and peach growers harvest nearly 1,372 acres annually producing approximately 61% of the State’s apple crop and 27% of the State’s peach crop each year. Dairy is
the principal livestock enterprise. The average number of milk cows is 12,670 head, ranking second in the State. In addition to milk and fruit, the other chief agricultural commodities are beef cattle and cereal grains. Selected agricultural statistics for Washington County for calendar year 2012 are as follows:
151
$107.7 mil
$62.26 mil
$125,219
Livestock income…………….…………………….…
Average income/farm…………………………….…..
Source: U.S.D.A. Agriculture Census 2012
The U.S.D.A. conducts a census every five years
Washington County Agriculture Statistics, 2012
860Number of farms…………….……………………….
Average acres/farm………….…………………........
Total farm income…………………………….…..….
FINANCIAL INFORMATION
Washington County, Maryland 32
IV. Financial Information
Accounting System
The accounts of the County are organized on the basis of funds, each of which is considered a separate fiscal and
accounting entity. The financial position and operations of each fund are accounted for with a self-balancing set of accounts,
recording cash and other financial resources, together with all related liabilities and residual equities or balances, and changes
therein, which are segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with
special regulations, restrictions, or limitations. Fund Structure
The revenues and receipts of the County are allocated to, and accounted for, in individual funds based upon the
purposes for which they are to be spent. The various funds are identified in the financial statements of the County. The fund
types used by the County are Governmental Funds (General, Special Revenue and Capital Projects), Proprietary Funds
(Enterprise and Internal Service) and Fiduciary Funds (Trust and Agency). Details of the County’s fund structure are set
forth in the notes to the financial statements, which are included in Appendix A to this Official Statement.
The County’s general fixed assets and general long-term obligations are reported in the applicable governmental or
business-type activity columns in the government-wide financial statements.
Basis of Accounting, Measurement Focus, and Financial Statement Presentation
Basis of accounting refers to the time at which revenues and expenditures are recognized in the accounts and reported in
the financial statements. Basis of accounting relates to the timing of the measurement made, regardless of the measurement focus
applied. The accounting policies of the County conform to generally accepted accounting principles as applicable to
governments.
The government-wide financial statements are reported using the economic resources measurement focus and the accrual
basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Revenues are recorded when earned and
expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as
revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility
requirements imposed by the provider have been met.
Governmental fund financial statements for the General Fund, Special Revenue Fund and Capital Projects Fund are
reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are
recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible
within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government
considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures
generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as
expenditures related to compensated absences and claims and judgments, are recorded only when payment is due.
Taxpayer-assessed income, gross receipts, and sales taxes are considered “measurable” when in the hands of
intermediary collecting governments and are recognized as revenue at that time. Anticipated refunds of such taxes are recorded as
liabilities and reductions of revenue when they are measurable and their validity seems certain.
Accounting Enterprise System
The County utilizes an integrated financial, human resource, and budget enterprise system. This enterprise system has a
web-based platform that streamlines workflow, which allows the County to automate numerous processes including real-time
reporting. All County departments have access to the system for requisitioning, reporting, and inquiries for information
concerning accounts and project status at any time. The system provides an excellent means for control of finances, and allows
for efficient use of resources. It also promotes accountability by generating timely reports and allowing budgetary controls for
management.
FINANCIAL INFORMATION
Washington County, Maryland 33
Capital Budget Preparation Software
The County uses a web-based capital budget preparation and monitoring system. It allows all departments and outside
agencies to access the system and input their capital budget requests, including funding sources, cost categories and operational
costs. The County set up a priority-ranking matrix system within the software. The ranking system is composed of 14 scored and
weighted criteria, which is the basis for assigning projects into one of the five priority ranking categories. The ranking system
provides management with the information required to make decisions regarding scheduling and funding for each project. The
capital budget system provides multiple reporting options and allows for continuous monitoring of activities of existing projects. Distinguished Budget Presentation Award
The County received the Distinguished Budget Presentation Award for its 2016 Budget Document from the GFOA.
The award is given to those entities that satisfy nationally recognized guidelines for effective budget presentation. Those
guidelines are designed to assess how well an entity’s budget serves as a policy document, a financial plan, an operations
guide, and a communication device. The County has received the award for 12 consecutive years. The award reflects the
commitment of the County to meet the highest standards in governmental budgeting. Budget Process and Schedule The County’s budgetary practices focus on long-term financial planning to ensure that budget decisions are understood over multiple years and to assess whether program and service levels can be sustained over those years. Practices require the development of organizational goals, policies, and procedures to achieve the goals, and making the allocation of
resources available to accomplish the goals. The County’s budget process is key to its long-range strategic plan. With the adoption phase ending in May, the
entire budget process encompasses nine months in preparation time. Financial forecasts, economic trends, policy reviews, and citizen input are all part of this process and result in the development of the operating and capital budgets for the year. The following describes the phases of the budget process. Financial Capacity and Analysis Phase The County develops statistical analysis of major revenue sources through various available resources. The County
prepares and annually updates a long-range (five year) financial forecasting system, which includes projections of revenues, expenditures, future costs, and financing of capital improvements that are included in the Capital Improvement Budget, Cost of
Service Plans, and the Operating Budget.
Revenue estimates are monitored to identify any potential trends which would significantly impact the various revenue
sources. The County reviews current construction trends, the number of building permits, mortgage rates, and other economic data that can impact revenue collections.
The County uses other financial modeling techniques that impact the long-term operations and rates for the Water Quality and Landfill Enterprise Funds.
The County annually undertakes a detailed analysis of its financial position. The County then plots and converts its
financial position into certain financial ratios and examines its performance trend. Most of the financial trend analysis includes peer group median and historical data. Trend indicators are tracked for specific elements of the County’s fiscal policies for
evaluation.
Debt capacity is evaluated on an annual basis prior to the adoption of the Capital Improvement Budget. The County examines statistical measures to determine debt capacity and creates ratios, which it compares to the ratios of other counties within
its peer group, rating agency standards, and Washington County’s historical ratios to determine debt affordability.
The economic and financial trend analysis is an integral part of the County’s decision-making process that includes short and long-term forecasts. The County’s current financial condition as well as future financial capacity, long-range plans, and
future goals and visions are evaluated. During this phase forecasting assumptions, policy and reserve reviews, compensation adjustments, and inflation assumptions are made.
FINANCIAL INFORMATION
Washington County, Maryland 34
Budget Development Start
The development of the budget starts with notice to departments and agencies that the capital and operating budget
programs are ready for input. Instructions for completing the budgets, due dates, and updated information on budgetary numbers, personnel positions, and goals are included with the notification. Budget Development Phase
Capital Improvement Budget development begins in the winter after the development of the debt capacity and financial trend and economic trend analysis. The Capital Improvement Program (the “CIP”) provides a comprehensive approach to
planning and impacts all facets of County operations. The County Administrator, the CFO, the Director of Engineering and Construction, the Director of Planning, and the Director of Public Works comprise the Capital Improvement Program Committee
(the “CIP Committee”). From the time the CIP’s initial annual review begins in October through its adoption in May of each fiscal year, there is constant interaction among departments, the CIP Committee, and the elected officials. This effort is
characterized by cooperation and reflects a common goal of ensuring that the CIP meets the objectives of the County and remains affordable and achievable. The CIP is reviewed in conjunction with the annual debt affordability analysis and with revenue projections, inclusive of rate analysis, in order to determine funding availability. A financial analysis of funding sources and project costs is conducted for all proposed capital improvement projects in conjunction with the results of the priority ranking system.
It is the CIP Committee’s responsibility to review all requests that County departments and agencies submit. Based on
the results of the priority ranking, and current and future needs, as developed in the 10-year capital plan, and available funding sources, the CIP Committee determines which capital projects best meet established criteria for the current fiscal year Capital
Improvement Budget and the 10-year forecast. Operating impacts of current and proposed capital projects are also taken into consideration by staff when developing the Capital Improvement Budget.
Operating Budgets represent existing service levels and two years of prior historical information. Departments and agencies request funding for the upcoming fiscal year. Any increases in program and services require justification, as do all capital outlay requests. These requests are summarized with projected funding shortfalls or overruns calculated. Review/Modification Phase The CFO presents the Operating and Capital Improvement Budgets to the Board. Preliminary recommendations are
reviewed to ensure that preliminary budgets address the County’s goals and fiscal management policies. The County Administrator and the CFO work with the Board on the proposed budget documents for adoption.
Adoption Phase
Proposed budgets are voted on by the Board to take to a public hearing to communicate to the general public for all operating and capital funds. Advertisement is disseminated through the local newspaper, handouts, and the County website. Documents and handouts are prepared for the public. Public hearings are held on the proposed budgets along with the current tax levy. A 10 day waiting period is held for public comment. Local law requires a balanced budget to be adopted by July 1st.
Budget Monitoring
Department managers are responsible for their budgets throughout the fiscal year. Expenditure percentages are calculated and compared to budget. Corrective action, if necessary, is taken if serious negative trends exist. Management and the
Board have real-time budgeting reports available on-line, as well as updates on major events and/or issues.
The County’s Operating Budget is adopted at the program/service level and the Capital Improvement Budget is adopted at the project level. Transfers between programs or projects in excess of $25,000 require Board approval. Any
transfer out of contingency requires the approval of the Board.
The CFO reviews the project status and revenues before any issuance of debt. Any modification to a project and/or the total debt to be issued based upon this review is required to be approved by the Board either for an increase or decrease in
total borrowing amount or for a change in the total borrowing source.
FINANCIAL INFORMATION
Washington County, Maryland 35
General Fund Revenues and Expenditures
The General Fund’s major function is to provide funding for education, public safety, courts, planning, permits, public
works, parks and recreation, general operations, and economic development. The major revenue sources to provide these
programs and services for the public are: Real and Personal Property Tax, Income Tax and Recordation Tax. The following table
displays the County’s General Fund actual revenues and expenditures compared to the final budget for fiscal year 2015, budgeted
revenues and expenditures for fiscal year 2016, and the proposed budget for fiscal year 2017.
Fiscal Year 2015 Fiscal Year 2016 Fiscal Year 2017
Final Actual Original Proposed
Budget Amounts Budget(1)Budget
REVENUES
Property Tax
Real Property Tax………………………………………………………106,636,980$ 106,526,518$ 106,977,350$
Personal Property Tax…………………………………………………12,124,470 12,761,837 12,497,840
Property Tax Interest Income…………………………………………480,000 411,564 480,000
Other Property Tax……………………………………………………719,190 718,412 714,020
State Administrative Fees ……………………………………………(568,460) (508,043) (525,000)
PropertyTax Discounts, Credits, and Fees…………………………(1,473,980) (1,396,755) (1,469,020)
Total Property Taxes………………………………………………117,918,200$ 118,513,533$ 118,675,190$ -$
Other Local Taxes
Income Tax………………………………………………………………72,230,000$ 73,603,292$ 74,910,000$
Admissions and Amusement Tax……………………………………310,000 281,568 300,000
Recordation Tax…………………………………………………………5,500,000 6,078,677 5,800,000
Trailer Tax………………………………………………………………470,000 513,535 470,000
Total Other Local Taxes……………………………………………78,510,000$ 80,477,072$ 81,480,000$ -$
Other Revenues
Licenses and Permits…………………………………………………1,450,750$ 1,362,651$ 1,260,200$
Court Costs and Fines…………………………………………………333,030 383,897 330,300
Charges for Services……………………………………………………427,900 434,237 388,850
Revenues from Use of Property………………………………………1,141,440 881,502 976,550
Reimbursed Expenses…………………………………………………1,126,430 1,212,768 1,145,170
Miscellaneous Revenues………………………………………………1,820,750 452,632 406,200
Grant and Shared Revenues…………………………………………3,441,449 3,355,253 1,929,990
Highway Revenues….….…………………………………………….1,582,770 1,554,706 1,660,250
Total Other Revenues………………………………………………11,324,519$ 9,637,646$ 8,097,510$ -$
TOTAL REVENUES………………………………………………207,752,719$ 208,628,251$ 208,252,700$ -$
EXPENDITURES
General Government………………………………………………………24,795,673$ 23,779,920$ 25,242,390$
Public Safety………………………………………………………………40,818,148 39,155,311 40,284,610
Health………………………………………………………………………2,339,270 2,339,270 2,339,270
Social Services……………………………………………………………570,578 571,517 338,070
Education…………………………………………………………………103,810,560 103,810,462 104,109,040
Parks, Recreation, and Culture……………………………………………5,678,220 5,622,928 5,590,940
Conservation of Natural Resources……………………………………605,830 595,350 679,730
Highway...…..…………………………………………………………….9,370,860 10,103,368 9,591,340
General Operations………………………………………………………510,010 558,112 622,300
Unallocated Employee Insurance and Benefits…………………………694,270 1,445,214 699,330
Intergovernmental…………………………………………………………3,649,020 5,862,623 3,820,190
Debt Service………………………………………………………………14,910,280 14,652,478 14,935,490
TOTAL EXPENDITURES…………………………………………207,752,719$ 208,496,553$ 208,252,700$ -$
EXCESS OF REVENUES OVER EXPENDITURES -$ 131,698$ -$ -$
Source: Washington County Department of Budget and Finance
(1) Budget revisions are possible until the close of the year on June 30, 2016.
Fiscal Years 2015, 2016 and 2017
County Commissioners of Washington County
Budget Comparison
General Fund
FINANCIAL INFORMATION
Washington County, Maryland 36
The following table displays the County’s General Fund revenues and expenditures for fiscal years 2011 through 2015.
County Commissioners of Washington County
Statement of Revenues, Expenditures and Changes in Fund Balance
General Fund
Year Ended June 30
2015 2014 2013 2012 2011
Revenues:
Taxes, interest and penalties…………………………………198,990,605$ 194,994,560$ 194,197,780$ 191,600,621$ 189,634,078$
Shared taxes and grants ………………………………………3,355,253 3,377,036 3,566,550 3,547,046 3,624,317
Licenses and permits …………………………………………1,362,651 1,187,285 1,149,568 1,278,654 1,173,403
Revenues from use of money and property ………………..881,502 945,977 988,019 1,066,799 1,280,462
Charges for services………………………………………….434,237 451,814 448,406 497,092 388,337
Other revenue …………………………………………………2,049,297 1,793,593 2,389,892 2,026,413 1,517,133
Highway revenue ……………………………………………1,554,706 1,697,840 1,683,821 1,291,748 1,337,206
Total revenues ……………………………………….208,628,251$ 204,448,105$ 204,424,036$ 201,308,373$ 198,954,936$
Expenditures:
General government …………………………………………23,779,920$ 21,474,148$ 19,725,043$ 19,552,837$ 17,985,815$
Public safety …………………………………………………39,155,311 36,352,815 35,020,519 33,771,477 34,183,751
Health …………………………………………………………2,339,270 2,339,270 2,339,270 2,876,643 2,389,270
Social services …………………………………………………571,517 934,217 2,321,055 2,248,270 2,400,068
Education ……………………………………………………103,810,462 103,418,590 101,816,613 101,693,900 101,360,380
Recreation and culture …………………………...…………..5,622,928 5,271,404 5,436,653 5,230,239 5,351,051
Conservation of natural resources ………………………….595,350 568,873 556,845 514,055 541,918
Intergovernmental ……………………………………………38,543 38,543 38,543 38,543 38,543
General operations ……………………………………………2,003,326 4,956,600 6,131,561 2,947,076 2,087,905
Highway(1) ……………………………………………………9,953,368 9,872,245 8,622,908 9,262,056 8,095,183
Debt service:
Principal ……………………………………………10,147,504 9,901,824 9,878,013 9,216,975 8,843,224
Interest ……………………………………....…….4,504,974 4,109,946 4,352,421 4,371,195 4,223,536
Total Expenditures …………………………..…….202,522,473$ 199,238,475$ 196,239,444$ 191,723,266$ 187,500,644$
Excess of revenues over expenditures ……………….……..6,105,778$ 5,209,630$ 8,184,592$ 9,585,107$ 11,454,292$
Other financing sources(uses):
Net bond proceeds…………………………………..……..-$ -$ 3,039$ 34,443$ -$
Proceeds of capital leases…………………………………..- 56,548 - 759,137 -
Principal amount of new debt for advanced refunding……..26,026,715 - - - -
Deposit to escrow fund for advance refunding and
repayment of loans………………………………………(26,021,529) - - - -
Operating transfers in ……………………………..………- - - - -
Operating transfers out ……………………………..…….(5,974,080) (5,915,929) (7,980,296) (9,318,716) (10,035,386)
Total other financing sources(uses) ……..………..(5,968,894)$ (5,859,381)$ (7,977,257)$ (8,525,136)$ (10,035,386)$
Excess of revenues and other sources over
expenditures and other uses ……………………………136,884$ (649,751)$ 207,335$ 1,059,971$ 1,418,906$
Consolidation of Highway Fund(1) ………………………..- - - - (644,789)
Fund balances at beginning of year ………………………..38,190,469 38,840,220 38,632,885 37,572,914 36,798,797
Fund balance at end of year ……………………………….38,327,353$ 38,190,469$ 38,840,220$ 38,632,885$ 37,572,914$
Fund Balance:
As a percent of revenue ……………………………18.4%18.7%19.0%19.2%18.9%
As a percent of expenditures ………………………18.9%19.2%19.8%20.2%20.0%
Committed, Assigned and Unassigned Fund Balance:36,844,446$ 37,162,054$ 37,503,352$ 37,427,426$ 36,955,703$
As a percent of revenue ……………………………17.7%18.2%18.3%18.6%18.6%
As a percent of expenditures ………………………18.2%18.7%19.1%19.5%19.7%
Debt Service:14,652,478$ 14,011,770$ 14,230,434$ 13,588,170$ 13,066,760$
As a percent of revenue ……………………………7.0%6.9%7.0%6.7%6.6%
As a percent of expenditures ………………………7.2%7.0%7.3%7.1%7.0%
Source: Washington County Department of Budget and Finance(1) Effective for fiscal years beginning July 1, 2010, the County implemented GASB Statement No. 54 of the Governmental Accounting Standards Board, Fund Balance Reporting and Governmental Fund Type Definitions. Based on this GASB Statement, the Highway Fund did not meet the criteria of a special revenue
fund and was consolidated into the General Fund.
FINANCIAL INFORMATION
Washington County, Maryland 37
Anticipated Results for Fiscal Year 2016
Fiscal year 2016 final results are not available as of the date of this Official Statement. However, based on current
review, the County’s two largest revenue sources, real estate and income taxes, are projected to meet current year budget and all
expenditures are in-line with the approved budget. Overall the financial results for fiscal year 2016 are expected to end on the
positive side, with total revenues in excess of total expenditures. The County expects to maintain its cash reserves for fiscal year
2016. Sources of Tax Revenue
Ad valorem property taxes, the County’s largest source of tax revenues, were 62% of total tax revenues in fiscal year
2014 and 60% in fiscal year 2015. During the same period, income tax revenues as a percentage of total tax revenues were 35.3%
in fiscal year 2014, and 37% in fiscal year 2015. The following table presents the County’s tax revenues by source for each of the
last five fiscal years.
Fiscal Year Local Property Local Income Other Local
Ended June 30 Taxes(1)Taxes Taxes (2)
2015 $ 198,990,605 $ 118,513,533 $ 73,603,292 $ 6,873,780
2014 194,994,560 120,678,207 68,864,506 5,451,847
2013 194,197,780 122,450,670 65,763,209 5,983,901
2012 191,600,621 122,669,812 64,578,939 4,351,870
2011 189,634,078 125,462,990 59,279,436 4,891,652
Source: Washington County Department of Budget and Finance
(1) Includes payments in lieu of taxes, additions and abatements, interest on taxes, discounts on taxes and tax credits for the elderly and disabled.
(2) Includes trailer court fees, recordation taxes, admission and amusement taxes and hotel/motel taxes.
Total Taxes
Tax Revenues by Source
Local Property Taxes
Property valuations and assessments are determined by the Maryland State Department of Assessments and Taxation,
which maintains local offices in Baltimore City and each county. For State and County real property tax purposes, real property is
valued at full cash value (“value”). All property is physically inspected once every three years and any increase in value arising
from such inspection is phased in over the ensuing three taxable years in equal annual installments.
Commencing with the tax year beginning July 1, 2001, property tax rates are applied to 100% of the value of real
property. The County and municipal rates applicable to all personal property and operating real property of public utilities are 2.5
times the property tax rate for real property.
Tangible personal property is generally assessed at cost, less depreciation for each year held to a minimum of 25%.
For most categories of personal property, depreciation is 10% per year subject to the minimum assessment of 25% of cost.
State law provides a credit against State, local and municipal real property taxes on certain owner-occupied residential
property. The tax credit for each tax year is computed by multiplying the State, local or municipal real property tax rate by the
amount by which (i) the current year’s assessment on residential property exceeds (ii) the homestead percentage multiplied by the
previous year’s assessment. The State homestead percentage is 110%. The counties and municipalities set their own respective
homestead percentage, but the credit percentage may not exceed 110% for any taxable year. The County adopted a homestead
percentage of 105% effective July 1, 2007. The State also provides a tax credit based on the ability of homeowners to pay property taxes. The credit is calculated by
use of a scale, which indicates a maximum tax liability for various income levels. This tax credit for local property taxes for
Washington County for fiscal year 2015 was $1,692,868 and the credit for fiscal year 2016 is budgeted at $1,275,230.
FINANCIAL INFORMATION
Washington County, Maryland 38
Pursuant to State law, the Board may grant a property tax credit against the County property tax imposed on, among
other categories of property, certain property owned by nonprofit civic associations and real property that is subject to the
County’s agricultural land preservation program. Manufacturing and commercial inventories of businesses are exempt from
County tax.
Assessed Value, Tax Rates and Tax Levy The following table sets forth the assessed value of all taxable property in Washington County for each of its five most recent fiscal years and the County and State tax rate applicable in each of those years. Assessed value of tax-exempt properties owned by federal, State and County governments, churches, schools, fraternal organizations, cemeteries, disabled veterans and the blind, aggregating $2,134,043,952 for the fiscal year ended June 30, 2015, is not included in the table. Under applicable law, there is no limit to the total tax levy for property taxes. In the opinion of the County, the tax rate established by it for each fiscal
year, when applied to the property subject thereto, is sufficient to provide revenues to discharge the County’s obligations to pay
principal and interest maturing on its outstanding general obligation indebtedness in each fiscal year.
2015 2014 2013 2012 2011
$11,798,859 $11,918,538 $12,310,975 $12,740,518 $13,650,208
162,536 167,959 161,054 162,932 168,373
390,610 375,606 350,000 379,500 379,500
$12,352,005 $12,462,103 $12,822,029 $13,282,950 $14,198,081
(0.9)%(2.8)%(3.5)%(6.4)%(4.5)%
$0.948 $0.948 $0.948 $0.948 $0.948
0.112 0.112 0.112 0.112 0.112
Source: Maryland State Department of Assessments and Taxation
Assessments and Tax Rates of all Property by Class
Fiscal Years Ended June 30
(Stated in Thousands)
Real property…………………………………………
Personal property:
Railroads and public utilities………………….
Business corporations……………...................
Total property
Change in market value of property
County tax rate (per $100 assessed value)
State tax rate (per $100 assessed value)
There were no changes to the property tax rates for the County or the State in fiscal year 2016. As of the date of this Official Statement, there are no proposed changes to the County or State property tax rates for fiscal year 2017.
FINANCIAL INFORMATION
Washington County, Maryland 39
Tax Collection
County taxes are due and payable as of July 1. Delinquent taxes are collected after nine months of delinquency by tax
sales conducted by the County Treasurer, selling either real or personal property. Historically, the County has conducted tax sales
on an annual basis.
The following table sets forth certain pertinent information with respect to the County’s tax levies and tax collections for each of its five most recent fiscal years.
Fiscal Year
Ending June 30 Taxes Levied Amount Percent Amount Percent
2015 $ 120,444,868 $ 119,903,244 99.55 $ 120,597,778 100.13 $ 676,704 0.56
2014 121,676,979 121,014,378 99.46 121,414,874 99.78 829,615 0.68
2013 123,303,379 122,940,251 99.71 124,018,282 100.58 567,508 0.46
2012 125,425,501 124,342,889 99.14 125,166,347 99.79 1,282,411 1.02
2011 127,163,603 126,537,616 99.51 128,579,492 101.11 1,023,256 0.80
Source: Washington County Department of Budget and Finance
Taxes Receivable
as a Percentage
of Total Taxes
Collected
Taxes
Receivable
Taxes Collected in
Year of Levy
Total Taxes Collected
(Current and
Delinquent)
FINANCIAL INFORMATION
Washington County, Maryland 40
Principal Taxpayers
The 20 largest taxpayers in the County as of June 30, 2015, ranked by assessed value, are listed below.
Percentage of
Assessed Assessed
Value Value
Outlet Village of Hagerstown………………………………………………105,577,730$
PR Valley Limited Ptsp…………….………………………………………..97,569,340
FedEx Ground Package System Inc……………………………………….83,602,596
Potomac Edison…………………………………………..…………………81,700,340
Bowman Group………………………………………………………………60,397,111
Washington Real Estate……………………………………………………59,640,107
254 Hagerstown/Citigroup/Citicorp……………………………………….52,545,390
Staples of Maryland LLC …………………………………………………..47,815,823
IIT Hagerstwon Dist. Ctr……………………………………………………47,175,233
Liberty Property Limited……………………………………………………44,447,600
Sub‑total $ 680,471,270 5.51%
Walmart Stores/Wal-Mart R.E./Sam's R.E./Sam's East…………………..44,432,430
Mack Trucks Inc………………………………………………………….…39,111,480
Verizon-Maryland……………………………………………………...……36,020,090
2007 East Greencastle Pike…………………………………………………34,360,000
Lowe's Home Centers Inc………………………………………………….33,668,047
Meritus Health Inc………..………………………………………………...31,591,486
GP Hagerstown Limited Ptsp………………………………………………30,035,200
FR Hagerstown LLC ………………………………………………………..29,496,467
Tractor Supply Company………………………………………………….28,390,073
ARCP MT Hagerstown………….…………………………………………27,624,900
Total $ 1,015,201,443 8.22%
The information set forth above was compiled from tax rolls on which the names and owners are not always recorded in the same way.
Source: Washington County Treasurer’s Office
Name of Taxpayer
Local Income Tax
Effective January 1, 2013, the personal State income tax rates for Maryland residents start at 2% on the first $1,000
of taxable income and increase up to a maximum of 5.75% on incomes exceeding $250,000 (or $300,000 for taxpayers filing jointly, head of household or qualifying widow(ers)). Pursuant to State law, each county and Baltimore City must levy a local
income tax at the rate of at least 1.25%, but not more than 3.20%, of the State income tax liability of individuals domiciled in their respective jurisdictions.
The County currently levies a local income tax on Washington County residents at the rate of 2.8%. The County does
not levy a local income tax on corporations.
Other Local Taxes and Revenues
In addition to general property taxes and income taxes, the County levies and collects miscellaneous taxes, the largest of
which is the recordation tax on instruments conveying title to property and securing debt. Revenues from this tax in the fiscal year
ended June 30, 2015 were $6,078,677. The County also receives revenues from the amusement and admission tax and the trailer
tax. Another significant source of local revenue is generated from the issuance of building and other permits. Revenues from all
these sources, including recordation taxes, in the fiscal year ended June 30, 2015 were $7,995,470.
FINANCIAL INFORMATION
Washington County, Maryland 41
State and Federal Financial Assistance
State Payment of Public School Capital Construction Costs
Pursuant to State law, the State pays certain costs in excess of available federal funds of all public school construction
projects and public school capital improvements if the Board of Public Works approves the projects or improvements. The cost of
acquiring land is not a construction cost that will be paid by the State.
The Board of Public Works is empowered to define by regulation what shall constitute an approved construction or
capital improvement cost and to adopt rules, regulations, and procedures for program administration. Program regulations limit
the amount of construction costs paid by the State by instituting a maximum State project allocation for each school construction
project funded through the program. Under the formula, the State’s share is computed by applying the applicable percentage to
the eligible portion of school construction costs. For the County, the maximum State share will equal 71% of approved
construction costs.
State and Federal Grants
During the County’s fiscal year ended June 30, 2015, an aggregate of $7,189,115 in federal and State funds was received
by all County departments for use in operations. The largest single categorical source was a federal and State grant for $889,688,
which was for the Small Urban Area Public Transportation Grant. The County also received a total of $6,636,281 in federal and
State funds for capital projects in the fiscal year ended June 30, 2015. The County projects that $4,129,591 in federal and State
funds will be received in fiscal year 2016 for operations and $8,235,193 in federal and State funds will be received for capital
projects.
During the fiscal year ended June 30, 2015, the Board of Education received $166,719,457 in State funds and
$24,315,696 in federal funds for operating and food service expenses. In fiscal year 2016, the Board of Education anticipates
receiving $165,488,318 in State funds and $22,775,852 in federal funds for operations.
FINANCIAL INFORMATION
Washington County, Maryland 42
General Fund Balance Sheet
The following table indicates the County’s General Fund balance sheet for each of the five most recent fiscal years.
2015 2014 2013 2012 2011(1)
ASSETS
Cash and short-term investments ……………………….32,999$ 40,971$ 252,052$ 315,956$ 42,231$
Investment in U.S. Government
Agency Securities ………………………………..110,533,955 118,065,564 130,562,407 135,948,740 157,231,094
Property taxes receivable (net) ………………………….535,177 588,451 376,599 1,051,056 396,186
Accounts receivable ……………………………………..416,161 265,824 374,571 407,981 499,021
Due from other funds …………………………………….- - 10,000 20,000 125,943
Due from other governments ……………………………16,373,944 11,838,036 10,811,977 15,804,020 19,014,127
Inventories ……………………………………...……….763,940 578,396 741,870 816,175 675,242
Other assets …………………………………….………..1,398,654 955,704 742,564 666,189 921,702
Total assets ……………………………………..130,054,830$ 132,332,946$ 143,872,040$ 155,030,117$ 178,905,546$
LIABILITIES
Accounts payable ………………………………………1,413,769$ 1,621,862$ 1,421,068$ 2,230,907$ 1,707,908$
Accrued expenses ………………………………………1,086,819 940,300 1,150,895 786,727 1,018,396
Liabilities on unpaid claims ……………………….……1,833,471 2,115,251 2,015,593 2,220,225 1,961,141
Due to other funds ……………………………………..77,037,235 83,418,109 95,120,905 100,568,990 122,242,678
Deferred revenue ……………………………………….306,901 283,880 3,463,212 9,279,273 12,630,582
Other liabilities ………………………………………….1,868,922 1,895,975 1,860,147 1,311,110 1,771,927
Total liabilities …………………………………..83,547,117$ 90,275,377$ 105,031,820$ 116,397,232$ 141,332,632$
DEFERRED INFLOWS OF RESOURCES
Unavailable Revenues…………………………………..8,180,360$ 3,867,100$ -$ -$ -$
FUND EQUITY
Reserved fund balances:-$ -$ -$ -$ -$
Unreserved fund balances:
Designated - - - - -
Undesignated - - - - -
Total fund equity ………………………………-$ -$ -$ -$ -$
Total liabilities and fund equity ………………-$ -$ -$ -$ -$
Nonspendable ………………………………………….1,063,939$ 661,513$ 136,667$ 24,713$ 77,777$
Restricted ……………………………………………….418,968 366,902 1,200,201 1,180,746 539,434
Committed ………………………………………………36,830,635 37,141,183 37,452,097 36,294,934 33,246,307
Assigned ………………………………..………………13,811 20,871 23,679 1,132,492 22,181
Unassigned (2)………………………………..……………- - 27,576 - 3,687,215
Total fund equity ……………………...………38,327,353$ 38,190,469$ 38,840,220$ 38,632,885$ 37,572,914$
Total liabilities and fund equity ……………..130,054,830$ 132,332,946$ 143,872,040$ 155,030,117$ 178,905,546$
Source: Washington County Department of Budget and Finance(1) Effective for fiscal years beginning July 1, 2010, the County implemented GASB Statement No. 54 of the Governmental Accounting Standards Board, Fund
Balance Reporting and Governmental Fund Type Definitions. Based on this GASB Statement, the fund balances for the General Fund were reclassified. Also,the Highway Fund did not meet the criteria of a special revenue fund and was consolidated into the General Fund.
(2) Unassigned fund balance is reflected differently from audited financial statements for years 2014 and 2015. Highway consolidation should have been reflected
in Committed Fund Balance. Financial statements will compare to this presentation moving forward.
County Commissioners of Washington County
Balance Sheet
General Fund
As of June 30
FINANCIAL INFORMATION
Washington County, Maryland 43
Key Financial Statistics General Fund Cash Reserves and Fund Balance
The following table illustrates the ratio of the General Fund fund balance as a percentage of total revenues for the
last five fiscal years. Also included in the table are the ratios of cash reserves as a percentage of General Fund revenues. It is
the intention of the County to maintain a minimum reserve level of 17 percent, which represents 60 days of working capital.
It is anticipated that the County will meet or exceed the 17 percent reserve level in fiscal year 2016.
Fund Balance as
Percentage
Reserves as
Percentage
Fund Balance of Revenues of Revenues
2015 $208,628,251 $38,327,353 18.37% 17.66%
2014 204,448,105 38,190,469 18.68 18.18
2013 204,424,036 38,840,220 19.00 18.35
2012 201,308,373 38,632,885 19.19 18.59
2011 198,954,936 37,572,914 18.89 18.56
Source: Washington County Department of Budget and Finance
Fiscal Year Revenues
DEBT AND CAPITAL REQUIREMENTS
Washington County, Maryland 44
V. Debt and Capital Requirements
Debt Management Policy
The County adheres to its Debt Management Policy (the “DM Policy”), which sets forth the parameters for issuing new
debt and managing outstanding debt. The DM Policy’s primary objective is to establish conditions for the use of debt and create
procedures that minimize debt service and issuance costs, retain high credit ratings, and maintain full and complete financial
disclosure and reporting. The DM Policy addresses such matters as: use of debt financing, capital planning, debt affordability
measures, types of debt, and method of sale. Adherence to the DM Policy helps to ensure that the County maintains a sound
debt position and that credit quality is protected.
General Obligation and Revenue Bonds
The County may only issue general obligation and revenue bonds under authority conferred by the Maryland General
Assembly. No referendum is required.
The County is authorized to issue short-term tax anticipation notes to meet any estimated current fiscal year cumulative
cash flow deficit. Such notes must be repaid within six months of their date of issue. The County has no short-term notes
outstanding at this time. As of June 1, 1999 the County may use a line-of-credit for $5,000,000 to meet a temporary cash flow
deficit. The County has not used the line-of-credit as of this date.
The County may issue economic development revenue bonds under State law, which provides that such bonds shall not
constitute an indebtedness or charge against the general credit or taxing power of the County. Pursuant to the County Code, the
County may authorize long-term debt in the form of an installment purchase contract to pay for development rights or make
certain other payments in connection with the Agricultural Land Preservation Program.
The County may issue general obligation bonds in an amount up to $60,000,000 pursuant to the authority of Chapter 60
of the Laws of Maryland of 2013. The principal amount of bonds issued pursuant to Chapter 60, at June 30, 2015, was
$10,162,278. The unused authorization available under Chapter 60 prior to the issuance of the Bonds is $49,837,722.
The County is authorized by State law to issue its bonds for the purpose of refunding any of its outstanding bonds,
including the payment of any redemption premium and interest accrued to the date of redemption, purchase or maturity of the
bonds being refunded.
As part of the annual budget process, an annual debt affordability analysis is prepared by the Office of Budget and
Finance. It is an effective tool for debt planning and management.
The Solid Waste operation was classified as a fund separate from the Highway Fund in 1996. It has paid for debt from
generated revenues since that time. In 2002, the County reclassified the Solid Waste Fund as an enterprise fund. The debt paid
out of revenues generated by that fund is considered self-supporting debt. In 2011, the County implemented GASB Statement
No. 54 of the Governmental Accounting Standards Board, Fund Balance Reporting and Governmental Fund Type Definitions.
Based on this GASB Statement, the Highway Fund did not meet the criteria of a special revenue fund and was consolidated into
the General Fund.
The following table sets forth the amount of the County’s general obligation bonded debt issued and outstanding as of
June 30, 2015, exclusive of certain water and sewer bonds (see “Water and Sewer Bonds” herein). Outstanding bonds as of such
date do not include those maturities of the Public Improvement Bonds of 2006, Public Improvement Bonds of 2007 and Public
Improvement Bonds of 2008 for the payment of which non-callable direct obligations of the United States have been placed in
escrow. Outstanding amounts have not been adjusted for discounts or premiums.
DEBT AND CAPITAL REQUIREMENTS
Washington County, Maryland 45
Statement of General Obligation Bonded Debt
Issued and Outstanding*
As of June 30, 2015
Amount Outstanding
Date of Amount General Solid Airport
Issue Issued Fund Waste Fund Fund Total
Public Improvement Bonds……………………Mar 2006 10,500,000$ 500,000$ -$ -$ 500,000$
Public Improvement Bonds……………………May 2007 16,000,000 1,819,235 370,765 - 2,190,000
Public Improvement Bonds……………………June 2008 18,539,530 (1) 2,499,816 - - 2,499,816
Public Improvement and Refunding Bonds..June 2009 18,371,300 (2) 9,823,723 1,882,475 - 11,706,198
Public Improvement Series A Bonds………..May 2010 6,992,993 (3) 3,167,831 1,253,948 - 4,421,779
Taxable Build America Series B Bonds……..May 2010 9,711,007 (4) 6,957,113 2,753,894 - 9,711,007
Public Improvement and Refunding Bonds…May 2010 13,790,000 7,741,334 2,268,666 - 10,010,000
Public Improvement Bonds…………………..May 2011 14,170,000 9,698,041 2,851,959 - 12,550,000
Public Improvement Bonds…………………..May 2012 12,068,100 (5) 11,184,985 - - 11,184,985
Refunding Bonds………………………………May 2012 7,740,000 5,307,330 30,680 996,990 6,335,000
Public Improvement Bonds…………………..May 2013 12,000,000 11,555,000 - - 11,555,000
Refunding Bonds………………………………May 2013 12,540,000 12,362,420 177,580 - 12,540,000
Public Improvement Bonds…………………..May 2014 14,000,000 14,000,000 - - 14,000,000
Public Improvement Bonds…………………..May 2015 12,000,000 (6) 12,000,000 - - 12,000,000
Refunding Bonds……………………………..May 2015 25,573,470 (7) 23,819,710 1,753,760 - 25,573,470
MWQFA (8) Financing Cell 3…………………Nov 2004 2,498,427 - 1,355,886 - 1,355,886
MWQFA (8) Solid Waste Refinancing……….Feb 2005 7,248,761 1,622,166 4,456,595 - 6,078,761
MWQFA (8) Resh Road Cap Phase I………..Dec 2006 5,000,000 3,266,231 - - 3,266,231
218,743,588$ 137,324,935$ 19,156,208$ 996,990$ 157,478,133$
Source: Washington County Department of Budget and Finance
* Exclusive of Water and Sewer bonded debt.
(1) Total issue amount for all County funds was $19,950,000.
(2) Total issue amount for all County funds was $22,130,000.
(3) Total issue amount for all County funds was $ 7,860,000.
(4) Total issue amount for all County funds was $10,915,000.
(5) Total issue amount for all County funds was $17,765,000.
(6) Total issue amount for all County funds was $15,460,000.
(7) Total issue amount for all County funds was $26,395,000.
(8) Maryland Water Quality Financing Administration.
Water and Sewer Bonds
Pursuant to Title 6 of the Code of Public Local Laws of Washington County, as amended (the “Water and Sewer Act”),
the County is authorized to issue bonds secured by the full faith and credit and unlimited taxing power of the County to provide
funds for the design, construction, establishment, purchase and condemnation of water systems, sewerage systems and surface
water drainage systems in the service areas created by the County. To the extent that the special assessments and other charges
imposed by the County with respect to a certain project are insufficient to pay that portion of the principal of and interest on any
such bonds attributable to the cost of a project, the County is obligated to levy and to collect a tax upon all property subject to
unlimited County taxation within the corporate limits of Washington County in rate and amount sufficient to provide funds as
may be necessary to provide for the payment of such portion of the principal and interest as it becomes due.
By State law, the total bonded indebtedness of the County for these purposes, including bonded indebtedness
previously issued by the former Washington County Sanitary District, may not exceed 25% of the assessed value of all property
in Washington County subject to unlimited County taxation. At the time the State law was enacted the assessed value was equal
to 40% of market value. Pursuant to legislation passed by the Maryland General Assembly, real property assessment law was
altered to reflect full market value assessments. Therefore, to maintain the intent of the State law, 25% of the 40% previous
reduction of assessed value, or 10%, is used to calculate the legal debt margin.
DEBT AND CAPITAL REQUIREMENTS
Washington County, Maryland 46
The following table sets forth the amount of the County’s water and sewer debt issued and outstanding as of June 30,
2015. Outstanding amounts have not been adjusted for discounts or premiums. Debt subject to the Water and Sewer Act is
referred to as “Water and Sewer” debt herein.
Date of Issue Issued Outstanding
Series A Bonds …………………………………June 1996 9,606,968$ 3,207,488$
Public Improvement Bonds……………………June 2008 1,410,470 (1)190,184
Public Improvement & Refunding Bonds…...…June 2009 3,758,700 (2)2,838,801
Public Improvement Series A Bonds…………May 2010 867,007 (3)548,221
Taxable Build America Series B Bonds………May 2010 1,203,993 (4)1,203,993
Public Improvement Bonds……………………May 2012 5,696,900 (5)5,280,015
Public Improvement Bonds……………………May 2015 3,460,000 (6)3,460,000
Refunding Bonds……………………………….May 2015 821,530 (7)821,530
MWQFA (8)Loan …………………………………Mar 2000 3,620,697 1,204,119
MWQFA (8)Loan …………………………………May 2004 8,091,063 3,486,063
MWQFA (8)Loan …………………………………Oct 2006 560,000 349,275
MWQFA (8)Loan …………………………………May 2015 2,553,000 2,553,000 (9)
41,650,328$ 25,142,689$
Source: Washington County Department of Budget and Finance
(1) Total issue amount for all County funds was $19,950,000.
(2) Total issue amount for all County funds was $22,130,000.
(3) Total issue amount for all County funds was $7.860,000.
(4) Total issue amount for all County funds was $10,915,000.
(5) Total issue amount for all County funds was $17,765,000.
(6) Total issue amount for all County funds was $15,460,000.
(7) Total issue amount for all County funds was $26,395,000.
(8) Maryland Water Quality Financing Administration.
(9) As of June 30, 2015, $1,163,659 of the $2,553,000 original
principal amount remained to be drawn.
Statement of Water and Sewer Bonded Debt
Issued and Outstanding
As of June 30, 2015
Assessed Value of Property in Washington County $12,352,005,000
Debt Limit: % of Assessed Value (1)10%
Water and Sewer Borrowing Limitation 1,235,200,000
Water and Sewer Debt 25,142,689
Debt Margin 1,210,057,311
Ratio of Water and Sewer Debt to Assessed Value 0.20%
Source: Washington County Department of Budget and Finance
(1) Reduced from 25% to 10% - see “Water and Sewer Bonds” herein.
Schedule of Legal Debt Margin
As of June 30, 2015
Water and Sewer Bonded Debt
DEBT AND CAPITAL REQUIREMENTS
Washington County, Maryland 47
Capital Lease Obligations and Other Contracts
The County has entered into several five-year capital lease agreements. The outstanding balance of these obligations as
of June 30, 2015 was $250,108. The lease agreements are primarily for heavy-duty equipment. The leases have been recorded
as capital leases in the appropriate County funds in the financial statements.
In addition to contracts for goods and services incurred in the ordinary course of business of the County, the County is
party to numerous other contracts, primarily with engineers, architects and contractors relating to capital projects. Funds
necessary to meet the County’s obligations in respect to such contracts have been appropriated in the related fund. Special Obligation Bonds
Washington County may create special taxing districts, levy ad valorem and/or special taxes, and borrow money by
issuing and selling bonds for the purpose of financing the cost of the design, construction, establishment, extension, alteration or
acquisition of adequate storm drainage systems, sewers, water systems, roads, bridges, culverts, tunnels, sidewalks, lighting,
parking, parks and recreation facilities, libraries, schools, transit facilities, solid waste facilities and other infrastructure
improvements, whether situated within or outside the special taxing district, and including infrastructure improvements located in
or supporting a transit-oriented development, a sustainable community or a State hospital development (within the meaning of the
State law). The bonds shall be payable solely from the ad valorem or special taxes levied on the property within the special taxing
district and neither the bonds, nor any interest thereon, shall ever constitute an indebtedness or a charge against the general credit
or taxing powers of the County.
The County has approved one “Request for Creation of a Special Taxing District and Related Actions” from the owners
of certain real property located in Washington County. In June 1998, November 1998 and May 2000 the County issued its
$3,100,000, $1,517,000 and $2,454,000 Washington County, Maryland Special Obligation Bonds (Barkdoll Tract Special Taxing
District) Series 1998, Series 1998 B and Series 2000, respectively. Bonded Indebtedness of Incorporated Municipalities
Eight of the nine incorporated municipalities of Washington County have outstanding indebtedness in the aggregate
amount of $92,891,601 as of June 30, 2015. The County is not obligated to pay such debt or the interest thereon and neither the
faith and credit nor taxing power of the County is pledged to the payment of principal or interest on such indebtedness.
Amount
9,381,213$
750,767
1,097,706
75,417,227
1,705,355
1,850,165
616,680
2,072,488
Total 92,891,601$
Source: Washington County Department of Budget and Finance
Boonsboro…………………….…….….……
Smithsburg………………………….………..
Williamsport……………………….…………
Hancock………………………………….…..
Keedysville…………………………….....….
Clear Spring…………………..……...………
Funkstown……………………………….….
Hagerstown……...…………………..………
Towns
County Commissioners of Washington County
Outstanding Underlying Debt
As of June 30, 2015
DEBT AND CAPITAL REQUIREMENTS
Washington County, Maryland 48
Direct and Underlying Debt
The following schedules present the County’s bonded debt outstanding as of June 30, 2015, and the ratios of such debt to
the County’s population and real and personal property assessed market values.
County Commissioners of Washington County
Direct and Overall Bonded Debt
As of June 30, 2015
(Excludes this Issue)
Direct Debt - Tax-Supported:
General Government Debt (1)…………………………………..137,324,935$
Direct Debt - Self-Supported:
Solid Waste ….…………………………………………………..19,156,208
Water and Sewer ….…………………………………………….25,142,689
Airport ….………………………………………………………..996,990
Total Direct Debt…………………………………………………….182,620,822
Underlying Debt……………………………………………………..92,891,601
Overall Bonded Debt………………………………………………..275,512,423$
Source: Washington County Department of Budget and Finance
(1) Includes Highway debt which is currently considered tax-supported.
Per Capita (Estimated Population 149,573):
Direct Tax-Supported Debt (1)………………………….918$
Overall Bonded Debt…………………………………….1,842$
Percentage of Assessed Value of $12,352,005,000:
Direct Tax-Supported Debt (1)…………………………1.11%
Overall Bonded Debt……………………………………2.23%
Source: Washington County Department of Budget and Finance
(1) Includes Highway debt which is currently considered tax-supported.
County Commissioners of Washington County
Debt Per Capita and Ratio of Debt to Assessed Values
As of June 30, 2015
(Excludes this Issue)
DEBT AND CAPITAL REQUIREMENTS
Washington County, Maryland 49
The following table presents the County’s direct tax-supported debt per capita and ratios of direct tax-supported debt to
assessed value for the last five fiscal years.
Fiscal Year Estimated Assessed Per
Direct Tax-Supported
Debt as a Percentage
Ended June 30 Population (000)Value (000)Capita of Assessed Value
2015 $137,325 150 $12,352,005 $918 1.11
2014 135,764 150 12,462,103 902 1.09
2013 131,784 150 12,822,029 879 1.03
2012 129,672 149 13,282,950 870 0.98
2011 127,250 148 14,198,081 860 0.90
Source: Washington County Department of Budget and Finance
Direct
Tax-Supported
Debt (000)
Debt Service Requirements on County Debt
The following tables set forth the debt service requirements for the County’s general obligation bonded debt as of June
30, 2015, adjusted to reflect issuance of the Bonds, and the rapidity of repayment for the County’s direct tax-supported debt.
DEBT AND CAPITAL REQUIREMENTS
Washington County, Maryland 50
Year Self-Supporting Debt Service Total Debt Service
Ending
June 30 Principal Interest Total Principal Interest Total Principal Interest Total
2016 9,721,410$ 4,062,008$ 13,783,418$ 3,527,519$ 2,496,527$ 6,024,046$ 13,248,929$ 6,558,535$ 19,807,464$
2017 10,170,734 4,317,327 14,488,061 3,608,192 2,577,479 6,185,671 13,778,926 6,894,806 20,673,732
2018 9,621,029 4,020,627 13,641,656 4,096,336 2,556,595 6,652,931 13,717,365 6,577,223 20,294,588
2019 8,502,618 3,696,740 12,199,358 4,607,246 2,512,666 7,119,912 13,109,864 6,209,406 19,319,270
2020 9,115,277 3,373,401 12,488,678 4,159,246 2,463,430 6,622,676 13,274,523 5,836,831 19,111,354
2021 9,161,840 3,038,486 12,200,326 2,850,512 699,286 3,549,798 12,012,352 3,737,772 15,750,124
2022 8,303,797 2,717,562 11,021,359 2,959,844 633,858 3,593,702 11,263,641 3,351,420 14,615,061
2023 8,223,873 2,424,274 10,648,147 3,109,114 570,199 3,679,313 11,332,987 2,994,472 14,327,459
2024 8,249,734 2,124,734 10,374,468 1,906,193 502,362 2,408,555 10,155,927 2,627,096 12,783,023
2025 8,135,073 1,853,376 9,988,449 1,843,943 443,798 2,287,741 9,979,016 2,297,173 12,276,189
2026 7,606,635 1,593,284 9,199,919 1,780,277 386,014 2,166,291 9,386,912 1,979,298 11,366,210
2027 7,114,163 1,340,639 8,454,802 1,846,915 327,678 2,174,593 8,961,078 1,668,317 10,629,395
2028 7,089,092 1,091,174 8,180,266 1,879,953 266,070 2,146,023 8,969,045 1,357,244 10,326,289
2029 5,012,538 874,926 5,887,464 1,647,543 206,763 1,854,306 6,660,081 1,081,689 7,741,770
2030 4,391,354 693,309 5,084,663 1,319,768 149,812 1,469,580 5,711,122 843,121 6,554,243
2031 4,558,026 535,716 5,093,742 1,364,145 106,012 1,470,157 5,922,171 641,728 6,563,899
2032 3,893,138 385,234 4,278,372 935,090 68,825 1,003,915 4,828,228 454,059 5,282,287
2033 3,250,181 257,969 3,508,150 734,114 43,098 777,212 3,984,295 301,067 4,285,362
2034 2,532,840 153,595 2,686,435 362,528 27,155 389,683 2,895,368 180,750 3,076,118
2035 1,817,768 70,508 1,888,276 373,683 16,784 390,467 2,191,451 87,292 2,278,743
2036 853,816 17,077 870,893 383,726 6,022 389,748 1,237,542 23,099 1,260,641
137,324,936$ 38,641,966$ 175,966,902$ 45,295,887$ 17,060,433$ 62,356,320$ 182,620,823$ 55,702,399$ 238,323,222$
Source: Washington County Department of Budget and Finance
* Totals may not foot due to rounding.
Washington County Schedule of Debt Service
Requirements on Long-term Obligations*
Tax-Supported Debt Service
As of June 30, 2015
DEBT AND CAPITAL REQUIREMENTS
Washington County, Maryland 51
Year Outstanding Debt Service 2016 Bonds
Ending
June 30 Principal Interest Total Principal Interest Total Principal Interest Total
2016 13,248,929$ 6,558,535$ 19,807,464$ -$ -$ -$ 13,248,929$ 6,558,535$ 19,807,464$
2017 13,778,926 6,894,806 20,673,732 - - - 13,778,926 6,894,806 20,673,732
2018 13,717,365 6,577,223 20,294,588 - - - 13,717,365 6,577,223 20,294,588
2019 13,109,864 6,209,406 19,319,270 - - - 13,109,864 6,209,406 19,319,270
2020 13,274,523 5,836,831 19,111,354 - - - 13,274,523 5,836,831 19,111,354
2021 12,012,352 3,737,772 15,750,124 - - - 12,012,352 3,737,772 15,750,124
2022 11,263,641 3,351,420 14,615,061 - - - 11,263,641 3,351,420 14,615,061
2023 11,332,987 2,994,472 14,327,459 - - - 11,332,987 2,994,472 14,327,459
2024 10,155,927 2,627,096 12,783,023 - - - 10,155,927 2,627,096 12,783,023
2025 9,979,016 2,297,173 12,276,189 - - - 9,979,016 2,297,173 12,276,189
2026 9,386,912 1,979,298 11,366,210 - - - 9,386,912 1,979,298 11,366,210
2027 8,961,078 1,668,317 10,629,395 - - - 8,961,078 1,668,317 10,629,395
2028 8,969,045 1,357,244 10,326,289 - - - 8,969,045 1,357,244 10,326,289
2029 6,660,081 1,081,689 7,741,770 - - - 6,660,081 1,081,689 7,741,770
2030 5,711,122 843,121 6,554,243 - - - 5,711,122 843,121 6,554,243
2031 5,922,171 641,728 6,563,899 - - - 5,922,171 641,728 6,563,899
2032 4,828,228 454,059 5,282,287 - - - 4,828,228 454,059 5,282,287
2033 3,984,295 301,067 4,285,362 - - - 3,984,295 301,067 4,285,362
2034 2,895,368 180,750 3,076,118 - - - 2,895,368 180,750 3,076,118
2035 2,191,451 87,292 2,278,743 - - - 2,191,451 87,292 2,278,743
2036 1,237,542 23,099 1,260,641 - - - 1,237,542 23,099 1,260,641
182,620,823$ 55,702,399$ 238,323,222$ -$ -$ -$ 182,620,823$ 55,702,399$ 238,323,222$
Source: Washington County Department of Budget and Finance
* Totals may not foot due to rounding.
Washington County Schedule of Debt Service
Requirements of Long-term Obligations
As of June 30, 2015
Adjusted to Reflect Issuance of the Bonds*
Total Debt Service
DEBT AND CAPITAL REQUIREMENTS
Washington County, Maryland 52
Number Principal Principal
of Years Amount Percent Amount Percent
5 47,131,068$ 34.32 -$
10 89,205,385 64.96 -
15 120,419,167 87.69 -
20 136,471,120 99.38 -
25 137,324,936 100.00 -
Source: Washington County Department of Budget and Finance
Rapidity of Direct Tax-Supported Debt Principal Payment
June 30, 2015
Before Issuance of Bonds After Issuance of Bonds
Capital Requirements Capital Improvement Program Summary
The County has established the CIP for establishing a Capital Budget to forecast future needs and set priorities. It is
reviewed and updated during the annual budget process. The objectives of the CIP are to: (1) provide a means for
coordinating and consolidating into one document all departmental and agency requests for capital funds; (2) establish a
system by which the capital projects of the County can be examined and given priorities according to their relative
importance; (3) provide a budgetary tool for the implementation of the Comprehensive Plan elements; (4) forecast future
capital demands on local current revenue; and (5) allow projects to be scheduled over a long-term period, thereby providing
adequate planning for both financial resources and project implementation. By applying the guidelines of the County’s DM
Policy and the annual debt affordability analysis, the Board is able to adopt a Capital Budget that provides maximum benefits
from available public funds and assures sound fiscal planning. See “FINANCIAL INFORMATION – Budget Process and
Schedule” herein.
MISCELLANEOUS
Washington County, Maryland 53
VI. Miscellaneous
Litigation
The County is currently a defendant in several litigation matters involving various matters and claims. Most of these
are covered by insurance, subject to a deductible. Since most of these disputes involve unliquidated damages, it is not possible
to provide a reliable total of damages for which the County may become liable. In the opinion of the County Attorney, all such
matters now pending or threatened are, collectively, unlikely to result in total liabilities that would have a material effect on the
financial condition of the County.
Ratings
Moody’s Investors Service, Inc., Standard & Poor’s Financial Services LLC, and Fitch Ratings have given the Bonds
the ratings indicated on the cover page of this Official Statement. An explanation of the significance of any of such ratings may
be obtained only from the agency furnishing the rating. The County furnished to such rating agencies the information contained
in a preliminary form of this Official Statement and other materials and information pertaining to the Bonds. Generally, rating
agencies base their ratings on such materials and information, as well as their own investigations, studies and assumptions. The
ratings given the Bonds may be changed at any time and no assurance can be given that they will not be revised downward or
withdrawn by one or more of such rating agencies if, in the judgment of any such rating agencies, circumstances should warrant
such action. Any such downward revision or withdrawal of any of such ratings may have an adverse effect on market prices for
the Bonds.
Continuing Disclosure Undertaking
In order to enable participating underwriters, as defined in Rule 15c2-12 of the Securities and Exchange Commission
(“Rule 15c2-12”) to comply with the requirements of paragraph (b)(5) of Rule 15c2-12, the County will execute and deliver a
continuing disclosure agreement (the “Continuing Disclosure Agreement”) on or before the date of issuance and delivery of the
Bonds, the proposed form of which is attached to this Official Statement as Appendix D. Potential purchasers of the Bonds
should note that the definition of Listed Events in Appendix D is intended to completely restate the events specified in
Rule 15c2-12. It is noted that certain Listed Events are expected to have no applicability to the Bonds, such as the possibility of
unscheduled draws on debt service reserves or credit enhancements, substitution of credit or liquidity providers or their failure to
perform, and matters affecting collateral for the Bonds.
Standard & Poor’s Financial Services LLC upgraded its rating on the County’s outstanding general obligation debt
from AA to AA+ on April 1, 2014; notice of such upgrade was not posted on EMMA until April 25, 2014. Except as indicated
in the previous sentence (to the extent the same constitutes a material failure), the County has not failed in the past five years to comply, in all material respects, with any previous continuing disclosure undertaking entered into by the County pursuant to Rule 15c2-12. Sale at Competitive Bidding
The Bonds were offered by the County at competitive bidding on May 3, 2016, in accordance with the official Notice
of Sale (a copy of which is attached as Appendix C). The interest rates shown on the inside cover page of this Official Statement
are the interest rates resulting from the award of the Bonds of each series at the competitive bidding. The yields or prices shown
on the inside cover page of this Official Statement for each series of the Bonds were furnished by the successful bidder for such
series of the Bonds. All other information concerning the nature and terms of any re-offering should be obtained from the
successful bidder for each series of the Bonds and not from the County.
Legal Matters
All legal matters incident to the authorization, issuance and sale of the Bonds are subject to the approval of Funk &
Bolton, P.A., Baltimore, Maryland, Bond Counsel. Delivery of each series of the Bonds is conditioned upon delivery by Bond
Counsel of an opinion relating to such series substantially in the applicable form set forth in Appendix B to this Official
Statement. The certified text of the applicable approving legal opinion for each series of the Bonds will be printed on or
attached to the Bonds.
MISCELLANEOUS
Washington County, Maryland 54
Independent Auditors
The financial statements as of June 30, 2015, and for the year then ended, included in this Official Statement, have been
audited by SB & Company, LLC, independent auditors, as stated in their report appearing herein.
Financial Advisor
Public Advisory Consultants, Inc., Owings Mills, Maryland (the “Financial Advisor”) is a registered municipal advisor
with the Municipal Securities Rulemaking Board and serves as financial advisor in connection with the issuance of the Bonds and other matters related to the County’s finances. The Financial Advisor has not been engaged, nor has it undertaken, to audit,
authenticate or otherwise verify the information set forth in this Official Statement, or any other related information available to the County, with respect to accuracy and completeness of disclosure of such information. The Financial Advisor makes no
guaranty, warranty or other representation respecting the accuracy and completeness of this Official Statement or any other matter related to the Official Statement. The Financial Advisor does not engage in the underwriting, selling, or trading of securities.
Verification of Mathematical Computations
The arithmetical accuracy of certain computations included in the schedules provided by the Financial Advisor, on
behalf of the County, relating to (a) computation of forecasted payments of principal and interest to refund the Refunded Bonds
and (b) computation of the yields on the Bonds and the Restricted Acquired Obligations was examined by The Arbitrage Group,
Inc. Such computations were based solely upon assumptions and information supplied by the Financial Advisor on behalf of the
County. The Arbitrage Group, Inc. has restricted its procedures to examining the arithmetical accuracy of certain computations
and has not made any study or evaluation of the assumptions and information upon which the computations are based and,
accordingly, has not expressed an opinion on the data used, the reasonableness of the assumptions, or the achievability of the
forecasted outcome.
This Official Statement has been approved and authorized by the County for use in connection with the sale of the
Bonds.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
By: President, Board of County Commissioners
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Financial Statements and Supplemental Schedules
Together with Report of Independent Public Accountants
For the Year Ended June 30, 2015
JUNE 30, 2015
CONTENTS
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 1
MANAGEMENT’S DISCUSSION AND ANALYSIS 4
FINANCIAL STATEMENTS
Statement of Net Position 16
Statement of Activities 17 Balance Sheet – Governmental Funds 19
Reconciliation of Balance Sheet of Governmental Funds to Statement of Net Position 20 Statement of Revenue, Expenditures, and Changes in Fund Balances – Governmental Funds 21
Reconciliation of Statement of Revenue, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 22
Statement of Net Position – Proprietary Funds 23 Statement of Revenue, Expenses, and Changes in Fund Net Position – Proprietary Funds 24
Statement of Cash Flows – Proprietary Funds 25 Statement of Net Position – Fiduciary Funds 26
Statement of Changes in Net Position – Fiduciary Funds 27 Notes to the Financial Statements 28
REQUIRED SUPPLEMENTARY INFORMATION
Schedule of Funding Progress – OPEB Trust Fund
Schedule of Changes in Pension Fund Net Pension Liability and Related Ratios – General Employees’ Pension Fund
Schedule of General Employees’ Pension Fund Employer Contributions Schedule of Changes in Pension Fund Net Pension Liability and Related Ratios – Volunteer Length of
Service Award Fund Schedule of Volunteer Length of Service Award Fund Employer Contributions
89
90
91
92 93
COMBINING AND INDIVIDUAL FUND STATEMENTS
Combining Statements of Financial Schedules 94 Combining Balance Sheet – Non-Major Governmental Funds 96
Combining Statement of Revenue, Expenditures, and Changes in Fund Balances – Non-Major Governmental Funds 97
Combining Statement of Net Position – Non-Major Proprietary Funds 98 Combining Statement of Revenue, Expenses, and Changes in Fund Net Position – Non-Major
Proprietary Funds 99 Combining Statement of Cash Flows – Non-Major Proprietary Funds 100
BUDGET AND ACTUAL SCHEDULE
Schedule of Revenue, Expenditures, and Changes in Fund Balance – Budget and Actual – General Fund 103
OTHER SCHEDULES
Local Management Board- Schedule of Revenue and Expenditures- Regulatory Basis 109
Local Management Board- Schedule of Earned Reinvestment 110
200 International Circle • Suite 5500 • Hunt Valley • Maryland 21030 • P 410.584.0060 • F 410.584.0061
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
County Commissioners of Washington County
Hagerstown, Maryland
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the
business-type activities, the aggregate discretely presented component unit, each major fund, and
the aggregate remaining fund information of the County Commissioners of Washington County,
Maryland (the County) as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise the County’s basic financial statements as
listed in the table of contents.
Management’s Responsibility for the Financial Statements
Washington County’s management is responsible for the preparation and fair presentation of
these financial statements in accordance with accounting principles generally accepted in the
United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express opinions on these basic financial statements based on our audit.
We did not audit the basic financial statements of the Board of Education of Washington County
(the Board). Those basic financial statements were audited by other auditors whose report
thereon has been furnished to us, and our opinion, insofar as it relates to the amounts included for the component unit, is based solely on the report of the other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America.
Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the basic financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the basic financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the basic financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers
internal control relevant to the entity’s preparation and fair presentation of the basic financial
statements in order to design audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by
management, as well as evaluating the overall presentation of the basic financial statements.
2
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Opinions
In our opinion, based on our audit and the report of the other auditors, the basic financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the aggregate discretely
presented component unit, each major fund, and the aggregate remaining fund information, of
Washington County, Maryland, as of June 30, 2015, and the respective changes in financial
position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Emphasis of a Matter
As discussed in Note 20 to the financial statements, during the year ended June 30, 2015, the County adopted new accounting guidance from Governmental Accounting Standards Board Statement No. 68, “Accounting and Financial Reporting for Pensions.” Our opinion is not
modified with respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management’s discussion and analysis, schedule of changes in pension fund net pension liability and related ratios, schedule of employer contribution for the general employees fund and the Length of Service Award Program (LOSAP) fund, and schedule of funding progress for the
Other Postemployment Benefit (OPEB) Trust, and the budget and actual schedules be presented
to supplement the basic financial statements. Such information, although not a part of the basic
financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited
procedures to the required supplementary information in accordance with auditing standards
generally accepted in the United States of America, which consisted of inquiries of management
about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an
opinion or provide any assurance on the information because the limited procedures do not
provide us with sufficient evidence to express an opinion or provide any assurance.
3
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the County’s basic financial statements. The accompanying combining and
individual fund statements, local management board schedule of revenue and expenditures
regulatory basis and schedule of earned reinvestment are presented for purposes of additional analysis and are not a required part of the basic financial statements.
The accompanying combining and individual fund statements and local management board
schedules are the responsibility of management and were derived from and relates directly to the
underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such
information directly to the underlying accounting and other records used to prepare the basic
financial statements or to the basic financial statements themselves, and other additional
procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the accompanying combining and individual fund statements and budgetary comparison schedules are fairly stated in all material respects in relation to the basic
financial statements as a whole.
Hunt Valley, Maryland
October 29, 2015
4
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2015
Washington County Government’s (the “County”) discussion and analysis is designed to: (a) assist the reader in focusing on significant financial issues, (b) provide an overview of the County’s financial activity, (c) identify
changes in the County’s financial position (it’s ability to address the next and subsequent years’ challenges), (d) identify any material deviations from the financial plan (the approved budget), and (e) identify individual fund
issues or concerns.
Since the Management’s Discussion and Analysis (MD&A) is designed to focus on the current year’s activities, resulting changes and currently known facts please read it in conjunction with the County’s financial statements
presented herein.
This discussion and analysis is intended to serve as an introduction to the County’s basic financial statements. The County’s basic financial statements are comprised of three components: 1) government-wide financial statements,
2) fund financial statements, and 3) notes to the financial statements. This report also contains 4) supplementary information in addition to the basic financial statements themselves.
1) Government-wide Financial Statements The government-wide financial statements are designed to provide readers with a broad overview of the
County’s finances, in a manner similar to a private business. The government-wide financial statements include a statement of net position and a statement of activities.
The statement of net position presents information on the County’s entire assets and liabilities, with the
difference between the two reported as net position. Over time, increases and decreases in net position may serve as a useful indicator of whether the financial position of the County is improving or
deteriorating.
The statement of activities presents information showing how the government’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying
event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future
fiscal periods (e.g., uncollected taxes and earned but unused vacation leave).
Both of these financial statements distinguish functions of the County that are principally supported by taxes and intergovernmental revenues (governmental activities) and activities from other functions that are
intended to recover all or a significant portion of their costs through user fees and charges (business-type activities).
The governmental activities of the County include education, general government, parks and
recreation, public safety, courts, health and social services, and highway maintenance.
The business-type activities of the County include airport, public golf course, public transit, solid waste, and water quality operations.
The government-wide financial statements include not only the County (known as the primary
government), but also include the Washington County Board of Education as a legally separate component unit and is reported separately from financial information presented for the primary government itself.
The government-wide financial statements can be found on pages 16-18 of this report.
2) Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been
segregated for specific activities or objectives. The County, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the
funds of the County can be divided into categories: governmental, proprietary, or fiduciary.
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MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2015
Governmental Funds. Governmental funds are used to account for the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide
financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year.
Such information may be useful in evaluating a government’s near-term financing requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing
decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison
between governmental funds and governmental activities.
The County maintains eleven individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures,
and changes in fund balances for the General, Capital Improvement, Community Partnership, Foreign Trade Zone (no reported activity), Inmate Welfare, Contraband, Agricultural Education, Gaming, Land
Preservation, HEPMPO, and Hotel Rental Tax.
The County adopts an annual appropriated budget for all of its governmental and proprietary fund budgets.
The basic governmental fund financial statements can be found on pages 19-21 of this report.
Proprietary Funds. When the County charges customers for a service it provides, whether to outside
customers or to other units of government, these services are generally reported in proprietary funds. Proprietary funds are reported in the same way that all activities are reported in the statement of net
assets and the statement of activities. Proprietary funds are comprised of two types: 1) Enterprise funds and 2) Internal service funds. The County uses enterprise funds to account for its airport, public golf
course, public transit, solid waste, and water quality operations. Internal service funds are used to report an activity that provides supplies and services for the government’s other programs and
activities. The County does not utilize an internal service fund. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail.
The basic proprietary fund financial statements can be found on pages 23-25 of this report.
Fiduciary Funds. Fiduciary funds are used to account for resources held for the benefit of parties
outside the government. Fiduciary funds are not reflected in the government-wide financial statement because the resources of those funds are not available to support the County’s own programs. The
accounting used for fiduciary funds is similar to proprietary funds. The basic fiduciary fund financial statements can be found on pages 26-27 of this report.
3) Notes to the Financial Statements
The notes to the financial statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial
statements can be found on pages 28-86 of this report.
4) Supplementary Information
In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the County’s progress in funding its obligation to provide
pension benefits to its employees and includes budgetary comparison schedules for the general fund.
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MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2015
Financial Analysis on Government-Wide Financial Statements
In addition to this MD&A, required supplementary information can be found on page 89-93 of this report.
As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. In the
case of the County, assets exceeded liabilities by $539.9 million as of the close of the most recent fiscal year.
Washington County, Maryland Net Position (Government-Wide)
Governmental Activities Business-type Activities Total Total Percent Change
2015 2014 2015 2014 2015 2014
Current and other assets $126,911,860 $ 130,030,261 $46,434,529 $ 49,933,704 $173,346,389 $179,963,965 -4%
Capital assets 431,053,835 420,873,321 248,459,872 252,070,781 679,513,707 672,944,102 1%
Total Assets 557,965,695 550,903,582 294,894,401 302,004,485 852,860,092 852,908,067 0%
Deferred Outflow of Resources 5,596,709 2,178,222 738,144 636,584 6,334,853 2,814,806 125%
Current and other liabilities 29,696,546 29,588,429 14,617,381 16,619,095 44,313,927 46,207,524 -4% Long-term liabilities 191,169,520 138,545,317 57,515,145 55,999,109 248,684,665 194,544,426 28%
Total Liabilities 220,866,066 168,133,746 72,132,526 72,618,204 292,998,592 240,751,950 22%
Deferred Inflow of Resources - - 26,246,880 27,064,705 26,246,880 27,064,705 -3%
Net Investment in Capital Assets 372,167,279 364,504,705 211,859,499 216,395,352 584,026,778 580,900,057 1%
Restricted Net Position 17,206,344 20,803,525 8,477,778 8,134,606 25,684,122 28,938,131 -11%
Unrestricted Net Position (46,677,285) (360,172) (23,084,138) (21,571,798) (69,761,423) (21,931,970) -218% Total Net Position $342,696,338 $ 384,948,058 $197,253,139 $ 202,958,160 $539,949,477 $ 587,906,218 -8%
The largest portion of the County’s net position reflects its investments in capital assets (e.g., land, roads, and
bridges); less related outstanding debt used to acquire those assets in the amount of $584 million. The County uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending.
Although the County’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the County’s net position, $25.7 million, represents resources that are subject to external restrictions on how they may be used. The remaining portion is unrestricted net
assets of ($69.8) million.
Unrestricted net assets in governmental activities have been reduced by $54.9 million in long-term debt, resulting in unrestricted net assets of ($46.7) million. This long-term debt was incurred by the County’s general fund for the
purpose of capital asset acquisition for the Board of Education of $52 million and Hagerstown Community College of $2.9 million. The capital assets acquired with these bonds are not reflected in the County’s primary government
financial statements.
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MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2015
Washington County, Maryland Change in Net Position
(Government-Wide)
Governmental Activities Business-type Activities Total
2015 2014 2015 2014 2015 2014
Program revenues:
Charges for Services $5,854,869 $ 5,352,465 $19,166,051 $ 18,532,250 $25,020,920 $23,884,715
Operating Grants and Contributions 6,543,220 6,323,715 1,382,948 1,366,588 7,926,168 7,690,303
Capital Grants and Contributions 14,054,268 3,386,431 2,746,149 2,169,921 16,800,417 5,556,352
General Revenues:
Property Taxes 118,534,624 120,607,747 - - 118,534,624 120,607,747
Local Taxes 90,220,815 79,723,459 - - 90,220,815 79,723,459
Other 3,416,030 3,192,299 725,043 736,073 4,141,073 3,928,372
Total Revenues 238,623,826 218,586,116 24,020,191 22,804,832 262,644,017 241,390,948
Program Expenses:
General Government 32,163,683 15,536,633 - - 32,163,683 15,536,633
Public Safety 46,584,797 42,806,759 - - 46,584,797 42,806,759
Health 2,339,270 2,339,270 - - 2,339,270 2,339,270
Social Services 571,517 934,217 - - 571,517 934,217
Education 113,491,068 114,765,247 - - 113,491,068 114,765,247
Parks and Recreation 6,791,711 5,881,642 - - 6,791,711 5,881,642
Natural Resources 1,690,246 2,599,487 - - 1,690,246 2,599,487
Community Promotion 5,959,702 4,597,185 - - 5,959,702 4,597,185
Highways and Streets 16,037,762 17,004,824 - - 16,037,762 17,004,824
Interest on long-term debt 4,167,500 4,200,780 - - 4,167500 4,200,780
Business-type Activities:
Water Quality - - 12,707,818 12,429,642 12,707,818 12,429,642
Solid Waste - - 7,720,049 7,909,660 7,720,049 7,909,660
Public Transit - - 3,010,778 2,877,101 3,010,778 2,877,101
Airport - - 7,993,635 7,933,117 7,993,635 7,933,117
Golf Course - - 1,239,140 1,160,303 1,239,140 1,160,303
Total Expenses 229,797,256 210,666,044 32,671,420 32,309,823 262,468,676 242,975,867
Change in Net Position before transfers 8,826,570 7,920,072 (8,651,229) (9,504,991) 175,341 (1,584,919)
Transfers (2,946,208) (1,574,282) 2,946,208 1,574,282 - -
Change in Net Position 5,880,362 6,345,790 (5,705,021) (7,930,709) 175,341 (1,584,919)
Net Position – Beginning of year 384,948,058 379,170,054 202,958,160 211,036,931 587,906,218 590,206,985
Change in Accounting Principle (48,132,082) (567,786) - (148,062) (48,132,082) (715,848)
Net Position – beginning of year, as restated 336,815,976 378,602,268 202,958,160 210,888,869 539,774,136 589,491,137
Net Position – end of year $342,696,338 $384,948,058 $197,253,139 $ 202,958,160 $539,949,477 $587,906,218
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MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2015
The County’s total net position increased by $175,341 during fiscal year 2015; total net position as of June 30, 2015 was $539.9 million representing a 8.1% decrease due to a change in accounting principal for pension accounting.
Governmental Activities (government-wide) – Change in Net Position:
Net position in governmental activities increase by $5.8 million. Key factors in this increase are as follows:
Property tax revenue came within $.5 million or .5% of 2015 projections. Personal property tax reflected
an increase over projections by $.6 million or 5.3% due to increased inventory and new business.
Income Tax revenue exceeded budget by $1.4 million or 1.9% as a result of continued decreases in the unemployment rate of 10.7% and a 10.2% increase over prior year actual. The average unemployment
rate was 9.76% in 2010; 9.28% in 2011; 8.53% in 2012; 7.77% in 2013; and 5.68% in 2014. The current unemployment rate as of August 2014 is 7.7%.
Recordation Tax revenue exceeded budget by $.6 million or 10.5%. The County’s housing inventory has
decreased since 2011; average home prices are up from 2011; large transaction activity was up. Fiscal year 2015 large commercial recordings accounted for approximately 24% of the tax collected as
compared to 15% in 2014.
Other revenues such as permits, licenses, non-use of fund balance fell short of budget by $1.7 million.
An additional transfer of $3.0 million was made to the Capital Projects, Golf Course, and Highway funds to offset operating shortfalls, negative fund balance and for future project costs. General fund operating
subsidies were increased in FY 2016 to the golf course.
Overall public safety expenditures reflect savings of $1.7 million resulting mainly from personnel cost savings, lower market prices in fuel products than anticipated, and favorable insurance awards during the
County’s bid process.
Unallocated cost exceeded projections by $.7 million related to prior year pension contribution; workers comp and health insurance net savings; and retirement incentives.
Remaining cost centers accounted for $1.3 million in savings, mainly a result of personnel cost savings
due to retirement incentives, lower market prices in fuel products than anticipated, and debt service
savings.
Various government-wide entries including 1) capital outlay purchases exceeded depreciation expense
by $.8 million; 2) recording of debt proceeds greater than debt principal payments decreasing net assets by $1.9 million; 3) compensated absences and post-retirement benefits exceeded the amount earned by $1.8 million; and 4) difference in revenues and expenditures recognized between governmental funds and the statement of activities increasing net assets by $14.2 million. These activities are reported
differently on the government-wide statements vs. the fund statements.
Capital Improvement Projects decreased by $8.6 million. Capital Improvement transactions are
earmarked for specific capital related projects and its cash flow will vary depending on the construction schedule and grant reimbursements. Other governmental funds accounted for $.4 decrease in fund balance activity.
Business-type Activities (government-wide) – Change in Net Position:
Business-type activities decreased the County’s net position by $5.7 million. Key elements of this decrease are as
follows:
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MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2015
Financial Analysis on Government Fund Financial Statements
Water Quality’s net position decreased by $.1 million, for a total of $119 million in net assets. The $.1 million
net loss includes $2.9 million in depreciation expense and anticipated the use of dedicated reserves in the WaterQuality’s long range financial plan for self-sufficiency.
Solid Waste’s total net position decreased by $2.0 million for a total of $6.5 million, mainly related to
depreciation expense of $3.2 million. The 40 West landfill site was re-designed which changed the total lifefrom 62 years to 120 years generating an additional 4 million cubic yards of available air space. This change in
accounting estimate had no effect on the total estimated closure and post closure cost which are in compliancewith State financial assurance requirements as of June 30, 2014. In addition the County is involved in a
public/private partnership to convert landfill operations to a Waste-to-Energy facility. Permitting has alreadybegun for this new process which is expected to convert at least 95% of the waste to energy sources.
Airport’s total net position is $65.5 million, representing a $4.4 million decrease. The net decrease is mainly the
result of increased depreciation related to the runway acquisition of which a majority was funded with federaland state grants of $6.5 million.
The County uses fund accounting to ensure and demonstrate compliance with finance related legal requirements
and restrictions, and fiscal accountability.
Governmental Funds:
The focus of the County’s governmental funds is to provide information on near term inflows, outflow, and balances
of spendable resources. Such information is useful in assessing the County’s financing requirements. In particular, fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the
fiscal year.
As of the end of the current fiscal year, the County’s governmental funds reported combined fund balances of $101.4 million, a decrease of $8.9 million. Approximately $37.5 million of this amount is designated for the general
fund cash reserve and $64.0 million is restricted or committed for construction projects and designated programs. In the combined governmental activities the County maintains eleven separate funds. Shown below are fund balances
and net changes in fund balance for each.
Governmental Activities Fund Balance Net Change in Fund Balance
2015 2014 % Change 2015 2014 % Change
General Fund $ 38,327,353 $ 38,190,469 .4% $ 136,884 $ (649,751) -121.1%
Capital Improvement Fund 62,522,002 71,142,687 -12.1% (8,620,685) (3,930,911) 119.3%
Community Grants Mgt 17,825 (1,992) -994.8% 19,817 (3,418) -679.8%
Inmate Welfare Fund 97,863 92,322 6.0% 5,541 7,536 -26.5%
Contraband Fund 57,710 59,776 -3.5% (2,066) (12,630) -83.6%
Agricultural Education Fund 41,019 11,832 246.7% 29,187 5,637 417.8%
Hotel Rental Tax Fund 323,605 658,118 -50.8% (334,513) (391,079) -14.5%
Gaming Fund 32,193 26,239 22.7% 5,954 18,870 -68.4%
Land Preservation Fund (29,955) 126,432 -123.7% (156,387) 30,814 -607.5%
HEPMPO (31,774) (44,464) -28.5% 12,690 (17,027) -174.5%
Total $ 101,357,841 $ 110,261,419 -8.1% $ (8,903,578) $ (4,941,959) 80.2%
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MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2015
Washington County, Maryland Fund Balance and Net Changes in Fund Balance – Fund Basis The following reflects all inflows and outflows of the governmental funds in total for the fiscal year ending June 30,
2015.
The General Fund is the chief operating fund of the County. At the end of the current fiscal year total fund balance reached $38.3 million. As a measure of the General Fund’s liquidity, it may be useful to compare both
committed fund balance and total fund balance to total fund expenditures. Committed fund balance represents $37.5 million that is for cash reserve while $.8 million is reserved for specific program funds.
The General Fund, fund balance increased by approximately $.1 million during the current fiscal year. Key
factors related to this change are:
Major Revenue Factors:
Property tax revenue came within $.5 million or .5% of 2015 projections. Personal property tax reflected an increase over projections by $.6 million or 5.3% due to increased inventory and new business.
Income Tax revenue exceeded budget by $1.4 million or 1.9% as a result of continued decreases in the
unemployment rate of 10.7% and a 10.2% increase over prior year actual. The average unemployment rate was 9.76% in 2010; 9.28% in 2011; 8.53% in 2012; 7.77% in 2013; and 5.68% in 2014. The current
unemployment rate as of August 2014 is 7.7%.
Recordation Tax revenue exceeded budget by $.6 million or 10.5%. The County’s housing inventory has decreased since 2011; average home prices are up from 2011; large transaction activity was up. Fiscal
year 2015 large commercial recordings accounted for approximately 24% of the tax collected as compared to 15% in 2014.
Other revenues such as permits, licenses, non-use of fund balance fell short of budget by $1.7 million.
Major Expenditure Factors:
An additional transfer of $3.0 million was made to the Capital Projects, Golf Course, and Highway funds
to offset operating shortfalls, negative fund balance and for future project costs. General fund operating subsidies were increased in FY 2016 to the golf course.
Overall public safety expenditures reflect savings of $1.7 million resulting mainly from personnel cost
savings, lower market prices in fuel products than anticipated, and favorable insurance awards during the County’s bid process.
Unallocated cost exceeded projections by $.7 million related to prior year pension contribution; workers
comp and health insurance net savings; and retirement incentives.
Taxes 91%
Charge for Services 2%
Other Revenues 2%
Shared Taxes and Grants 5%
Summary of Inflows All Governmental Funds
General 10%
Public Safety 17%
Education 42%
Debt Service 6%
Capital Costs 13%
Programs & Services 12%
Summary of Outflows All Governmental Funds
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MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2015
Remaining cost centers accounted for $1.3 million in savings, mainly a result of personnel cost savings
due to retirement incentives, lower market prices in fuel products than anticipated, and debt servicesavings.
The Capital Projects Fund is used to account for major capital acquisition and construction of County
operations. At the end of the current fiscal year the Capital Project Fund has a total fund balance of $62.5million all of which is designated for capital related projects. Major funding sources for projects are pay-go-
funding, debt proceeds, fees and taxes, and grants. Fund balance decreased by $8.6 million for the current fiscalyear. The change in fund balance is the result of timing differences in projects with funding proceeds and
project expenditures and use of prior project savings.
The County’s Community Grant Management, Inmate Welfare, Contraband, Agricultural Education,Foreign Trade Zone, Hotel Rental Tax, Gaming, HEPMPO, and Land Preservation Funds combined have a
fund balance of $.5 million. The net decrease in fund balance during the current year was $.4 million. Thesefunds represent monies designated for specific programs and services.
Proprietary Funds:
The County’s proprietary funds provide the same type of information found in the government-wide financial
statements, but in more detail. Net position and net income (loss) were as follows:
Washington County, Maryland
Net Position and Net Income (Loss) (Fund Basis)
Business-type Activities Total Net Position Change in Net Position
2015 2014 % Change 2015 2014 %Change
Water Quality $ 118,932,196 $ 119,067,040 -.1% $ (134,844) $ (1,117,503) -87.9% Solid Waste 6,471,820 8,471,982 -23.6% (2,000,162) (2,545,019) -21.4%
Airport 65,479,865 69,926,649 -6.4% (4,446,784) (3,843,202) 15.7% Public Transit 4,056,389 4,244,939 -4.4% (188,550) (458,708) -58.9% Black Rock 2,312,869 1,247,550 85.4% 1,065,319 (114,339) -1031.7%
Total $ 197,253,139 $ 202,958,160 -2.8% $ (5,705,021) $ (8,078,771) -29.38%
The following reflects the inflows and outflows of the business-type activity funds for the fiscal year ending June 30, 2015.
Other factors concerning the finances of these funds have been addressed in the discussion of the County’s business-
type activities under “Financial Analysis on Government-Wide Financial Statements”.
Charge for Services 71%
Operating Grants 14%
Capital Grants 12%
Other 3%
Sources of Inflows Business Type Activities
Depreciation 41%
Personnel 33%
Operating 21%
Debt Costs 5%
Sources of Outflows Business Type Activities
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MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2015
General Fund Budgetary Analysis – Government Fund Financial Statement Basis
Washington County, Maryland General Fund Budgetary Analysis As of June 30, 2015
(Government Fund Basis)
Category
Budgetary Amounts
Actual
Difference
Original Final Org. Budget vs. Final Budget Final Budget vs. Actual
Revenues: Property Tax $ 117,918,200 $ 117,918,200 $ 118,513,533 $ - $ 595,333 Local Tax 78,510,000 78,510,000 80,477,072 - 1,967,072 Other Revenue 9,635,970 11,324,519 9,637,646 1,688,549 (1,686,873)
Total Revenues 206,064,170 207,752,719 208,628,251 1,688,549 875,532
Expenses: General Government 24,553,260 24,795,673 23,779,920 242,413 1,015,753
Public Safety 39,718,390 40,818,148 39,155,311 1,099,758 1,662,837 Health and Social Services 2,671,260 2,909,848 2,910,787 238,588 (939) Education 103,810,560 103,810,560 103,810,462 - 98
Parks, Recreation, Natural Resources 6,277,010 6,284,050 6,218,278 7,040 65,772 Highways and Streets 9,313,250 9,370,860 10,103,368 57,610 (732,508) General Operations 510,010 510,010 558,112 - (48,102)
Unallocated Costs 694,270 694,270 1,445,214 - (750,944) Intergovernmental 3,605,880 3,649,020 5,862,623 43,140 (2,213,603) Debt Service 14,910,280 14,910,280 14,652,478 - 257,802
Total Expenses 206,064,170 207,752,719 208,496,553 1,688,549 (743,834)
Other Financing Sources (Uses) - - 5,186 - 5,186
Net Increase in Assets - 06/30/15 $ - $ - $ 136,884 $ - $ 136,884
Original Budget vs. Final Budget:
The net budgetary change of $1.7 million resulted mainly from grant transactions. Increases in grants reflected as
revenue were received or expended during the fiscal year from additional state or federal grants of $1.7 million.
Final Budget vs. Actual Results:
Revenue was over by $.8 million and expenditures were over budget by $.7 million yielding a $.1 million net increase. Property Tax experienced an increase of $.6 million over budget or .5%. Income Tax revenue exceeded
budget by 1.9% or $1.4 million. Recordation Tax exceeded final budget by $.6 million or 10.5%. Other revenues fell short by $1.8 million, including the non-use of $.4 in an excess fund balance budget. Offsetting the revenue
change were net savings of $2.3 million from retirement incentives and fuel price variances and additional transfers to the Golf Course, Highway, and Capital Improvement funds of $3.0 million were made to cover overruns due to
snow storms, additional operating subsidy and for future project funding.
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MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2015
The County’s investment in capital assets for its governmental and business-type activities as of June 30, 2015, amounts to $645 million (net of depreciation). This investment in capital assets includes land, buildings, bridges,
roads, equipment, and operational facilities.
Washington County, Maryland Net Capital Assets (Government Fund Basis)
Description Governmental Activities Business-type Activities Total
2015 2014 2015 2014 2015 2014 % Change
Land and Land Improvement $90,761,013 $86,407,735 $70,823,766 $77,942,901 $161,584,779 $164,350,636 -2%
Building and Improvements 61,595,344 62,409,852 45,815,344 47,357,918 107,410,688 109,767,770 -2%
Facilities, Lines, and Mains - - 86,042,590 84,559,965 86,042,590 84,559,965 -2% Vehicles 3,186,856 3,311,597 2,110,825 2,165,288 5,297,681 5,476,885 -3%
Infrastructure 232,846,628 236,566,488 - - 232,846,628 236,566,488 -2%
Machinery and Equipment 2,848,053 2,564,018 3,137,909 3,604,560 5,985,962 6,168,578 -3%
Office/Computer Equipment 13,166,918 14,974,838 393,266 661,880 13,560,184 15,636,718 -13%
Treatment Plant - - 32,139,702 29,901,781 32,139,702 29,901,781 7%
Total $404,404,812 $406,234,528 $240,463,402 $246,194,293 $644,868,214 $652,428,821 -1%
Major capital asset events, excluding education, during the current fiscal year included the following:
Additional information on the County’s capital assets can be found in note 5 on pages 46-49 of this report.
At the end of the current fiscal year, the County had total outstanding debt, excluding capital leases, of $189 million.
This amount was comprised of debt backed by the full faith and credit of the County and user fees. The debt decreased by approximately $11 million from net principal payments and increased by $16 million in new
borrowings. Funds borrowed were used for infrastructure projects of $10 million and educational projects of $6 million.
Capital Asset Administration – Government Wide Statements
Debt Administration
Infrastructure, $19,535,346 , 80%
Vehicles & Equipment, $4,206,539 , 17%
Other, $750,195 , 3%
Capital Asset Acquistions
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MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2015
Economic Factors and Fiscal Year 2015
Requests for Information
Washington County, Maryland Outstanding Debt
(Government – Wide)
Instrument Type Governmental Activity Business-type Activity Total Outstanding Debt % Change
2015 2014 2015 2014 2015 2014
General Obligation Bonds $139,136,640 $134,884,153 $32,786,306 $31,408,121 $171,922,946 $166,292,274 3%
Maryland Water Quality Bonds 4,888,398 5,176,743 12,241,277 12,802,416 17,129,675 17,979,159 2%
Total $144,025,038 $140,060,896 $45,027,583 $44,210,537 $189,052,621 $184,271,433 3%
The County’s credit ratings for fiscal year 2015 are as follows: 1) Standard and Poor’s rated AA+ with stable
outlook, 2) Fitch rated AA+ with a stable outlook, and 3) Moody’s Investors Service rated Aa1 with a stable outlook.
Under the Code of Public Local Law, the amount of general obligation debt the County may issue associated with
water quality debt is limited to 10 percent of its total assessed valuation of all real estate in the County that is subject to taxation. The current estimated debt limitation for water quality is $1.2 billion, which is significantly in excess of
the County’s current water quality general obligation debt.
Additional Information on the County’s long-term debt can be found in note 8 on pages 53-57 of this report.
Washington County’s unemployment rate for June 2015 was 6.1% compared to 6.7% in June of 2014.
Unemployment trends are showing a slow steady improvement. It is anticipated that the unemployment rate willtake several years to recover due to permanent loss of certain industry jobs, re-entry/retraining of the current
workforce, and new workforce entry.
Water and sewer rates were increased for the 2016 budget year. The water and sewer revenue requirementswere increased 3.0% and 3.5%, respectively. This revenue increase is based on financial information formulated
annually from the County’s cost of service model.
With the decreasing trend in the Solid Waste stream, Washington County has entered into a public/privatepartnership that will promote the use and development of domestic energy. Phase I will include a refuse-derivedfacility while Phase II is to generate low-cost clean-burning diesel, gasoline, jet fuel, home heating fuel andnitrogen fertilizers. This innovative approach to municipal solid waste will allow Washington County to be
ahead of the curve to comply with upcoming federal and state regulations and serve as an internationalbenchmark in environmentally responsible waste management.
This financial report is designed to provide a general overview of the County’s finances for all those with an interest
in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Office of Budget and Finance, 100 West Washington Street, Room 304, Hagerstown, Maryland 21740. Questions concerning the Washington County Board of Education should be directed to their offices at 10435 Downsville Pike Hagerstown, Maryland 21740.
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COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Statement of Net Position
As of June 30, 2015
The accompanying notes are an integral part of this financial statement. 16
Component Unit
Governmental
activities
Business-type
activities Total
Board of
Education Total
ASSETS
Cash and short-term investments 2,712,805$ 29,132,974$ 31,845,779$ 26,087,356$ 57,933,135$
Investments 110,770,494 - 110,770,494 21,928,360 132,698,854
Property taxes receivable, net of allowance 535,177 - 535,177 - 535,177
Accounts receivable, net of allowance 1,329,433 1,430,769 2,760,202 342,112 3,102,314
Interest receivable 195,991 - 195,991 - 195,991
Unbilled receivables 169,759 1,723,413 1,893,172 - 1,893,172
Due from other governmental agencies 19,564,314 1,952,341 21,516,655 7,259,099 28,775,754
Due from primary government - - - 651 651
Internal balances (11,930,985) 11,930,985 - - -
Inventories 763,940 264,047 1,027,987 477,566 1,505,553
Other assets 431,291 - 431,291 974,411 1,405,702
Net other post employment benefits assets 1,767,775 - 1,767,775 411,890 2,179,665
Recoverable disbursements 251,866 - 251,866 - 251,866
Notes receivable 350,000 - 350,000 - 350,000
Projects under construction 26,649,023 7,996,470 34,645,493 8,277,129 42,922,622
Property, plant, and equipment, net 404,404,812 240,463,402 644,868,214 224,353,641 869,221,855
TOTAL ASSETS 557,965,695 294,894,401 852,860,096 290,112,215 1,142,972,311
DEFERRED OUTFLOWS OF RESOURCES
Loss on refunding 3,653,107 738,144 4,391,251 - 4,391,251
Net pension activity 1,943,602 - 1,943,602 2,073,037 4,016,639
TOTAL DEFERRED OUTFLOWS OF RESOURCES 5,596,709 738,144 6,334,853 2,073,037 8,407,890
Current Liabilities:
Current maturities of long-term obligations 9,721,410 3,527,519 13,248,929 - 13,248,929
Current maturities of capital lease obligations 167,077 11,738 178,815 557,057 735,872
Current maturities of installment purchase contracts 351,794 - 351,794 - 351,794
Accounts payable 9,871,971 1,435,657 11,307,628 5,628,796 16,936,424
Accrued expenses 1,099,867 472,838 1,572,705 19,721,016 21,293,721
Accrued interest 1,864,356 7,013,740 8,878,096 - 8,878,096
Unearned revenue 621,710 1,450,060 2,071,770 1,325,448 3,397,218
Compensated absences 1,986,029 395,333 2,381,362 445,525 2,826,887
Landfill closure and post-closure costs - 235,200 235,200 - 235,200
Other liabilities 2,178,861 75,296 2,254,157 - 2,254,157
Liabilities for unpaid claims 1,833,471 - 1,833,471 - 1,833,471
Total current liabilities 29,696,546 14,617,381 44,313,927 27,677,842 71,991,769
Non Current Liabilities:
Unearned revenue - 639,857 639,857 - 639,857
Compensated absences 1,483,903 169,663 1,653,566 6,935,904 8,589,470
Long-term obligations 134,303,628 41,500,064 175,803,692 - 175,803,692
Capital lease obligations 32,463 38,830 71,293 6,446,458 6,517,751
Installment purchase contracts 146,006 - 146,006 - 146,006
Landfill closure and post-closure costs - 15,166,731 15,166,731 - 15,166,731
Net pension liability 55,203,520 - 55,203,520 14,395,785 69,599,305
Total noncurrent liabilities 191,169,520 57,515,145 248,684,665 27,778,147 276,462,812
TOTAL LIABILITIES 220,866,066 72,132,526 292,998,592 55,455,989 348,454,581
Service concession arrangements - 26,246,880 26,246,880 - 26,246,880
Net pension activity - - - 1,575,713 1,575,713
TOTAL DEFERRED I-NFLOWS OF RESOURCES - 26,246,880 26,246,880 1,575,713 27,822,593
NET POSITION
Net investment in capital assets 372,167,279 211,859,499 584,026,778 225,627,255 809,654,033
Restricted for:
John Howard Trust 240,755 - 240,755 - 240,755
Capital projects 16,965,589 8,477,778 25,443,367 - 25,443,367
Unrestricted (46,677,285) (23,084,138) (69,761,423) 9,526,295 (60,235,128)
TOTAL NET POSITION 342,696,338$ 197,253,139$ 539,949,477$ 235,153,550$ 775,103,027$
Primary Government
LIABILITIES
DEFERRED INFLOWS OF RESOURCES
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Statement of Activities
For the Year Ended June 30, 2015
The accompanying notes are an integral part of this financial statement. 17
Functions/Programs Expenses
Charges for
Services
Operating
Grants and
Contributions
Capital Grants and
Contributions
Primary Government:Governmental activities:
General government 32,163,683$ 4,305,737$ 418,550$ 250,770$
Public safety 46,584,797 1,432,386 1,933,494 246,180
Health 2,339,270 - - -
Social services 571,517 - - -
Education 113,491,068 - - 97,620
Parks, recreation and culture 6,791,711 116,746 18,853 318,134
Natural resources 1,690,246 - 371,363 -
Community promotion 5,959,702 - 2,941,905 -
Highways and streets 16,037,762 - 859,055 13,141,564
Interest on long-term debt 4,167,500 - - -
Total governmental activities 229,797,256 5,854,869 6,543,220 14,054,268
Business-type activities
Water quality 12,707,818 10,386,767 - 1,574,287
Solid waste 7,720,049 5,104,343 - -
Airport 7,993,635 2,398,450 44,994 576,562
Public transit 3,010,778 445,378 1,337,954 580,300
Black rock golf course 1,239,140 831,113 - 15,000
Total business-type activities 32,671,420 19,166,051 1,382,948 2,746,149
TOTAL PRIMARY GOVERNMENT 262,468,676$ 25,020,920$ 7,926,168$ 16,800,417$
Component unit:
Board of Education 329,638,213$ 13,091,617$ 59,830,922$ 41,700$
Property taxes
Local taxes
Income on investments
Reimbursed expenses
Miscellaneous
Unrestricted grants and contributions
Gain (loss) on disposal of capital assets
Transfers
TOTAL GENERAL REVENUE
CHANGE IN NET POSITION
NET POSITION - BEGINNING OF YEAR
PRIOR PERIOD ADJUSTMENT FOR CHANGE IN
ACCOUNTING PRINCIPLE
NET POSITION - END OF YEAR
Program Revenue
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Statement of Activities
For the Year Ended June 30, 2015
The accompanying notes are an integral part of this financial statement. 18
Component Unit
Governmental
Activities
Business-Type
Activities Total
Board of
Education Total
(27,188,626)$ -$ (27,188,626)$ -$ (27,188,626)$
(42,972,737) - (42,972,737) - (42,972,737)
(2,339,270) - (2,339,270) - (2,339,270)
(571,517) - (571,517) - (571,517)
(113,393,448) - (113,393,448) - (113,393,448)
(6,337,978) - (6,337,978) - (6,337,978)
(1,318,883) - (1,318,883) - (1,318,883)
(3,017,797) - (3,017,797) - (3,017,797)
(2,037,143) - (2,037,143) - (2,037,143)
(4,167,500) - (4,167,500) - (4,167,500)
(203,344,899) - (203,344,899) - (203,344,899)
- (746,764) (746,764) - (746,764)
- (2,615,706) (2,615,706) - (2,615,706)
- (4,973,629) (4,973,629) - (4,973,629)
- (647,146) (647,146) - (647,146)
- (393,027) (393,027) - (393,027)
- (9,376,272) (9,376,272) - (9,376,272)
(203,344,899) (9,376,272) (212,721,171) - (212,721,171)
- - - (256,673,974) (256,673,974)
118,534,624 - 118,534,624 - 118,534,624
90,220,815 - 90,220,815 - 90,220,815
919,984 173,572 1,093,556 181,211 1,274,767
1,776,895 - 1,776,895 258,098,966 259,875,861
653,741 537,313 1,191,054 455,441 1,646,495
- - - - -
65,410 14,158 79,568 - 79,568
(2,946,208) 2,946,208 - - -
209,225,261 3,671,251 212,896,512 258,735,618 471,632,130
5,880,362 (5,705,021) 175,341 2,061,644 2,236,985
384,948,058 202,958,160 587,906,218 247,072,987 834,979,205
(48,132,082) - (48,132,082) (13,981,081) (62,113,163)
342,696,338$ 197,253,139$ 539,949,477$ 235,153,550$ 775,103,027$
Primary Government
Net (Expense) Revenue and Changes in Net Position
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Balance Sheet – Governmental Funds
As of June 30, 2015
The accompanying notes are an integral part of this financial statement. 19
Capital Total
General Projects Non-major Governmental
Fund Fund Funds Funds
ASSETS
Cash 32,999$ -$ 2,679,806$ 2,712,805$
Investments 110,533,955 236,539 - 110,770,494
Property taxes receivable, net of allowance 535,177 - - 535,177
Accounts receivable, net of allowance 416,161 597,153 316,119 1,329,433
Interest receivable 195,742 249 - 195,991
Unbilled receivables 169,759 - - 169,759
Due from other funds - 65,312,740 - 65,312,740
Due from other governmental agencies 16,373,944 2,625,323 565,047 19,564,314
Recoverable disbursements 251,862 - - 251,862
Notes receivable 431,291 - - 431,291
Other assets 350,000 - - 350,000
Inventories 763,940 - - 763,940
TOTAL ASSETS 130,054,830$ 68,772,004$ 3,560,972$ 202,387,806$
LIABILITIES, DEFERRED INFLOWS
OF RESOURCES, AND FUND BALANCES
LIABILITIES:
Accounts payable 1,413,769$ 6,249,990$ 2,208,212$ 9,871,971$
Due to other funds 77,037,235 - 206,490 77,243,725
Accrued expenses 1,086,819 12 13,036 1,099,867
Other liabilities 1,868,922 - 309,939 2,178,861
Liabilities for unpaid claims 1,833,471 - - 1,833,471
Unearned revenue 306,901 - 314,809 621,710
TOTAL LIABILITIES 83,547,117 6,250,002 3,052,486 92,849,605
DEFERRED INFLOWS OF RESOURCES:
Unavailable revenues 8,180,360 - - 8,180,360
FUND BALANCES:
Nonspendable 1,063,939 - - 1,063,939
Restricted 418,968 17,206,344 619,912 18,245,224
Committed 37,462,860 45,315,658 - 82,778,518
Assigned 13,811 - 73,212 87,023
Unassigned (632,225) - (184,638) (816,863)
TOTAL FUND BALANCES 38,327,353 62,522,002 508,486 101,357,841
TOTAL LIABILITIES, DEFERRED INFLOWS
OF RESOURCES, AND FUND BALANCES 130,054,830$ 68,772,004$ 3,560,972$ 202,387,806$
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Reconciliation of Balance Sheet of Governmental Funds to Statement of Net Position
As of June 30, 2015
The accompanying notes are an integral part of this financial statement. 20
Fund balance of governmental funds 101,357,841$
Capital assets, net 404,404,812
Projects under construction 26,649,023
Net other post employment benefits 1,767,775
Unavailable revenue 8,180,360
5,596,709
Long-term obligations (144,025,038)
Installment purchase obligations (497,800)
Capital lease obligations (199,540)
Accrued interest payable-net of IRS subsidy (1,864,352)
Compensated absences and net pension liability (58,673,452)
Net position of governmental activities 342,696,338$
Long-term liabilities are not due and payable in the current period and therefore
are not reported in the funds:
Other long-term assets that are not available to pay for current-period
expenditures and, therefore, are deferred in the funds:
Capital assets used in governmental activities are not financial resources and,
therefore, are not reported in the funds:
Amounts reported for governmental activities in the statement of net position are
different because:
Revenues in the statement of activities that do not provide current financial
resources are not reported as revenue in the funds
Deferred outflow of resources, including loss on refunding and net deferred
pension activity are not financial resources and therefore are not reported in the
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Statement of Revenue, Expenditures, and Changes in Fund Balances - Governmental Funds
For the Year Ended June 30, 2015
The accompanying notes are an integral part of this financial statement. 21
REVENUE General property taxes 118,513,533$ -$ -$ 118,513,533$
Other local taxes 80,477,072 3,360,783 2,090,790 85,928,645
Licenses and permits 1,362,651 - 2,129,873 3,492,524
Court costs and fines 383,897 - - 383,897
Charges for services 434,237 - 314,874 749,111
Revenue from uses of property 881,502 - 38,482 919,984
Reimbursed expenses 1,212,768 - 3,010 1,215,778
Miscellaneous revenues 452,632 671,461 201,109 1,325,202
Shared taxes and grants 3,355,253 4,007,447 3,494,147 10,856,847 Highway 1,554,706 - - 1,554,706
Total Revenue 208,628,251 8,039,691 8,272,285 224,940,227
EXPENDITURES
Current:
General government 23,779,920 - - 23,779,920
Public safety 39,155,311 - 1,396,074 40,551,385
Health 2,339,270 - - 2,339,270
Social services 571,517 - - 571,517 Education 103,810,462 - - 103,810,462
Parks, recreation and culture 5,622,928 - 201,435 5,824,363
Natural resources 595,350 - 1,094,340 1,689,690
Intergovernmental 38,543 - - 38,543
General operations 2,003,326 - 680,682 2,684,008
Community promotion - - 5,958,403 5,958,403
Highways and streets 9,953,368 - - 9,953,368
Debt service 14,652,478 - - 14,652,478
Capital outlay: General government - 5,424,885 - 5,424,885
Public safety - 1,740,699 - 1,740,699
Highways and streets - 14,644,376 - 14,644,376
Education - 9,680,606 - 9,680,606
Parks and recreation - 322,718 - 322,718
Total Expenditures 202,522,473 31,813,284 9,330,934 243,666,691
Excess (Deficiency) Of Revenue
Over Expenditures 6,105,778 (23,773,593) (1,058,649) (18,726,464)
OTHER FINANCING SOURCES (USES)
Transfers in - 3,044,000 1,025,872 4,069,872
Transfers out (5,974,080) (655,000) (387,000) (7,016,080)
Principal amount of new debt for advance refunding 26,026,715 - - 26,026,715
Deposit to escrow fund for advance refunding and
and repayment of loans (26,021,529) - - (26,021,529)
Proceeds of bond sale - 12,763,908 - 12,763,908
TOTAL OTHER FINANCING SOURCES (USES)(5,968,894) 15,152,908 638,872 9,822,886
NET CHANGES IN FUND BALANCE 136,884 (8,620,685) (419,777) (8,903,578)
FUND BALANCES - BEGINNING OF YEAR 38,190,469 71,142,687 928,263 110,261,419
FUND BALANCES - END OF YEAR 38,327,353$ 62,522,002$ 508,486$ 101,357,841$
General Fund
Total
Governmental
Funds
Non-major
Funds
Capital
Projects Fund
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Reconciliation of Statement of Revenue, Expenditures, and Changes in Fund Balances of
Governmental Funds to the Statement of Activities For the Year Ended June 30, 2015
The accompanying notes are an integral part of this financial statement. 22
Net changes in fund balances in governmental funds (8,903,578)$
Amounts reported for governmental activities in the statement of activities
are different because:
Governmental funds report capital outlay as expenditures. However, in the
statement of activities, the cost of those assets is allocated over their
estimated useful lives as depreciation expense. This is the amount by which
capital outlay exceeded depreciation in the current period.
Capital outlay capitalized 19,385,743$
Depreciation (18,575,567) 810,176
In the statement of activities, only the gain or loss on the sale of assets is
reported, whereas in the governmental funds, the proceeds from the sale
increase financial resources. Thus, the change in net position differs from the
change in fund balance by the cost of the assets sold.(5,022)
Bond and capital lease proceeds provide current financial resources to
governmental funds, but issuing debt increases long-term liabilities in the
statement of net position. Repayment of bond, capital lease and installment
purchase principal is an expenditure in the governmental funds, but the
repayments reduce long-term liabilities in the statement of net position. This
is the amount by which proceeds exceeded repayments.
Debt and lease proceeds (12,769,094)$
Payments of installment purchase principal 517,737
Payments of lease principal 160,781
Payments of debt principal 10,147,504 (1,943,072)
In the statement of activities, compensated absences and post-retirement
benefits are measured by the amounts earned during the year. In the
governmental funds, however, expenditures are measured by the amount of
financial resources used. This year, compensated absences and post-
retirement benefits exceeded the amount earned.1,755,861
Revenue and expenditures are reported in the statement of activities on the
accrual basis and in the governmental funds when they provide or use
current financial resources. This is the net difference of revenues and
expenditures recognized between the governmental funds and statement of
activities.14,165,997
Change in net position of governmental activities 5,880,362$
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Statement of Net Position - Proprietary Funds
For the Year Ended June 30, 2015
The accompanying notes are an integral part of this financial statement. 23
Business Type Activities - Enterprise Funds
Water Solid
Quality Waste Airport Non-major
Fund Fund Fund Funds Total
ASSETS
15,784,465$ 11,993,197$ 690,731$ 664,581$ 29,132,974$
1,155,577 239,902 20,260 15,030 1,430,769
1,394,899 296,444 31,509 561 1,723,413
6,800,662 5,130,323 - - 11,930,985
1,160,204 - 456,178 335,959 1,952,341
96,498 13,851 32,247 121,451 264,047
Total current assets 26,392,305 17,673,717 1,230,925 1,137,582 46,434,529
4,593,658 2,836,580 536,893 29,339 7,996,470
182,029,292 63,830,752 150,095,840 12,113,288 408,069,172
(61,149,910) (41,939,930) (57,917,227) (6,598,703) (167,605,770)
Total noncurrent assets 125,473,040 24,727,402 92,715,506 5,543,924 248,459,872
TOTAL ASSETS 151,865,345 42,401,119 93,946,431 6,681,506 294,894,401
DEFERRED OUTFLOWS OF RESOURCES
358,125 350,209 29,810 - 738,144
LIABILITIES
1,892,775 1,383,414 251,330 - 3,527,519
11,738 - - - 11,738
684,493 424,041 247,318 79,805 1,435,657
354,376 37,392 16,832 64,238 472,838
6,743,184 252,331 18,225 - 7,013,740
86,613 532,895 800,002 30,550 1,450,060
225,956 65,348 27,442 76,587 395,333
- 235,200 - - 235,200
7,300 - 43,760 24,236 75,296
Total current liabilities 10,006,435 2,930,621 1,404,909 275,416 14,617,381
639,857 - - - 639,857
89,604 31,432 11,795 36,832 169,663
22,516,548 18,150,724 832,792 - 41,500,064
Capital lease obligations 38,830 - - - 38,830
- 15,166,731 - - 15,166,731
Total noncurrent liabilities 23,284,839 33,348,887 844,587 36,832 57,515,145
TOTAL LIABILITIES 33,291,274 36,279,508 2,249,496 312,248 72,132,526
DEFERRED INFLOWS OF RESOURCES
Service concession arrangements - - 26,246,880 - 26,246,880
Net Position
109,490,927 5,193,264 91,631,384 5,543,924 211,859,499
8,477,778 - - - 8,477,778
963,491 1,278,556 (26,151,519) 825,334 (23,084,138)
TOTAL NET POSITION 118,932,196$ 6,471,820$ 65,479,865$ 6,369,258$ 197,253,139$
Restricted - capital projects
Net investment in capital assets
Unrestricted
Non Current Liabilities:
Unearned revenue
Compensated absences
Bonds and long-term debt
Landfill closure and post-closure costs
Compensated absences
Landfill closure and post-closure costs
Other liabilities
Current Liabilities:
Current maturities of long-term obligations
Accounts payable
Accrued expenses
Accrued interest
Unearned revenue
Current maturities of capital lease obligations
Loss on refundings
Current Assets:
Cash and short-term investments
Accounts receivable, net
Unbilled receivables
Due from other governmental agencies
Due from other funds
Inventories
Noncurrent Assets:
Projects under construction
Property, plant and equipment
Accumulated depreciation
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Statement of Revenue, Expenses and Changes in Net Position - Proprietary Funds
For the Year Ended June 30, 2015
The accompanying notes are an integral part of this financial statement. 24
Water Solid
Quality Waste Airport Non-major
Fund Fund Fund Funds Totals
OPERATING REVENUE
Charges for services 10,386,767$ 5,104,343$ 2,398,450$ 1,276,491$ 19,166,051$
Miscellaneous 366,824 122,107 25,269 23,113 537,313
TOTAL OPERATING REVENUE 10,753,591 5,226,450 2,423,719 1,299,604 19,703,364
OPERATING EXPENSES
Salaries and wages 3,609,595 1,177,368 528,282 1,656,982 6,972,227
Fringe benefits 2,223,796 565,072 273,395 750,802 3,813,065
Utilities 815,355 50,764 161,302 81,703 1,109,124
Insurance 117,026 26,350 34,490 40,648 218,514
Repairs and maintenance 268,740 - 109,378 170,816 548,934
Supplies 256,705 91,011 8,833 51,314 407,863
Cost of goods sold - - - 97,322 97,322
Contracted services 269,426 1,715,030 61,557 232,646 2,278,659
Rentals and leases 23,742 1,974 6,389 106,870 138,975
Other operating 1,188,730 367,615 202,623 359,296 2,118,264
Uncollectible accounts (1,142) 1,776 4,638 60 5,332
Controllable assets 8,100 - 27,291 5,135 40,526
Depreciation 2,933,386 3,209,108 6,550,828 696,324 13,389,646
TOTAL OPERATING EXPENSES 11,713,459 7,206,068 7,969,006 4,249,918 31,138,451
OPERATING LOSS (959,868) (1,979,618) (5,545,287) (2,950,314) (11,435,087)
OTHER INCOME (EXPENSE)
Interest expense (994,359) (513,981) (24,629) - (1,532,969)
Interest income 163,288 2,077 8,177 30 173,572
Gain (loss) on disposal of assets - - 29,899 (15,741) 14,158
TOTAL OTHER INCOME (EXPENSE)(831,071) (511,904) 13,447 (15,711) (1,345,239)
LOSS BEFORE OPERATING TRANSFERS AND
GRANTS (1,790,939) (2,491,522) (5,531,840) (2,966,025) (12,780,326)
OPERATING TRANSFERS 81,808 491,360 64,500 1,810,540 2,448,208
GRANTS FOR OPERATING - - 44,994 1,337,954 1,382,948
NET LOSS BEFORE CAPITAL TRANSFERS AND
GRANTS (1,709,131) (2,000,162) (5,422,346) 182,469 (8,949,170)
CAPITAL TRANSFERS - - 399,000 99,000 498,000
CAPITAL GRANTS AND CONTRIBUTIONS 1,574,287 - 576,562 595,300 2,746,149
NET CHANGES IN NET POSITION (134,844) (2,000,162) (4,446,784) 876,769 (5,705,021)
NET POSITION - BEGINNING OF YEAR 119,067,040 8,471,982 69,926,649 5,492,489 202,958,160
NET POSITION - END OF YEAR 118,932,196$ 6,471,820$ 65,479,865$ 6,369,258$ 197,253,139$
Enterprise Funds
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Statement of Cash Flows – Proprietary Funds
For Year Ended June 30, 2015
The accompanying notes are an integral part of this financial statement. 25
Water Solid
Quality Waste Airport Non-major
Fund Fund Fund Funds Total
Cash Flows from Operating Activities
Receipts from customers $10,582,321 $ 5,438,431 $ 1,914,194 $ 1,985,792 $ 19,920,738
Payments to suppliers (3,164,942) (2,482,460) (1,028,476) (1,123,386) (7,799,264)
Payments to employees (5,798,342) (1,733,433) (799,821) (2,405,781) (10,737,377)
Net Cash from Operating Activities 1,619,037 1,222,538 85,897 (1,543,375) 1,384,097
Cash Flows from Noncapital Financing Activities
Operating contributions 81,808 491,360 109,494 3,148,494 3,831,156
Increase (decrease) in due to/from other funds (1,132,571) - - (1,059,386) (2,191,957)
Net Cash from Noncapital Financing Activities (1,050,763) 491,360 109,494 2,089,108 1,639,199
Cash Flows from Capital and Related Financing Activities
Interest paid on notes and bond payable (1,397,751) (567,193) (27,002) 30 (1,991,916)
Acquisition and construction of capital assets (5,518,002) (2,983,575) (727,601) (560,741) (9,789,919)
Gain (loss) on the sale of assets - - 29,899 (15,741) 14,158
Contribution for capital acquisitions 1,574,287 - 975,562 694,300 3,244,149
Principal payments on notes and bonds payable 2,375,970 (1,406,291) (254,193) - 715,486
Net Cash from Capital and Related Financing Activities (2,965,496) (4,957,059) (3,335) 117,848 (7,808,042)
Cash Flows from Investing Activities
Interest on investments 163,288 2,077 8,177 - 173,542
Net change in cash (2,233,934) (3,241,084) 200,233 663,581 (4,611,204)
Cash, Beginning of Year 18,018,399 15,234,281 490,498 1,000 33,744,178
Cash, End of Year $15,784,465 $11,993,197 $ 690,731 $ 664,581 $ 29,132,974
Non-Cash Operating Activities
Loss on refunding $ 358,125 $ 350,209 $ 29,810 $ - $ 738,144
Non-Cash Capital and Related Financing Activities
Capital lease $ (11,182) $ - $ - $ - $ (11,182)
from Operating Activities
Operating loss $ (959,868) $(1,979,618) $ (5,545,287) $(2,950,314) $(11,435,087)
Adjustments to reconcile operating income to net cash
from operating activities:
Depreciation 2,933,386 3,209,108 6,550,828 696,324 13,389,646
Changes in assets and liabilities:
Accounts receivable 100,192 (32,628) 126,872 (4,049) 190,387
Unbilled receivables 9,504 (24,707) (25,782) (9) (40,994)
Due to/from other government entities (270,627) 212,432 313,671 659,946 915,422
Inventories 4,189 1,413 13,259 (3,748) 15,113
Accounts payable and other liabilities (222,449) (39,050) (425,234) 21,675 (665,058)
Accrued expenses 21,094 4,521 2,700 14,892 43,207
Landfill closure - (190,303) - - (190,303)
Unearned revenue (10,339) 56,884 (924,286) 30,300 (847,441)
Compensated absences 13,955 4,486 (844) (8,392) 9,205
Net Cash from Operating Activities $ 1,619,037 $ 1,222,538 $ 85,897 $(1,543,375) $ 1,384,097
Enterprise Funds
Reconciliation of Operating Loss to Net Cash
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Statement of Net Position – Fiduciary Funds
As of June 30, 2015
The accompanying notes are an integral part of this financial statement. 26
ASSETS
Cash and short-term investments 5,456,898$ 288,576$ 850,744$ 65,524$ 3,299,586$
Investments, at fair value:
US Government obligations 11,391,323 1,136,045 1,989,936 - -
Municipal bonds 2,286,614 - - - -
Corporate bonds and obligations 4,908,084 555,174 1,013,306 - -
Fixed income securities 5,834,715 586,605 1,454,813 - -
Corporate stock 26,530,254 2,139,627 4,080,034 - -
Equity funds 35,576,442 3,245,954 6,555,180 61,848 -
Accounts receivable 127,157 11,304 20,531 - -
Due from other funds - - - - -
TOTAL ASSETS 92,111,487 7,963,285 15,964,544 127,372 3,299,586
LIABILITIES
Accounts payable - - - - 134,069
Due to other funds - - - 651 -
Due to student groups - - - - 3,165,517
TOTAL LIABILITIES - - - 651 3,299,586
NET POSITION
Held in trust for pension and OPEB 92,111,487 7,963,285 15,964,544 - -
Held in trust for scholarships - - - 126,721 -
NET POSITION 92,111,487$ 7,963,285$ 15,964,544$ 126,721$ -$
Pension Trust Agency
Private Purpose
TrustOPEB Trus tLOSAP Trust
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Statement of Changes in Net Position - Fiduciary Funds
For Year Ended June 30, 2015
The accompanying notes are an integral part of this financial statement. 27
ADDITIONS
Contributions:
Employer 6,786,549$ 600,000$ 1,006,600$ -$
Plan members 1,871,200 - - -
Gifts and contributions - - - 35,200
Receipts of In-kind 220,613 - 59,148 -
Total Contributions 8,878,362 600,000 1,065,748 35,200
Investment Income:
Realized and unrealized gains 2,424,151 202,417 (1,245,081) -
Interest and dividends 1,141,352 98,909 104,375 1,281
Other income 1,181,690 80,185 1,864,280 -
Total Investment Income 4,747,193 381,511 723,574 1,281
TOTAL ADDITIONS 13,625,555 981,511 1,789,322 36,481
DEDUCTIONS
Benefits 6,880,887 461,316 - -
Scholarship expenses - - - 37,856
Administrative expenses 604,197 23,215 110,551 -
TOTAL DEDUCTIONS 7,485,084 484,531 110,551 37,856
CHANGES IN NET POSITION 6,140,471 496,980 1,678,771 (1,375)
NET POSITION - BEGINNING OF YEAR 85,971,016 7,466,305 14,285,773 128,096
NET POSITION - END OF YEAR 92,111,487$ 7,963,285$ 15,964,544$ 126,721$
Pension Trust LOSAP Trust OPEB Trus t
Private Purpose
Trust
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
28
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Financial Reporting Entity
The primary government is the County Commissioners of Washington County, referred to
herein as the County or the County Commissioners. The County is governed by an elected
five-member board.
The accompanying financial statements are presented as of June 30, 2015 and for the year then ended and have been prepared in conformity with accounting principles generally
accepted in the United States of America applicable to local governments. The
Governmental Accounting Standards Board (GASB) is the standard setting body for
establishing governmental accounting and financial reporting principles, which are
primarily set forth in the GASB’s Codification of Governmental Accounting and Financial Reporting Standards (GASB Codification).
Reporting Entity
The accompanying financial statements comply with the provisions of the GASB Standards in that the financial statements include all organizations, activities, functions and
component units for which the County (the primary government) is financially accountable.
Financial accountability is defined as the appointment of a voting majority of a legally
separate organization’s governing body and either (1) the County’s ability to impose its
will over the organization, or (2) the potential that the organization will provide a financial benefit to or impose a financial burden on the County.
Based on the foregoing, the County’s financial reporting entity includes all funds, agencies,
boards and commissions that are part of the primary government, and the component units
discussed below.
Blended Component Units - The Washington County Public Golf Corporation (Black Rock
Golf Course) is governed by a five-member board appointed by the County
Commissioners. Although it is legally separate from the County, the Washington County
Public Golf Corporation is reported as if it were part of the primary government because its sole purpose is to operate the golf course which is owned by the County. Black Rock Golf
Course is reported as an enterprise fund.
Discretely Presented Component Unit - The component unit column in the government-
wide financial statements include the financial data of the County’s other component unit, the Board of Education of Washington County (the Board, Board of Education or School
System.) The Board of Education is elected by the voters of Washington County. The
Board of Education operates the public schools in the County. The Board may not issue
debt or levy taxes. The County issues debt and levies taxes to provide capital and operating
funds to the Board. The State of Maryland also provides significant capital and operating funds to the Board.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
29
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Reporting Entity (continued)
Complete financial statements of the discretely presented individual component unit can be
obtained from its administrative office:
Washington County Board of Education
10435 Downsville Pike Hagerstown, Maryland 21740
Related Organizations - The County Commissioners are also responsible for appointing the
members of the boards of various other organizations, but the County’s accountability for
these organizations do not extend beyond making the appointments. Several of these other organizations are funded by Federal or state governments.
Government-Wide and Fund Financial Statements
The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the non-fiduciary activities of the
primary government and its component units. For the most part, the effect of interfund
activity has been removed from these statements. Governmental activities, which normally
are supported by taxes and intergovernmental revenue, are reported separately from
business-type activities, which rely to a significant extent on fees and charges for support. Likewise, the primary government is reported separately from certain legally separate
component units for which the primary government is financially accountable.
The statement of activities demonstrates the degree to which the direct expenses of a given
function or segment are offset by program revenue. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenue includes: 1)
charges to customers or applicants who purchase, use, or directly benefit from goods,
services, or privileges provided by a given function or segment, and 2) grants and
contributions that are restricted to meeting the operational or capital requirements of a
particular function or segment. Taxes and other items not properly included among program revenue are reported as general revenue.
Separate financial statements are provided for governmental funds, proprietary funds, and
fiduciary funds, even though the latter is excluded from the government-wide financial
statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
30
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Measurement Focus, Basis of Accounting, and Financial Statement Presentation
The government-wide financial statements are reported using the economic resources
measurement focus and the accrual basis of accounting, as are the proprietary fund and
fiduciary fund financial statements. Revenue is recorded when earned and expenses are
recorded when a liability is incurred, regardless of the timing of related cash flows.
Property taxes are recognized as revenue in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by
the provider have been met.
Governmental fund financial statements are reported using the current financial resources
measurement focus and the modified accrual basis of accounting. Revenue is recognized as soon as they are both measurable and available. Revenue is considered to be available
when they are collectible within the current period or soon enough thereafter to pay
liabilities of the current period. For this purpose, the government considers revenue to be
available if they are collected within 60 days of the end of the current fiscal period.
Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to
compensated absences and claims and judgments, are recorded only when payment is due.
Property taxes, income taxes, other local taxes, licenses, and interest associated with the
current fiscal period are all recognized as revenue of the current fiscal period.
The County’s pension plan’s financial statements are prepared using the accrual basis of
accounting. Plan member contributions are recognized in the period in which the
contributions are due. Employer contributions to each plan are recognized when due and
the employer has made a formal commitment to provide the contributions. Benefits and refunds are recognized when due and payable in accordance with the terms of each plan.
The government reports the following major governmental funds:
The General Fund is the general operating fund of the County. It is used to account for all financial resources except those required to be accounted for in another fund.
The Capital Projects Fund is used to account for financial resources to be used for the
acquisition or construction of major capital facilities in the governmental funds. The
Capital Projects Fund accounts for all capital improvements, which are financed by bond issues, government grants, and transfers from the General and Special Revenue Funds.
Closed projects are transferred to the appropriate fund.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
31
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Measurement Focus, Basis of Accounting, and Financial Statement Presentation (continued)
The government reports the following major proprietary funds:
The Water Quality Fund accounts for activities of the County’s sewage treatment
plants, sewage pumping stations and collection systems, and the water treatment plants and distribution systems.
The Solid Waste Fund is used to account for activities related to the safe disposal of
solid waste, to meet all state, Federal, and county regulations and to provide for
recycling.
The Airport Fund is used to account for activities at the Hagerstown Regional Airport
that serves the air transportation and ancillary needs of the four state region.
Additionally, the government reports the following fiduciary funds:
The County’s Pension Trust Fund is used to account for activities related to the
Employees’ Retirement Plan of Washington County.
The County’s Volunteer Length of Service Award Program Trust Fund (LOSAP) is used to account for activities related to the eligible volunteers’ retirement, disability,
and death benefits.
The Private-Purpose Trust Fund is used to account for the assets donated to the Board
of Education to finance memorial scholarships, which are limited to revenue earned.
The Other Postemployment Benefits Trust Fund (OPEB) is used to account for
activities related to the other postemployment benefit plan of Washington County.
As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are payments-in-lieu of taxes and
other charges between the government’s water and sewer function and various other
functions of the government. Elimination of these charges would distort the direct costs and
program revenue reported for the various functions concerned.
Amounts reported as program revenue include: 1) charges to customers or applicants for
goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital
grants and contributions. Internally dedicated resources are reported as general revenue
rather than as program revenue. Likewise, general revenue includes all taxes.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
32
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Measurement Focus, Basis of Accounting, and Financial Statement Presentation (continued)
Proprietary funds distinguish operating revenue and expenses from non-operating items.
Operating revenue and expenses generally result from producing and delivering goods and
providing services and use of properties in connection with a proprietary fund’s principal
ongoing operations. The principal operating revenue of the enterprise funds are charges to customers for sales and services. The Water Quality Fund also recognizes as operating
revenue the portion of connection fees intended to recover the cost of connecting new
customers to the system. Operating expenses for enterprise funds include the cost of sales
and services, administrative expenses, and depreciation of capital assets. All revenue and
expenses not meeting this definition are reported as non-operating revenue and expenses.
When both restricted and unrestricted resources are available for use, it is the government’s
policy to use restricted resources first, and then unrestricted resources as they are needed.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires the County to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses/expenditures during the reporting period. Actual results
could differ from those estimates.
Capital Assets
Capital assets, which include property, plant, equipment, and infrastructure assets (e.g.,
roads, bridges, and similar items), are reported in the applicable governmental or business-
type activities columns in the government-wide financial statements. Capital assets are
defined by the County as assets with an initial, individual cost of $10,000 or greater for all
funds except for the Black Rock Golf Course and Public Transit Funds, which are $5,000. All assets are recorded at historical cost or estimated historical cost, except for donated
capital assets which are recorded at estimated fair market value at the date of donation.
The costs of normal maintenance and repairs that do not add to the value of the asset or do
not materially extend the life of the asset are not capitalized.
Major outlays for capital assets and improvements are capitalized as projects are
constructed. Interest incurred during the construction phase of capital assets of business-
type activities is included as part of the capitalized value of the assets constructed.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
33
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Capital Assets (continued)
Property, plant, equipment and infrastructure assets of the primary government, as well as
the component units, are depreciated using the straight line method over the following
estimated useful lives:
Land Improvements 15-50 years Buildings and Improvements 10-40 years
Facilities 20-100 years
Vehicles 5-10 years
Infrastructure 10-100 years
Machinery and Equipment 5-20 years Office Furniture and Equipment 5-10 years
Treatment Plants 25-100 years
Computer Equipment 5-10 years
Long-Term Obligations
In the government-wide financial statements and proprietary funds financial statements, long-
term debt and other long-term obligations are reported as liabilities in the applicable
governmental activities, business-type activities, and proprietary fund statements of Net
Position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond
premium or discount.
In the fund financial statements, governmental funds recognize bond premiums and discounts,
as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums and discounts on debt issuances are reported as
other financing sources (uses). Issuance costs, whether or not withheld from the actual debt
proceeds received, are reported as capital outlay expenditures in the Capital Projects Fund.
Investments
Investments are stated at fair value based on quoted market values. Under the terms of
repurchase agreements the excess cash from checking accounts is invested in short-term
investments. All deposits are insured by FDIC or a surety bond. Short-term investments in U.S.
Treasury and agency obligations that have remaining maturities of 90 days or less, provided that the fair value of those investments is not significantly affected by impairment, are reported
at amortized cost, which approximates market value. Securities traded on a national or
international exchange are valued at the last reported sales price at current exchange rates.
Investments that do not have an established market are reported at estimated fair value.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
34
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Investments (continued)
Retirement plan investments are reported at fair value. Short-term investments are reported
at cost, which approximates fair value. Securities traded on a national or international
exchange are valued at the last reported sales price at current exchange rates. Investments
that do not have an established market are reported at estimated fair value.
Inventories
Inventories of the General Fund, Special Revenue Funds and Enterprise Funds consist of
expendable supplies held for consumption and items held for sale. These items are priced at
cost using the first-in, first-out method, or average costing.
Employee Benefit Programs
The County’s benefit program provides substantially all employees with group
hospitalization, life insurance, disability income protection and retirement plans. The cost of the retirement plans is accounted for in the General and Special Revenue Funds and in
the Enterprise Funds of the County.
There are two employee retirement plans for County employees. The County plans cover
all full-time employees other than those employed prior to July 1, 1972, who elected to retain membership in the Maryland State Retirement System. The Board of Education
Retirement Plan is the Maryland State Retirement System. The assets of the County plans
are held by a trustee.
Retirement plan costs for members of the County Retirement Plan are determined annually on an actuarial basis. Pension costs charged to expense equal the annual required
contributions, calculated in accordance with GASB Statement No. 27. The County follows
the practice of funding pension costs accrued.
Taxes and County Services
The County and its separate funds do not pay Federal, state or local taxes except social
security taxes. Except for certain limited reimbursements of administrative expenses and
employee benefits, the General Fund is not reimbursed by the other funds for general staff
services.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
35
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Real Estate and Personal Property Taxes
The County’s property tax is levied each July 1st, at rates enacted by the Board of County
Commissioners based on the total assessed value as determined by the Maryland State
Department of Assessments and Taxation. The rates of levy cannot exceed the constant yield
tax rate furnished by the Maryland State Department of Assessments and Taxation without
public notice and only after public hearings. A reassessment of all property is required to be completed every three years.
Property taxes are levied as of July 1st, and a discount of one-half percent is granted for
property taxes paid by July 31st. Taxpayers also have the options of paying in full without
interest by September 30th, or paying their tax bills semi-annually. Taxpayers electing the semi-annual method can pay the first installment without interest by September 30th. Beginning
October 1st, interest is charged. The second semi-annual payment, including a service charge, is
due by December 31st. Interest accrues at one percent monthly for delinquent property taxes.
Maryland law provides that unpaid real estate property taxes shall be a lien on the real property from the date the taxes become payable. If real estate property taxes remain unpaid, the collector shall sell the real properties at tax sale no later than two years from the date taxes are
in arrears. The County estate tax sale is held annually on the first Tuesday in the month of June.
Rate of County Taxes:
Income tax 2.8% of Maryland taxable income (2014 and 2015 calendar years)
Recordation tax $3.80 per $500
Trailer park 15% of gross rentals Property taxes $0.948 per $100 of assessable base
Cash Flows
For the purposes of the Statement of Cash Flows, the proprietary funds have defined cash
equivalents as all highly liquid deposits and other investment instruments that have a maturity
of three months or less.
Concentrations of Credit Risk
The County’s receivables consist of amounts due from County residents for property and other
taxes, utilities and miscellaneous services fees and amounts due from the Federal and state
governments for grants and shared taxes. The Water Quality department provides sewage and
water services for residential, commercial and other entities in the Washington County, Maryland region. The department extends credit to its customers for sewer and water service
charges.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
36
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Net Position and Fund Equity
The difference between fund assets and liabilities is “Net Position” on the government-
wide and fiduciary fund statements and “Fund Balance” on governmental fund statements.
Net Position are classified as “Net Investment in Capital Assets,” legally “Restricted” for a
specific purpose or “Unrestricted” and available for appropriation for general purposes.
In the governmental fund financial statements, non-spendable and restricted fund balances
represent amounts that are legally restricted by outside parties for use for a specific purpose
or are otherwise not available for appropriation. Committed fund balance represents
amounts that are reserved for a particular purpose by the County Commissioners of
Washington County and would require action by the Board to release the fund balance from its commitment. Assigned fund balance represents tentative management plans that
are subject to change.
Implementation of New Accounting Principles
The County has adopted the provision of Governmental Accounting Standard Board
(GASB) Statement No. 68, entitled Accounting and Financial Reporting for Pensions, an
amendment of GASB Statement No. 27 and Statement No. 71, Pension Transition for
Contributions Made Subsequent to the Measurement Date. As part of GASB 68 the County
is required to record its net funded pension liability.
GASB also issued Statement No. 69, entitled Government Combinations and Disposals of
Government Operation, and GASB Statement No. 70, entitled Accounting and Financial
Reporting for Nonexchange Financial Guarantees. Both statements were adopted this
fiscal year but had no effect on these accompanying financial statements.
The, GASB has issued Statement No. 72, entitled Fair Value Measurement and
Application; Statement No. 73, entitled, Accounting and Financial Reporting for Pensions
and Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to certain Provisions of GASB Statements 67 and 68; GASB Statement No. 74 entitled, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans; GASB
Statement No. 75, entitled, Accounting and Financial Reporting for Postemployment
Benefits Other Than Pensions; GASB Statement No. 76; entitled, The Hierarchy of
Generally Accepted Accounting Principles for State and Local Government; and GASB
Statement No. 77; entitled, Tax Abatement Disclosures, which will require adoption in the future, if applicable. These statements may or will have a material effect on the County’s
financial statements once implemented.
The County will be analyzing the effects of these pronouncements and plans to adopt them
as applicable by their effective date.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
37
2. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY
Budgetary Information
The County’s budget process is key to its long-range strategic plan. With the adoption
phase ending in May, the entire budget process encompasses nine months in preparation
time. Financial forecasts, economic trends, policy reviews, and citizen input are all part of
this process and result in the development of the operating and capital budgets for the year.
The following describes the budget process and procedures established by the County. Budgets are adopted using the same basis of accounting as that used for reporting purposes.
Financial Capacity and Analysis Phase
The County develops statistical analysis of major revenue sources through various resources available. The County prepares and annually updates a long-range (10 years)
financial forecasting system which includes projections of revenue, expenditures, future
costs, financing of capital improvements that are included in the Capital Improvement
Budgets, Cost of Service Plans and the Operating Budget.
Revenue estimates are monitored to identify any potential trends, which would
significantly impact the various revenue sources. The County reviews current construction
trends, the number of building permits, mortgages rates, and other economic data that can
impact revenue collections.
The County uses other financial modeling techniques that impact the long-term operations
and rates for the Water Quality and Solid Waste Funds.
The County annually updates its financial ratio trends. Most of the financial trends include
peer group median and historical data. Trend indicators are tracked for specific elements of the County’s fiscal policies for evaluation.
Debt capacity is evaluated on an annual basis prior to the adoption of the Capital
Improvement Budget. The County examines statistical measures and compares them to
other counties, rating agency standards, and Washington County’s historical measures to determine debt affordability.
The economic and financial trend analysis is an integral part of the County’s decision-
making process that includes short and long-term forecasts. The County’s current financial
condition as well as future financial capacity, long-range plans, and future goals and visions are evaluated. During this phase forecasting assumptions, policy and reserve
reviews, compensation adjustments, and inflation assumptions are made.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
38
2. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY (continued)
Budgetary Information (continued)
Budget Development Start
The development of the budget starts with the on-line release of operational Budgets and
ten year capital improvement budget. The information distributed includes instructions on
completing the budgets, due dates, and updated information on budgetary numbers, personnel positions, goals, and other pertinent information.
Budget Development Phase
Capital Improvement budget development begins in the winter after the development of the debt capacity and financial trend and economic trend analysis. The Capital Improvement
Program (CIP) provides a comprehensive approach to planning and impacts all facets of
County operations. The County Administrator, the Chief Financial Officer, the Planning
Director, and the Director of Public Works comprise the Capital Improvements Program
Committee (CIP Committee). From the time the CIP’s initial annual review begins in October through its adoption in May of each fiscal year, there is constant interaction
between departments, the CIP Committee, and the elected officials. This effort is
characterized by cooperation and reflects a common goal of ensuring that the CIP meets the
objectives of the County and remains affordable and achievable.
The CIP is reviewed in conjunction with the annual debt affordability analysis with revenue
projections inclusive of rate analysis, in order to determine funding availability. A financial
analysis of funding sources and project costs is conducted for all proposed capital
improvement projects.
It is the CIP Committee’s responsibility to review all requests that County departments and
agencies submit. All projects are ranked based on established criteria for priority ranking.
Considering current and future needs as developed in the ten-year capital plan, and
available funding sources and the results of the priority ranking process, the CIP
Committee determines which capital projects best meet established criteria for the current fiscal year Capital Improvement budget and the nine-year forecast. Operating impacts of
current and proposed capital projects are also taken into consideration by staff when
developing their Capital Improvement budget.
Operating budgets represent existing service levels and two years of prior historical information. Departments and agencies request funding for the upcoming fiscal year. Any
increases in program and services require justification, as do, all capital outlay requests.
These requests are summarized with projected funding shortfalls or overruns calculated.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
39
2. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY (continued)
Budgetary Information (continued)
Review and Modification Phase
The County Administrator presents the Operating and Capital Improvement budgets to the
County Commissioners. Preliminary recommendations are reviewed to ensure that preliminary Budgets address the County’s goals and fiscal management policies. The
County Administrator and the Chief Financial Officer work with the Commissioners on the
proposed budget documents for adoption.
Adoption Phase
Proposed budgets are voted on by the County Commissioners to take to a public hearing to
communicate to the general public for all operating and capital funds. The public hearing is advertised in the local newspaper and on the County web site. A presentation and handouts
are prepared for the public.
Public hearings are held on the proposed budgets and the current tax levy. Local law
requires a balanced budget to be adopted by July 1.
Start Up
Department Managers are responsible for their budgets throughout the fiscal year. Expenditure percentages are calculated and compared to budget. Corrective action, if
necessary, is taken if serious negative trends exist. Management and the County
Commissioners have real-time budgeting reports available on-line as well as updates on
major events and/or issues. Balanced Budget
Under County code, the County Commissioners annual budget shall have a figure for the total of all appropriations and a figure for the total of all revenue available to pay the
appropriations. The figure for total appropriations may not exceed the figure for total
estimated revenue.
Costing of Services
In addition to accrual basis budgeting, several enterprise funds utilize a cost of service
approach. Cost of service is a method of accounting, which identifies both the cost of the program and the portion of the cost that will be recovered through fees and charges. By using this financial technique, the County is able to assess the true cost of providing a
service. Currently, water, sewer, and solid waste services use this approach to determine
cost and rates.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
40
2.STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY (continued)
Budgetary Information (continued)
Amendment to the Budget
The County’s operating budgets are adopted at the program and service level and the
Capital Improvement budget is adopted at the project level. Transfers between programs or
projects in excess of $25,000 require County Commissioner’s approval.
The Chief Financial Officer reviews the project status and revenue before any issuance of
debt. Any modifications to a project and/or the total debt to be issued based upon this
review is required to be approved by the County Commissioners either for an increase or
decrease in total borrowing amount or for a change in the total borrowing source.
3.CASH AND SHORT-TERM INVESTMENTS
County
The County maintains a cash and investment pool that is available for use by all funds, and
is displayed on the Statement of Net Position as “cash and short-term investments.”
Statutes authorize the County to invest in United States government bonds, obligations of
the Federal government or agencies, savings accounts in Maryland banks, repurchaseagreements and the Maryland Local Government Investment Pool.
Deposits
As of June 30, 2015, the carrying amount of the County’s deposits was $31,826,979 andthe bank balances were $33,395,104. All deposits are carried at cost plus accrued interest.
There were no significant violations of the collateralization requirements during the year
ended June 30, 2015. The County’s deposit policy specifies that all deposits must be
entirely covered by Federal depository insurance, deposit surety bond, or by collateral in
the form of pledged securities, according to state statute. In order to anticipate marketchanges and provide a level of security for all funds, the collateralization level is required
to be at least 102% of market value of principal and accrued interest.
Custodial Credit Risk: Custodial credit risk is the risk that in the event of a bank failure,
the County’s deposits may not be returned. The County does not have a deposit policy forcustodial credit risk. As of June 30, 2015, the County’s bank balance of $33,395,104 was
exposed to custodial credit risk as $250,000 of interest bearing accounts and $250,000 of
noninterest bearing accounts are insured by FDIC, $15,000,000 is covered by a short term
line of credit, and the remainder is collateralized through the Bank of New York Mellon.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
41
3.CASH AND SHORT-TERM INVESTMENTS (continued)
County (continued)
Investments
As of June 30, 2015, the County had the following investments and maturities.
Investment Type Fair Value Less than 1 1-5 6-10 More than 10
Investments held in County’s name:
110,312,769$ 100,312,769$ 10,000,000$ -$ -$
Certificates of Deposit 457,725 - 457,725 - -
Total investments held in County’s name 110,770,494 100,312,769 10,457,725 - -
Investments held by trustee of
Pension plan:
18,586,021 3,996,843 3,000,720 3,931,407 7,657,051
Fixed income securities 5,834,715 5,834,715 - - -
Corporate stocks 26,530,254 26,530,254 - - -
Equity funds 35,576,442 35,576,442 - - -
Money market funds 5,456,898 5,456,898 - - -
Interest and dividends receivable 127,157 127,157 - - -
Investments held by trustee of
LOSAP plan:
1,691,219 415,790 275,365 329,264 670,800
Corporate stocks 2,139,627 2,139,627 - - -
Fixed income funds 586,605 586,605 - - -
Equity funds 3,245,954 3,245,954 - - -
Money market funds 288,576 288,576 - - -
Interest and dividends receivable 11,304 11,304 - - -
Investments held by trustee of
OPEB plan:
3,003,242 781,369 415,416 600,699 1,205,758
Corporate stocks 4,080,034 4,080,034 - - -
Fixed income funds 1,454,813 1,454,813 - - -
Equity funds 6,555,180 6,555,180 - - -
Money market funds 850,744 850,744 - - -
Interest and dividends receivable 20,531 20,531 - - -
Total investments 226,809,810$ 198,265,605$ 14,149,226$ 4,861,370$ 9,533,609$
U.S. government obligations, municipal
and corporate bonds
Total Investments held by trustee of
OPEB plan
Total Investments held by trustee of
LOSAP plan
Total Investments held by trustee of
pension plan
U.S. government obligations, municipal
and corporate bonds
U.S. government obligations and
corporate bonds
U.S. government obligations and
corporate bonds
Investment Maturities (in Years)
92,111,487 77,522,309 3,000,720 3,931,407 7,657,051
7,963,285 6,687,856 275,365 329,264 670,800
15,964,544 13,742,671 415,416 600,699 1,205,758
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
42
3. CASH AND SHORT-TERM INVESTMENTS (continued)
Investments (continued)
Interest Rate Risk: As a means of limiting its exposure to fair value losses arising from
interest rates, the County’s investment policy specifies that funds shall be invested at all times in keeping with the daily and seasonal pattern of the County’s cash balances, as well
as any other special factors or needs, in order to assure the availability of funds on a timely
and liquid basis. Cash flow projections will be monitored and updated on an ongoing basis
by the Budget and Finance Department and communicated regularly to the County
Administrator. On a periodic basis, the County will determine, based on cash flow projections, what the appropriate average weighted maturity of the portfolio should be.
Unless matched to a specific cash flow, the County will not invest in securities maturing
more than three years from the date of purchase. Reserve funds may be invested in
securities exceeding three years if the maturities of such instruments precede or coincide with the expected needs for funds and only with the prior approval of the Budget and
Finance Department.
The County’s Pension Plan Investment Policy states that the assets are to be managed for
total return, defined as dividend and interest income plus or minus capital gains and losses. Investments shall be diversified so as to minimize the risk of unacceptable losses. The
portfolio is looked at as a whole rather than as individual securities. Investing for long term
(preferably longer than 10 years) becomes critical to investment success because it allows
the long-term characteristics of the asset classes to surface.
The table below summarizes the target asset class weighting, along with the allowable
ranges for each class.
Investment Type Range Target
Equities:
Large-Cap U.S. Stocks 25-45% 35% Small-Cap U.S. Stocks 0-15% 10% International Stocks 5-20% 15%
REITS 0-10% 5%
Fixed Income:
High Yield Bonds 0-15% 10% Investment Grade Bonds 5-30% 23% Money Market 0-10% 2%
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
43
3. CASH AND SHORT-TERM INVESTMENTS (continued)
Investments (continued)
Credit Risk: It is the County’s investment policy to only invest in U.S. Government
Treasury obligations, agencies and sponsored instrumentalities. Also the County’s
investment policy allows for investments in banks located in the State of Maryland
(Certificates of Deposit) with the exception of Bankers Acceptances. Commercial banks
must have a short-term rating of at least investment grade from the appropriate bank rating agencies. Bankers’ Acceptances from domestic banks, which also include United States
affiliates of large international banks, must have a rating of Al from Standards and Poor’s
Corporation and P1 from Moody’s Investor Services. As of June 30, 2015, the County’s
investments were 100% in U.S. Treasury and Agency obligations and certificates of
deposit.
The County’s Pension Plan Investment Policy allows for investing in the following
investment types. Also, below is the benchmark used for rating each of the assets:
Investment Type Evaluation Benchmark
Equities: Large-Cap U.S. Stocks S&P 500 Small-Cap U.S. Stocks Russell 2000
International Stocks MSCI ACWI
REITS NAREIT Equity
Fixed Income: High Yield Bonds Barclays High Yield Credit Bond Index Investment Grade Bonds Barclays Aggregate Bond Index
Money Market Citigroup 90 Day T-Bill Index
Custodial Credit Risk: For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the County will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party.
As of June 30, 2015, none of the County’s investments are exposed to custodial credit
risk because they are held in the County’s name.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
44
3. CASH AND SHORT-TERM INVESTMENTS (continued)
Board of Education Cash:
Credit Risk: Maryland State Law prescribes that local government units, such as the
School System, must deposit its cash in banks transacting business in the State of
Maryland, and that such banks must secure any deposits in excess of Federal Deposit Insurance Corporation (FDIC) insurance levels with collateral whose market value is at least equal to the deposits. Any cash deposit exceeding the FDIC insurance level will
require collateralization. Beginning January 1, 2013, FDIC coverage limits are applied
to total noninterest-bearing accounts separately from interest-bearing accounts.
Additionally, a compensating balance agreement exists with the Board’s primary financial institution. This non-interest bearing deposit is maintained in lieu of cash payments for standard bank services. The required average balance totaled $250,000 at
June 30, 2015.
Compliance is summarized as follows:
June 30, 2015
Carrying amount of cash deposits 26,028,969$ 58,387$ 3,365,110$ 29,452,466$
Bank balance of cash deposits 27,885,813 57,417 3,538,835 31,482,065
Amount covered by FDIC 499,121 45,218 873,371 1,417,710
Amount collateralized with securities
27,386,692 12,199 2,665,464 30,064,355
Governmental
Activities
Business Type
Activities
Fiduciary
Responsibilities Total
held by an agent of the pledging
financial institution in the
School system’s name
Investments: Credit Risk: Maryland statutes authorize the School System to invest in obligations of the
United States government or agency obligations.
Interest Rate and Custodial Risk: Investments are made in Federal government securities primarily through repurchase agreements without risk of loss due to market conditions. The
Board’s investments, which include uninsured and unregistered investments, are held by a
bank’s trust department or agent in the School System’s name. The Board’s policy is
generally to require delivery of the underlying collateral to a third party custodian.
Foreign Currency Risk: Maryland law does not permit the School System to have or hold
any type of international investment vehicle.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
45
3. CASH AND SHORT-TERM INVESTMENTS (continued)
Board of Education (continued)
Market Risk: The School System’s investments are exposed to various risks, such as
interest rate, market, currency and credit risks. Due to the level of risk associated with
certain investments and the level of uncertainty related to changes in the value of
investments, it is at least reasonably possible that changes in risks in the near term would
materially affect investment assets reported in the financial statements.
As of June 30, 2015, the School System had the following investments and maturities:
June 30, 2015
Federal Home Loan Bank – 1.405%
matures December 26, 2019 988,150$ -$ -$ 988,150$
Federal Home Loan Mortgage Corp. - 1.125%
matures March 27, 2018 2,495,000 - - 2,495,000
Federal Home Loan Mortgage Corp. -
1.000% matures September 22, 2017 4,995,700 - - 4,995,700
Federal National Mortgage Association - 1.259%
matures January 30, 2019 3,997,280 - - 3,997,280
Federal National Loan Bank - Step Up/Variable
matures December 28, 2020 989,390 - - 989,390
Federal Home Loan Bank - 1.370%
matures on October 24, 2019 2,961,960 - - 2,961,960
Federal Home Loan Bank - 1.640%
matures December 10, 2018 5,500,880 - - 5,500,880
Income Fund of America - - 61,848 61,848
21,928,360$ -$ 61,848$ 21,990,208$
Governmental
Activities
Business-Type
Activities
Fiduciary
Responsibilitie Total
Fair Value
Investment Type June 30, 2015 Less than 1 1-5 6-10 More than 10
U.S. Agencies $ 21,928,360 $ - $ 20,938,970 $ 989,390 $ -
Income Fund 61,848 61,848 - - -
$ 21,990,208 $ 61,848 $ 20,938,970 $ 989,390 $ -
Investment Maturities (in Years)
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
46
4. RECEIVABLES
Receivables as of year-end for the government’s funds, including the applicable allowances
for uncollectible accounts are as follows:
Receivables:
Taxes receivable $ 676,704 $ - $ - $ 676,704
Accounts receivable 439,894 597,153 316,119 1,353,166
Gross receivables 1,116,598 597,153 316,119 2,029,870
Less: allowance for uncollectibles 165,260 - - 165,260
Net Total Receivables $ 951,338 $ 597,153 $ 316,119 $ 1,864,610
Accounts receivable $ 1,168,562 $ 307,303 $ 81,489 $ 15,530 $ 1,572,884
Less: allowance for uncollectibles 12,985 67,401 61,229 500 142,115
Net Total Receivables $ 1,155,577 $ 239,902 $ 20,260 $ 15,030 $ 1,430,769
Water
Quality Solid Waste Airport Non-major Total
Business-type Activities
Governmental Activities
General Non-Major
Capital
Projects Total
Governmental funds report unavailable revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Governmental funds also record unearned revenue in connection with resources that have
been received, but not yet earned. As of the end of the current fiscal year unearned revenue
for delinquent property taxes receivable reported in the General Fund was $166,936.
Receivables do not include various taxes collected by the State of Maryland on behalf of the County, including income taxes. These amounts are included in Due From Other Governmental Agencies.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
47
5. CAPITAL ASSETS
Capital asset activity for the year ended June 30, 2015, was as follows:
Primary Government
Balance Balance
June 30, 2014 Additions Retirements June 30, 2015
Governmental activities:
Capital assets, not being depreciated:
Land 79,559,181$ 3,521,165$ -$ 83,080,346$
Capital assets, being depreciated:
Land improvements 11,983,499 1,176,120 (14,604) 13,145,015
Building and improvements 89,295,047 1,560,145 - 90,855,192
vehicles 13,988,760 683,906 (545,593) 14,127,073
Infrastructure 1,136,310,588 8,112,427 - 1,144,423,015
Machinery and equipment 9,210,063 691,782 (536,344) 9,365,501
Office furniture and equipment 5,496,308 139,232 (29,340) 5,606,200
Computer equipment 31,679,442 907,456 (13,517) 32,573,381
Total capital assets, being depreciated 1,297,963,707 13,271,068 (1,139,398) 1,310,095,377
Total capital assets 1,377,522,888 16,792,233 (1,139,398) 1,393,175,723
Accumulated depreciation for:
Land improvements (5,134,945) (344,007) 14,604 (5,464,348)
Building and improvements (26,885,195) (2,374,653) - (29,259,848)
Vehicles (10,677,163) (803,625) 540,571 (10,940,217)
Infrastructure (899,744,100) (11,832,287) - (911,576,387)
Machinery and equipment (6,646,045) (407,746) 536,343 (6,517,448)
Office furniture and equipment (5,356,977) (110,351) 29,340 (5,437,988)
Computer equipment (16,843,935) (2,744,256) 13,516 (19,574,675)
Total Accumulated Depreciation (971,288,360) (18,616,925) 1,134,374 (988,770,911)
Governmental activities capital assets, net 406,234,528$ (1,824,692)$ (5,024)$ 404,404,812$
Projects Under Construction 14,638,793$ 22,132,678$ (10,122,448)$ 26,649,023$
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
48
5.CAPITAL ASSETS (continued)
Business-type Activities
Balance Balance
June 30, 2014 Additions Retirements June 30, 2015
Capital assets, not being depreciated:
Land 12,052,287$ -$ -$ 12,052,287$
Capital assets, being depreciated:
Land improvements 136,684,203 769,767 (54,444) 137,399,526
Building and improvements 63,235,558 25,550 - 63,261,108
Facilities 114,347,347 2,963,310 - 117,310,657
Vehicles 7,972,600 637,925 (353,429) 8,257,096
Machinery and equipment 12,410,242 132,495 (279,752) 12,262,985
Office furniture and equipment 323,205 - - 323,205
Computer equipment 2,580,117 - (50,930) 2,529,187
Treatment plants 51,502,321 3,170,800 - 54,673,121
Total capital assets, being depreciated 389,055,593 7,699,847 (738,555) 396,016,885
Total capital assets 401,107,880 7,699,847 (738,555) 408,069,172
Accumulated depreciation for:
Land improvements (70,793,589) (7,882,612) 48,154 (78,628,047)
Building and improvements (15,877,640) (1,568,124) - (17,445,764)
Facilities (29,787,382) (1,480,685) - (31,268,067)
Vehicles (5,807,312) (692,388) 353,429 (6,146,271)
Machinery and equipment (8,805,682) (582,255) 262,861 (9,125,076)
Office furniture and equipment (322,916) (290) - (323,206)
Computer equipment (1,918,526) (268,324) 50,930 (2,135,920)
Treatment plants (21,600,540) (932,879) - (22,533,419)
Total Accumulated Depreciation (154,913,587) (13,407,557) 715,374 (167,605,770)
Business-type activities capital assets, net 246,194,293$ (5,707,710)$ (23,181)$ 240,463,402$
Projects Under Construction 5,876,488$ 9,857,252$ (7,737,270)$ 7,996,470$
Business-type activities:
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
49
5. CAPITAL ASSETS (continued)
Depreciation expense was charged to functions/programs of the primary government as
follows:
Governmental Activities:
General Government 13,824,532$
Public Safety 3,978,145
Recreation 297,294
Conservation of Natural Resources 944
Highway 474,652
Total Depreciation Expense - Governmental Activities 18,575,567$
Business-Type Activities:
Transit Fund 612,692$
Airport Fund 6,550,828
Golf Course Fund 83,632
Water Quality Fund 2,933,386
Solid Waste Fund 3,209,108
Total Depreciation Expense – Business-Type Activities 13,389,646$ Board of Education (Discretely presented component unit)
Balance Balance
June 30, 2014 Additions Deletions June 30, 2015
Government activities
Capital assets, not being depreciated:
Land 8,692,987$ -$ $ - 8,692,987$
Facilities under construction 20,978,265 6,875,002 (19,576,138)8,277,129
29,671,252 6,875,002 (19,576,138)16,970,116
Capital assets, being depreciated:
Building and improvements 297,412,132 22,323,098 (247,394)319,487,836
Furniture and equipment 43,570,496 3,624,841 (1,415,014)45,780,323
Equipment under capital leases 9,743,869 1,002,859 (1,319,876)9,426,852
350,726,497 26,950,798 (2,982,284) 374,695,011
Accumulated depreciation:
Building and improvements (123,096,635) (7,333,880) 246,253 (130,184,262)
Furniture and equipment (26,970,401) (3,321,156) 1,288,763 (29,002,794)
Buildings and equipment under capital lease (2,108,556) (517,140) 1,319,876 (1,305,820)
(152,175,592) (11,172,176) 2,854,892 (160,492,876)
Governmental activities capital assets, net 228,222,157$ 22,653,624$ (19,703,530)$ 231,172,251$
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
50
5. CAPITAL ASSETS (continued)
Board of Education (continued)
Balance Balance
June 30, 2014 Additions Retirements June 30, 2015
Business-type activities
Capital assets, being depreciated:
Furniture and equipment 4,599,791$ 276,250$ (78,745)$ 4,797,296$
Accumulated depreciation
Furniture and equipment (3,198,298) (206,043) 65,564 (3,338,777)
Business-type activities capital assets, net 1,401,493$ 70,207$ (13,181)$ 1,458,519$
Depreciation expense was charged to the functions/programs of the Board as follows:
Governmental activities:
Other instructional costs 2,055,299$
Student transportation services 1,235,876
Operation of plant 175,845
Depreciation - unallocated 7,705,156
11,172,176$
Business-type activities:
Food services 206,043$
Total governmental activities depreciation expense
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
51
6. INTERFUND RECEIVABLES AND PAYABLES
Outstanding balances between funds are reported as “due to/from other funds” and are the
result of the County’s central cash management and disbursement system. Other activity between funds that are representative of lending/borrowing arrangements outstanding at the
end of the fiscal year are also referred to in the fund statements as “due to/from other
funds.”
Receivable Fund Payable Fund Amount
Water Quality General Fund 6,682,962$
HEPMPO 117,700
Solid Waste General Fund 5,041,533
HEPMPO 88,790
Capital Projects General Fund 65,312,740
Total 77,243,725$
Due to/from primary government and component unit:
Receivable Entity Payable Entity Amount
Component unit - Board of Education Primary government - capital projects $ 1,904,013 All interfund payables are without interest.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
52
7. INTERFUND TRANSACTIONS During the course of normal operations, the County has numerous transactions between
funds. Usually these transfers are undertaken to enable the receiving funds to provide
services that the government has determined to be in the best interest of the County.
Interfund transactions are generally classified as follows:
Transfers are reported as “Other Financing Sources (Uses)” in the governmental funds and
as “Operating Transfers” or “Capital Transfers” in the enterprise funds. A summary of transfers follows:
Operating Operating Capital CapitalFundTransfers In Transfers Out Transfers In Transfers Out
General Fund:Capital Projects -$ -$ -$ 2,950,000$
Solid Waste - 491,360 - -
Public Transit - 472,270 - - Water Quality - 81,808 - - Community Grants Management - 291,420 - -
Agricultural Education Center - 189,190 - - Golf Course - 1,351,590 - - HEPMPO - 7,510 - -
Land Preservation - 124,432 - -
Airport - 14,500 - - Capital Projects Fund:General Fund - - 2,707,000 -
Airport Fund - - - 255,000 Hotel Rental Fund - - 337,000 - Land Preservation - - - 400,000 Solid Waste:
General Fund 491,360 - - - Public Transit:General Fund 472,270 - - -
HEPMPO - 13,320 - -
Water Quality:General Fund 81,808 - - - Airport:
General Fund 14,500 - 144,000 - Hotel Rental 50,000 - - - Capital Project Fund - - 255,000 - Golf Course:
General Fund 1,351,590 - 99,000 - Community Grant Management Fund:General Fund 291,420 - - -
Agricultural Education Center:
General Fund 189,190 - - - HEPMPO:General Fund 7,510 - - -
Public Transit Fund 13,320 - - - Hotel Rental:Capital Project Fund - - - 337,000 Airport - 50,000 - -
Land Preservation:General Fund 124,432 - - - Capital Projects Fund - - 400,000 - Total 3,087,400$ 3,087,400$ 3,942,000$ 3,942,000$
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
53
8. LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS
The County issues general obligation bonds to provide funds for the acquisition and
construction of major capital facilities. General obligation bonds have been issued for both governmental and business-type activities. General obligation bonds are direct obligations
and pledge the full faith and credit of the County. These bonds generally are issued as 20-
year serial bonds with different amounts of principal maturing each year. General
obligation bonds and capital lease obligations currently outstanding are as follows:
Interest Beginning Ending Due Within
Rate Balance Additions Reductions Balance One Year
Governmental Activities
Bonds payable:
General obligation bonds 2.0-5.5%130,586,824$ 35,819,710$ 33,969,997$ 132,436,537$ 9,430,515$
4,297,329 2,970,923 568,149 6,700,103 -
134,884,153 38,790,633 34,538,146 139,136,640 9,430,515
Other loans payable
Maryland Water Quality loans 1.0%5,176,743 - 288,345 4,888,398 290,895
Total bonds and loans payable 140,060,896 38,790,633 34,826,491 144,025,038 9,721,410
Agricultural Land Preservation 3.0%1,015,537 - 517,737 497,800 351,794
Capital lease obligations 2.1%360,321 - 160,781 199,540 167,077
Net pension liability 54,356,471 847,058 - 55,203,520 -
195,793,225 39,637,691 35,505,009 199,925,898 10,240,281
Business-type Activities
Bonds payable:
General obligation bonds 2.0-5.9%30,945,869$ 6,035,290$ 5,090,208$ 31,890,951$ 2,657,095$
476,404 503,862 74,827 905,439 -
(14,152) - (4,068) (10,084) -
31,408,121 6,539,152 5,160,967 32,786,306 2,657,095
Other loans payable:
Maryland Water Quality loans 0.40-1.7%12,802,416 2,553,000 1,950,480 13,404,936 870,424
Amount to be drawn - (2,553,000) (1,389,341) (1,163,659) -
Total other loans payable 12,802,416 - 561,139 12,241,277 870,424
Total bonds and loans payable 44,210,537 6,539,152 5,722,106 45,027,583 3,527,519
Capital lease obligations 4.90%61,750 - 11,182 50,568 11,738
44,272,287 6,539,152 5,733,288 45,078,151 3,539,257
Total Combined Activities
Long-term Liabilities 240,065,512$ 46,176,843$ 41,238,297$ 245,004,049$ 13,779,538$
4.5-11.64%6,695,262$ 1,002,859$ 694,606$ 7,003,515$ 557,057$ Board of Education
Unamortized bond premium
Total bonds payable
Governmental Activity
Long-term Liabilities
Unamortized bond premium
Unamortized bond discount
Total bonds payable
Business-type Activity
Long-term Liabilities
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
54
8.LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS (continued)
Summary of remaining debt service requirements for the years ended June 30, are as
follows:
Year ending Governmental Activities Business-type Activities Combined Activities
June 30 Principal Interest Principal Interest Principal Interest
2016 9,721,410$ 4,062,008$ 3,527,519$ 2,488,118$ 13,248,929$ 6,550,126$
2017 10,170,734 4,317,327 3,608,192 2,557,056 13,778,926 6,874,383
2018 9,621,029 4,020,627 4,096,337 2,537,117 13,717,366 6,557,744
2019 8,502,618 3,696,740 4,607,246 2,494,141 13,109,864 6,190,881
2020 9,115,277 3,373,401 4,159,246 2,445,866 13,274,523 5,819,267
2021-2025 42,074,317 12,158,432 12,669,606 2,776,366 54,743,923 14,934,798
2026-2030 31,213,782 5,593,332 8,474,455 1,288,406 39,688,237 6,881,738
2031-2035 16,051,952 1,403,022 3,769,559 240,171 19,821,511 1,643,193
2036 853,816 17,077 383,727 4,923 1,237,543 22,000
Total 137,324,935$ 38,641,966$ 45,295,887$ 16,832,164$ 182,620,822$ 55,474,130$
Less:
Unamortized discount - (10,084) (10,084)
Unamortized premium 6,700,103 905,439 7,605,542
Amount to be drawn - (1,163,659) (1,163,659)
144,025,038$ 45,027,583$ 189,052,621$
The County Commissioners have received bonding authority from the State Legislature to issue public facilities bonds for the purpose of financing various capital projects. As of
June 30, 2015, the unused authorization was $49,837,722.
Conduit Debt
From time to time, the County has issued Industrial Revenue Bonds to provide financial
assistance to private-sector entities for the acquisition and construction of industrial and
commercial facilities deemed to be in the public interest. The bonds are secured by the
property financed and are payable solely from payments received in the underlying mortgage loans. Upon repayment of the bonds, ownership of the acquired facilities transfers to the private-sector entity served by the bond issuance. Neither the County, the
State, nor any political subdivision thereof is obligated in any manner for repayment of the
bonds. In accordance with governmental accounting standards, the bonds are not reported
as liabilities in the accompanying financial statements. As of June 30, 2015, there were Industrial Revenue Bonds outstanding with an aggregate principal amount payable of $53,204,779.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
55
8. LONG-TERM AND CAPITAL LEASE OBLIGATIONS (continued)
Agricultural Land Preservation Installments
The County has entered into installment contracts to purchase easements for agricultural
land preservation purposes. Under the terms of the installment contracts, the County pays
the property owner annual interest and principal payments over the ten year term of the
contract. The primary source of revenue for repayment of the indebtedness is a portion of
the transfer tax on all transfers of real property in the County. The annual requirements to amortize agricultural preservation installments outstanding as of June 30, 2015, are as
follows:
As of Total
June 30,Principal Interest Requirement
2016 351,794$ 14,934$ 366,728$
2017 146,006 4,380 150,386
497,800$ 19,314$ 517,114$ For the year ended June 30, 2015, total principal and interest incurred related to agricultural
land preservation installments was $517,737 and $30,466, respectively.
Capital Leases
On January 15, 2012, the General Fund entered into a capital lease agreement for
equipment. The lease calls for annual lease payments of $158,267 and expires January 15,
2016. On December 3, 2013, the General Fund entered into a capital lease agreement for
equipment. The lease calls for annual lease payments of $671 through January 19, 2015,
and annual lease payments of $1,077 from February 19, 2015 through January 19, 2019. The future minimum lease payments under these agreements are as follows:
Year ending June 30,Amount
2016 171,192$
2017 12,925
2018 12,925
2019 7,538
Total minimum payments 204,580
Less: amounts representing interest 5,040
Present value of net minimum lease payments 199,540$
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
56
8. LONG-TERM AND CAPITAL LEASE OBLIGATIONS (continued)
Capital Leases (continued)
On January 14, 2014, the Water Quality Fund entered into a capital lease agreement for
equipment. The lease calls for annual lease payments of $14,250 and expires January 14,
2019. The future minimum payments under this agreement are as follows:
Year ending June 30,Amount
2016 14,250$
2017 14,250
2018 14,250
2019 14,250
Total minimum payments 57,000
Less: amounts representing interest 6,432
Present value of net minimum lease payments 50,568$
The following is an analysis of the capital assets acquired under capital leases as of June 30, 2015.
Net Book Value
June 30, 2015
General Fund $ 1,337,873 $ 437,880 $ 899,993
Water Quality 76,000 21,533 54,467
Total 1,413,873$ 459,413$ 954,460$
Capitalized
Amount
Accumulated
Depreciation
Board of Education
The Board of Education has various capital lease agreements for certain building data processing and communications equipment. Information for assets acquired from capital leases
is not available. The future minimum payments under these agreements are as follows:
Year ending June 30,Principal Interest Total
2016 $ 557,057 $ 338,347 $ 895,404
2017 591,238 304,166 895,404
2018 627,281 268,123 895,404
2019 661,558 230,064 891,622
2020 654,998 191,054 846,052
2021-2025 2,558,398 608,945 3,167,343
2026-2029 1,352,985 72,319 1,425,304
7,003,515$ 2,013,018$ 9,016,533$
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
57
8. LONG-TERM AND CAPITAL LEASE OBLIGATIONS (continued)
Capital Leases (continued)
In prior years, the County has partially defeased certain bonds by placing the proceeds of
new bonds in an irrevocable trust to provide for certain future debt service payments on the
old bonds. Accordingly, the trust account assets and the liability for the partially defeased
bonds are not included in the County’s financial statements. As of June 30, 2015,
$27,730,000 of long-term obligations outstanding are considered defeased.
9. OPERATING LEASE AGREEMENTS
County
During fiscal year 2004, the County entered into a lease agreement whereby the lessee
constructed a building and improvements on land owned at the Airport. The total cost of
the building and improvements was capitalized as an asset in the Airport Fund with an
estimated useful life of 40 years. As of June 30, 2004, the building and improvements were
estimated at $2,500,000. During the year ended June 30, 2005, a revised cost was obtained reducing the value to $2,000,000. The $500,000 adjustment was recorded as a reduction to
fixed assets and deferred inflow of resources in the June 30, 2005, financial statements. The
terms of the original agreement which began June 30, 2004, allowed the lessee to use the
property for a period of 25 years, with no additional payments due. During fiscal year
2006, this lease was amended with lease terms extended to 31 years and additional building and improvements valued at $1,800,000 were capitalized as an asset in the Airport Fund
with an estimated useful life of 40 years. During fiscal year 2009, a second amendment to
the lease agreement allowed for additional building and improvements valued at $400,000
and an extension of the lease through December 31, 2042. The addition was capitalized as
an asset in the Airport Fund with an estimated useful life of 40 years. Deferred inflow of resources in the amount of $2,500,000 was recorded in the Airport Fund at the inception of
this lease but was adjusted down to $2,000,000 during year ended 2005, and was to be
recognized as rental income over the original 25 year term of the lease. Since the
amendments extending the lease term and the additional capitalization of building and
improvements, the remaining deferred inflow of resources of $3,587,724 as of June 30, 2010, will be amortized over 33 years. The terms of the agreement as amended in fiscal
year 2009, allow the lessee to use the property for a period of 33 years. The terms of the
lease agreement require that the lessee pay the County annual rent of $5,250 beginning
May 1, 2006, with an annual increase of 4% each May 1st thereafter. The lease also
requires that the County credit the lessee $127,500 for the lessee’s incurred costs in excavating the site for the addition. The agreement allows an option for the lessee to
continue the lease past the 33 year term at a rental payment equal to the fair market rental
value of the leased property at that time.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
58
9. OPERATING LEASE AGREEMENTS (continued)
County (continued)
During fiscal year 2006, the County entered into a lease agreement whereby the lessee
constructed a building and improvements on land owned at the Airport. The total cost of
the building and improvements was $3,100,000, which was capitalized as an asset in the
Airport Fund with an estimated useful life of 40 years on June 30, 2006. The terms of the
agreement which began June 30, 2006, allow the lessee to use the property for a period of 39 years (primary terms). The terms of the lease agreement require that the lessee pay the
County annual rent of $5,200 during the primary terms of the lease with an annual increase
of 3% each year. The agreement allows an option for the lessee to continue the lease past
the 39 year term at a rental payment equal to the fair market rental value of the leased
property at that time. Deferred inflow of resources in the amount of $3,100,000 was recorded in the Airport Fund at the inception of the lease.
During fiscal year 2007, the County entered into a lease agreement whereby the lessee
constructed a building and improvements for $5,500,000, which was capitalized as an asset
in the Airport Fund with an estimated useful life of 40 years on June 30, 2007. The terms of the agreement, which began December 1, 2006, allow the lessee to use the property for a
period of 39 years (primary terms). The terms of the lease agreement require that the lessee
pay the County annual rent of $15,750 during the primary terms of the lease with an annual
increase of 4% each year. The agreement allows an option for the lessee to continue the
lease past the 39 year term at a rental payment equal to the fair market rental value of the leased property at that time. Deferred inflow of resources in the amount of $5,500,000 was
recorded in the Airport Fund on June 30, 2007.
During fiscal year 2010, the County entered into a lease agreement whereby the lessee
constructed a building and improvements for $3,000,000, which was capitalized as an asset in the Airport Fund with an estimated useful life of 40 years on June 30, 2010. The terms of
the agreement, which began June 1, 2009, allow the lessee to use the property for a period
of 39 years (primary terms). The terms of the lease agreement require that the lessee pay
the County annual rent of $13,208 during the primary terms of the lease with an annual
increase of 4% each year. Deferred inflow of resources in the amount of $3,000,000 was recorded in the Airport Fund on June 30, 2010.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
59
9. OPERATING LEASE AGREEMENTS (continued)
County (continued)
During fiscal year 2010, the County entered into a lease agreement whereby the lessee
constructed a building and improvements for $3,800,000, which was capitalized as an asset
in the Airport Fund with an estimated useful life of 40 years on June 30, 2010. The terms of
the agreement, which began November 1, 2009, allow the lessee to use the property for a
period of 39 years (primary years). The terms of the lease agreement require that the lessee pay the County annual rent of $17,000 during the primary terms of the lease with an annual
increase of 4% each year. The lease also requires that the County credit the lessee $250,000
for the lessee’s incurred costs in site preparation and excavation costs. The agreement
allows for an option for the lessee to continue the lease past the 39 year term at a rental
payment equal to the fair market rental value of the leased property at that time. Deferred inflow of resources in the amount of $3,800,000 was recorded in the Airport Fund as of
June 30, 2010.
During fiscal year 2011, the County entered into a lease agreement whereby the lessee
constructed a building and improvements for $4,500,000, which was capitalized as an asset in the Airport Fund with an estimated useful life of 40 years on June 30, 2011. The terms of
the agreement, which began July 1, 2010, allow the lessee to use the property for a period
of 39 years (primary years). The terms of the lease agreement require that the lessee pay the
County annual rent of $15,985 during the primary terms of the lease with an annual
increase of 4% each year. The agreement allow for an option for the lessee to continue the lease past the 39 year term at a rental payment equal to the fair market rental value of the
leased property at that time. Deferred inflow of resources in the amount of $4,500,000 was
recorded in the Airport Fund as of June 30, 2011.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
60
9. OPERATING LEASE AGREEMENTS (continued)
County (continued)
During fiscal year 2013, the County entered into a lease agreement whereby the lessee
constructed a building and improvements for $2,000,000, which was capitalized as an asset
in the Airport Fund with an estimated useful life of 40 years on June 30, 2013. The terms of
the agreement, which began January 1, 2013, allow the lessee to use the property for a
period of 30 years (initial term) with no payments due during the first five years of the initial term of the lease. The terms of the lease agreement require that the lessee pay the
County annual rent of $23,357 during the initial term of the lease with an annual increase
of 2% each year. The agreement allows for an option for the lessee to continue the lease
past the 30 year term at a rental payment equal to the fair market rental value of the leased
property at that time. Deferred inflow of resources in the amount of $2,000,000 was recorded in the Airport Fund as of June 30, 2013.
During fiscal year 2014, the County entered into a lease agreement whereby the lessee
constructed a building and improvements for $5,500,000, which was capitalized as an asset
in the Airport Fund with an estimated useful life of 40 years on June 30, 2014. The terms of the agreement, which began November 1, 2013, allow the lessee to use the property for a
period of 39 years (primary term). The terms of the lease agreement require that the lessee
pay the County annual rent of $13,881 during the primary term of the lease with an annual
increase of 2% each year. The agreement allows an option for the lessee to continue the
lease past the 39 year term at a rental payment equal to the fair market rental value of the leased property at that time. Deferred inflow of resources in the amount of $5,500,000 was
recorded in the Airport Fund on June 30, 2014.
During year ending June 30, 2015, rental income for the above leases of $880,214 was
recognized in the Airport Fund.
On January 1, 2006, the County entered into an agreement with Spirit Services, Inc. of
Washington County to lease and operate the Conococheague Industrial Pretreatment
Facility. Under the lease agreement, Spirit Services, Inc., has exclusive control and
management of the pretreatment facility and assumes all responsibility for utility and maintenance expenses.
The term of the lease runs for a period of ninety-nine years with fixed monthly rent
payments of $28,800. During the year ended June 30, 2015, outsourcing revenue of
$345,600 was recognized in the Water Quality Fund.
On January 19, 2012, Black Rock Golf Course entered into a new lease for golf carts. The
agreement called for lease payments of $8,077 payable from April through November of
each year. The lease term is for six years commencing on March 1, 2012. Total lease
payments for the year ended June 30, 2015, were $64,616.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
61
10. UNUSED VACATION AND SICK LEAVE
County
The County accrues accumulated unpaid vacation and sick leave and associated
employee-related costs when earned or estimated to be earned by the employee. The
accrual of vacation leave is based upon individual salary rates in effect as of June 30
2015, and is capped at 25 days. The accrual of sick leave is based on payment upon
retirement at a rate of $10 per day for each unused sick leave day up to a total of 130 days. Total unpaid vacation and sick leave accrued as of June 30, 2015, was $2,566,704
and $535,551, respectively. Unused vacation and sick leave will be liquidated by the
respective government and enterprise funds where the current employee costs are
recorded.
Board of Education
The School System accrues accumulated unpaid vacation and sick leave and associated
employee-related costs when earned or estimated to be earned by the employee. The
accrual of vacation leave is based upon individual salary rates in effect as of June 30. The accrual of sick leave is based on payment upon retirement at rates set forth in the
various negotiated agreements. Sick leave is estimated to be earned once an employee
has obtained 25 years of service or 55 years of age. Total unpaid vacation and sick
leave accrued as of June 30, 2015, was $7,381,429. Total employee related costs
associated and accrued with these compensated absences amounted to $524,551 as of June 30, 2015. For governmental funds, $439,592 as of June 30, 2015, is considered
payable with current sources and is included in accrued liabilities. The remaining
amounts are estimated to be used in subsequent fiscal years and are maintained
separately and represent a reconciling item between the fund and government-wide
financial statement presentations.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
62
11. RETIREMENT PLANS
County Defined Benefit Pension Plan
Plan Description
The County Commissioners of Washington County Employees Retirement Plan (the Plan)
is a single-employer defined benefit pension plan established by the County
Commissioners effective July 1, 1972, and adopted by ordinance. The County Commissioners have the power and authority to establish and amend the benefit provisions of the Plan. The Plan provides retirement benefits to Plan members. Effective January 1,
1986, members are qualified to participate in the Plan if they are compensated on the basis
of working at least 40 hours per week and 12 months in a calendar year. Participation
classification is based on the employee’s status as either “uniformed” or “non-uniformed’. A uniformed employee may retire at the earlier of age 50 or 25 years of service. A non-uniformed employee may retire at the earlier of age 60 or 30 years of eligibility service.
Vesting begins after 5 years of service. Retirement benefits for uniformed employees are
calculated by a formula and provide approximately 50% of average pay after 25 years.
Non-uniformed employees retirement benefits provide approximately 60% of average pay after 30 years of service.
Effective July 1, 2013 the Employee’s Retirement Plan was amended. The amendment
affected only non-uniformed employees. Non-uniformed employees were required to make an election to either remain under the former plan provisions or opt to participate under the
new rules. For employees electing to remain under the former plan rules, a non-uniformed
employee may retire at the earlier of age 60 or 30 years of eligibility service. Non-
uniformed employees retirement benefits provide approximately 60% of average pay after
30 years of service. Non-uniformed employees may take early retirement with reduced benefits at 25 years of service.
Under the amended plan a non-uniformed employee may retire at the earlier of age 60 or 25 years of service. Retirement benefits would provide approximately 50% of average pay after 25 years. There is no longer an early retirement option.
Employees hired after September 1, 2013 are required to participate in the amended plan.
The net pension liability by plan is as follows:
Retirement Plan
Net Pension Liability 50,428,633$
LOSAP Plan
Net Pension Liability 4,774,887
55,203,520$
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
63
11. RETIREMENT PLANS (continued)
County Defined Benefit Pension Plan (continued)
Investments
The County’s Pension Plan Investment Policy states that the assets are to be managed for total return, defined as dividend and interest income plus or minus capital gains and losses.
Investments shall be diversified so as to minimize the risk of unacceptable losses. The
portfolio is looked at as a whole rather than as individual securities. Investing for long term
(preferably longer than 10 years) becomes critical to investment success because it allows the long-term characteristics of the asset classes to surface. The table below summarizes the target asset class weighting, along with the allowable ranges for each class.
Investment Type Range Target
Equities:
Large-Cap U.S. Stocks 25-45% 35%
Small-Cap U.S. Stocks 0-15% 10%
International Stocks 5-20% 15% REITS 0-10% 5%
Fixed Income:
High Yield Bonds 0-15% 10%
Investment Grade Bonds 5-30% 23%
Money Market 0-10% 2%
Funding Policy
The contribution requirements of Plan members and the County are established and may be
amended by the County Commissioners. Under the amended plan, all plan members are
required to contribute 6%. Non-uniformed employees electing to remain under the old plan are required to contribute 5.5%.
All information that follows for the Plan is measured as of July 1, 2014, which is the latest
actuarial report available.
Membership of the Plan
The membership consisted of the following as of July 1, 2014, the date of the latest
actuarial valuation:
Retirees and beneficiaries receiving benefits 256
Terminated Plan members entitled to but not
yet receiving benefits 46
Active Plan members 749
Total 1,051
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
64
11. RETIREMENT PLANS (continued)
County Defined Benefit Pension Plan (continued)
Actuarial Assumptions
The long-term expected rate of return on pension plan investments was determined using a
standard building block approach. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset
allocation percentage and adding expected inflation. Best estimates of arithmetic assumed rates
of return for each class included in the pension plans’ general target asset allocation as of June
30, 2015 is as follows:
Investment Type
% of
Portfolio
Assumed
Rate of
Return
Equities:60%-70%9%-11%
Fixed Income:30%-40%3%-5%
Annual Pension Cost and Net Pension Obligation
The total pension liability for the current year was determined as part of the July 1, 2014,
actuarial valuation using the projected unit credit cost method. The actuarial assumptions included (a) 7.75% investment rate of return (net of administrative expenses), and (b) projected
salary increases of 4.0% per year. The actuary was using the 83 GAM sex distinct mortality
tables. The assumptions did not include postretirement benefit increases. The actuarial value of
assets was determined by the market value of investments. The unfunded actuarial accrued
liability is being amortized at a level dollar over 25 years. The effect of an unfunded actuarial accrued liability (funding excess) is amortized immediately.
Net Pension Liability
The net pension liability is equal to the total pension liability minus the net position of the plan. The result as of June 30, 2015 is as follows:
Total pension liability 142,540,120$
Net position (92,111,487)
Net pension liability 50,428,633$
Net position as a percentage of total pension liability is 64.6%.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
65
11. RETIREMENT PLANS (continued)
County Defined Benefit Pension Plan (continued)
Sensitivity of the net pension liability to changes in the discount rate
The following presents the net pension liability of the Plan, calculated using a discount rate
of 7.75% as well as what the Plan’s net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower (6.75%) or 1-percentage point higher
(8.75%) than the current rate:
1.0% decrease
(6.75%)
Current rate
7.75%
1.0%
increase
(8.75%)
Net pension liability 65,896,249$ 50,428,633$ 37,230,172$
Deferred Outflows of Resources and Deferred Inflows of Resources For the year ended June 30, 2015, the County recognized pension expense of $(1,042,893) for the Plan. As of June 30, 2015, the County reported deferred outflows of resources and
deferred inflows of resources related to the Plan from the following sources:
Deferred
Outflows of
Resources
Deferred Inflows
of Resources
Difference between expected and actual experience -$ -$
Change in assumptions - -
Net difference between projected and actual investment
earnings 1,782,387 -
Total 1,782,387$ -$
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
66
11.RETIREMENT PLANS (continued)
County Defined Benefit Pension Plan (continued)
Deferred Outflows of Resources and Deferred Inflows of Resources (continued)
The above amounts reported as deferred outflows of resources and deferred inflows of
resources related to the Plan will be recognized in the pension expense as follows:
Years Ended June 30, Amount
2016 445,597$
2017 445,597
2018 445,597
2019 445,596
Total 1,782,387$
Board of Education
The employees of the School System are covered by one of the following pension plans
affiliated with the State Retirement and Pension System of Maryland, and agent multiple-
employer public employee retirement systems administered by the Maryland State
Retirement Agency:
•The Teachers’ Retirement System of the State of Maryland,
•The Employees’ Retirement System of the State of Maryland,
•The Pension System for Teachers of the State of Maryland, or
•The Pension System for Employees of the State of Maryland
During the 1979 legislative session, the Maryland General Assembly created, effective
January 1, 1980, the “Pension System for Teachers of the State of Maryland” and the
“Pension System for Employees of the State of Maryland”. Prior to this date, all teachers
and related positions were required to be members of the “Teachers’ Retirement System of
the State of Maryland”, and educational support positions were members of the “Employees’ Retirement System of the State of Maryland”. All School System employees
who were members of the “Retirement System” may remain in that System, or they may
elect to join the “Pension System”. All teachers hired within the State after December 31,
1979, must join the “Pension System for Teachers”. The “Employees’ Retirement System”
and the “Pension System for Employees” cover those employees not covered by the teachers’ plans. These employees are principally custodial, maintenance, and food service
employees.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
67
11. RETIREMENT PLANS (continued)
Board of Education (continued)
These pension plans may provide pension benefits and death and disability benefits. A
member may retire with full benefits upon the earlier of attaining age 60 or accumulating
30 years of service from the Retirement System and at 62 with specified years of service or
30 years of service regardless of age from the Pension System. Benefits generally vest after
5 years of service for employees hired before July 1, 2011 and 10 years of service for those hired after that date. The pension plans were established by the State Personnel and
Pensions Article of the Annotated Code of Maryland. The State Retirement Agency issues
a publicly available financial report that includes basic financial statements and required
supplementary information for the pension plans. The report may be obtained by writing to
State Retirement and Pension System of Maryland, 120 East Baltimore Street, Baltimore, Maryland 21202, or by calling 410-625-5555.
Both the “Retirement System” and the “Pension System” for teachers and educational support employees are jointly contributory. Under the “Retirement System”, employees
contribute 4% - 7% of their total gross salary, and under the “Pension System”, employees
contribute 7% their gross salary for the year. Effective, July 1, 1980, in accordance with the
law governing the Systems, all benefits of the Systems are funded in advance. Annually
appropriated employer contribution rates for retirement benefits are determined using the entry age normal cost method. The method produces an employer contribution rate
consisting of (1) an amount for normal cost (the estimated amount necessary to finance
benefits earned by employees during the current service year), and (2) the amount for
amortization of the unfunded actuarial accrued liability. The pension plans funded ratio is
65.52%, which measures the actuarial value of plan assets as a percentage of actuarial accrued liability.
Washington County School System contributions totaling $1,864,791 and $1,890,341 for fiscal years 2015 and 2014, respectively; and contributions by the State of Maryland on
behalf of the School System totaling $17,316,621 and $17,080,357 for fiscal years 2015
and 2014, respectively. All contributions were made in accordance with actuarially
determined contribution requirements based on an actuarial valuation performed annually.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
68
11. RETIREMENT PLANS (continued)
Board of Education (continued)
At June 30, 2015, the School System reported a liability for its proportionate share of net
pension liability that reflected a reduction for State pension support provided to the School
System. The amount recognized by the School System as its proportionate share of the net
pension liability, the related State support and the total portion of the net pension liability
that was associated with the School System were as follows:
School System's proportionate share of net pension liability -$ 14,395,785$
State's proportionate share of net position liability associated
with the School System 131,873,741 -
Total 131,873,741$ 14,395,785$
Teacher's
Retirement and
Pension System
Employees'
Retirement and
Pension System
For the year ended June 30, 2015, the School System recognized pension expense of
$23,803,351 related to governmental activities and $312,737 related to business-type
activities. As of June 30, 2015, the School System reported deferred outflows of resources and deferred inflows of resources related to the pensions from the following sources:
Change in assumptions 208,246$ -$
Net difference between projected and actual investment
earnings - 1,575,713
School System contributions subsequent to the measurement
date 1,864,791 -
Total 2,073,037$ 1,575,713$
Deferred
Outflows of
Resources
Deferred Inflows
of Resources
The $1,864,791 reported as deferred outflows of resources related to pensions resulting from the School System contributions subsequent to the measurement date will be
recognized as a reduction of the net pension liability in the year ended June 30, 2016. Other
amounts reported as deferred outflows of resources and deferred inflows of resources
related to pensions will be recognized in pension expense as follows:
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
69
11. RETIREMENT PLANS (continued)
Board of Education (continued)
Years Ended June 30, Amount
2016 (265,528)$
2017 (265,528)
2018 (265,528)
2019 (265,528)
2020 (265,528)
Thereafter (39,827) Sensitivity of the net pension liability to changes in the discount rate
The following presents the net pension liability of the plan, calculated using a discount rate
of 7.65% as well as what the plan’s net pension liability would be if it were calculated
using a discount rate that is 1-percentage point lower (6.65%) or 1-percentage point higher
(8.65%) than the current rate:
1.0% decrease
(6.65%)
Current rate
7.65%
1.0%
increase
(8.65%)
Net pension liability 20,746,137$ 14,395,785$ 9,076,561$
The contributions made by the State of Maryland on behalf of the School System were recognized as both revenue and expenditures in the General Fund as required by GASB
No. 24.
12. RISK MANAGEMENT
County
The County is exposed to various risks of loss related to torts; theft of, damage to, and
destruction of assets; errors and omissions; injuries to employees; and natural disasters. The
County purchases commercial insurance for claims in excess of deductible amounts for all
risks of loss, except for employee health and workers’ compensation. Settlements have not exceeded insurance coverages during the past three fiscal years.
The County Commissioners have established a self-insurance plan for health benefits to its employees, retirees and to other governmental and non-profit agencies. Budgeted amounts are charged to each fund, and premiums are charged to retirees and other governmental and
non-profit agencies for their share of the costs, which are intended to cover the estimated
costs of claims and administrative expenses. Contributions from employees, retirees and
other governmental non-profit agencies are offset against budget amounts charged in the related fund. Under this plan, the County’s General Fund bears all risk of loss.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
70
12. RISK MANAGEMENT (continued)
County (continued)
The County has established claims liabilities based on estimates of the ultimate cost of settling
the claims (including future claim adjustment expenses) that have been reported but not settled,
and of claims that have been incurred but not reported. The length of time for which such costs
must be estimated varies depending on the coverage involved. Because actual claims costs
depend on such complex factors as inflation, changes in doctrines of legal liability, and damage awards, the process used in computing claims liabilities does not necessarily result in an exact
amount. Claims liabilities are recomputed periodically using a variety of actuarial and
statistical techniques to produce current estimates that reflect recent settlements, claim
frequency, and other economic and social factors. A provision for inflation in the calculation of
estimated future claim costs is implicit in the calculation because reliance is placed both on actual historical data that reflect past inflation and on other factors that are considered to be
appropriate modifiers of past experience. Adjustments to claims liabilities are charged or
credited to expense in the periods in which they are made.
The liability for estimated claims was determined to be $1,056,288 which is reflected in the accompanying financial statements as of June 30, 2015. Changes in the claims liability
were as follows:
2015 2014
Liability, beginning of year 1,060,759$ 1,097,002$
13,919,883 12,432,050
Claims and administrative costs paid (13,924,354) (12,468,293)
Liability, end of year 1,056,288$ 1,060,759$
Years Ended June 30,
Premiums collected and changes in estimates during
the year
The County uses a third party administrator to process and pay claims. The County has
purchased a stop-loss insurance policy in which the insurance company covers individual claims once they exceed $175,000. Under this policy, the County was liable for the first 125% of expected claims paid in the current fiscal year. Any claims in excess of this
amount are to be paid by the insurance company under the stop-loss policy.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
71
12. RISK MANAGEMENT (continued)
County (continued)
The County Commissioners have also established a self-insurance plan for Workers’
Compensation claims whereby the County is liable for the first $600,000 per occurrence.
As required by the State of Maryland, $175,000 in U.S. Treasury Notes is held by the State
Workers’ Compensation Commission and is included in investments on the balance sheet.
The County extends coverage under this plan to the employees of other governmental and nonprofit agencies. These agencies are charged a “premium”, however the County bears
the risk of loss. The liability for estimated claims was determined to be $777,183, which is
reflected in the accompanying financial statements as of June 30, 2015. Changes in the
claims liability were as follows:
2015 2014
Liability, beginning of year 1,054,492$ 918,591$
1,255,713 1,072,408
Claims and administrative costs paid (1,533,022) (936,507)
Liability, end of year 777,183$ 1,054,492$
Premiums collected and changes in estimates during
the year
Years Ended June 30,
Board of Education
The School System is exposed to various risks of loss related to torts; theft of, damage to,
and destruction of assets; errors and omissions; personal injury; and natural disaster. The School System is one of seventeen Boards of Education within the State of Maryland belonging to the Maryland Association of Boards of Education Group Insurance Pool (the
Pool), a public entity risk pool organized as a trust. The School System pays an annual
premium to the Pool for its property, liability, and automobile coverage. Such premiums
are actuarially calculated for the Pool as a whole based on loss data and are allocated to members based on student enrollment and number and type of vehicles as well as experience modification factors. The Pool is reinsured on a claims-made basis for legal
liability covering claims aggregating $3 million per district per year.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
72
12. RISK MANAGEMENT (continued)
Board of Education (continued)
Additionally, the School System is one of sixteen Boards of Education within the State of
Maryland belonging to the Maryland Association of Boards of Education Workers’
Compensation Group Self-Insurance Fund (the Fund). This Fund was established to
provide worker’s compensation indemnity and medical benefits coverage for participating
school boards. The Fund is operated under regulations promulgated by the State’s Workers’ Compensation Commission (COMAR 14.09.02). Each Fund participant pays an annual
premium calculated on its payroll according to the standard classifications, with an
experience modification applied. Although premiums billed to the Fund members are
determined on an actuarial basis, ultimate liability for claims remains with the respective
members and accordingly, the insurance risks are not transferred to the Fund. Six months following the end of the Fund’s fiscal year, the Fund’s trustees declare unneeded funds as
surplus and distribute 50% of the declared surplus as dividends to the Fund members. This
dividend distribution is made no sooner than one year after the close of that fiscal year.
Members dedicate the remaining 50% of the surplus each year to a surplus fund until it
reaches 75% net annual premium. The Fund carries an excess insurance policy providing specific excess and employer liability protection coverage, thus reducing the potential of
assessment against Fund members. The Fund provides coverage for up to a maximum of
$500,000 for each worker’s compensation claim.
Settled claims from these risks have not exceeded the planned coverage during any of the past three years.
The School System also offers a program of self-insured health, dental, and vision benefits
to its employees and retirees. Charges are made to other Funds, employees and retirees for
their respective share of the costs in amounts planned to match the estimated claims, the cost of insurance premiums for coverage in excess of self-insured amounts and the
administrative costs in providing the program. Such costs are also offset by interest income
earned from investing receipts until they are paid out in the form of claims or expenses.
Administrative costs directly related to the program are borne by the Self-Insurance Fund.
In accordance with the Governmental Accounting Standards Board’s Statement No. 10
“Accounting and Financial Reporting for Risk Financing and Related Insurance Issues,”
charges to other funds must be accounted for as revenue by an internal service fund and
expenditures/expenses by the other funds. The amounts of these charges were $29,960,584
and $30,656,377 for the years ended June 30, 2015 and 2014, respectively.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
73
12. RISK MANAGEMENT (continued)
Board of Education (continued)
The Self-Insurance Fund’s accrued liabilities include an estimate of the amount to be paid
for self-insured claims incurred prior to June 30, 2015 and 2014. This estimate is prepared
based upon the School System’s experience and other relevant facts. Changes in the Fund’s
claims liability amount were as follows:
2015 2014
Liability, beginning of year 2,165,352$ 2,075,915$
Claims and changes in estimates during the year 39,184,521 36,426,667
Claims paid and accrued (38,724,823) (36,337,230)
Liability, end of year 2,625,050$ 2,165,352$
Years Ended June 30,
13.DEFERRED COMPENSATION PLAN
The County offers its employees a deferred compensation plan created in accordance with
Internal Revenue Code Section 457 and administered by a third party. The plan, available
to all County employees, permits them to defer a portion of their salary until future years.
The deferred compensation is not available to employees until termination, retirement,death, or unforeseeable emergency. The deferred compensation plan assets are held in trust
for the exclusive benefit of the plan participants. Therefore, the plan assets are not
presented in the financial statements.
14.SEGMENT INFORMATION
The County has entered into loan agreements with the Maryland Water Quality Financing
Administration. The loans are backed by the full faith and credit and taxing power of the
County; however, the source of payment of the principal and interest of the loans is thesewer user charges and pretreatment facility user charges. The user charges are accountedfor in the Water Quality Fund. Summarized financial information for the Sewer and
Pretreatment operations is presented below. The Water Quality Department operates the
County’s sewage treatment plants, sewage pumping stations, and collection systems and
leases the pretreatment facility to a private company.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
74
14. SEGMENT INFORMATION (continued)
CONDENSED STATEMENT OF NET POSITION
ASSETS
Current assets 18,655,887$ 2,384,777$
Noncurrent assets 107,643,105 5,343,849
Total Assets 126,298,992 7,728,626
DEFERRED OUTFLOW OF RESOURCES 39,728 276,378
LIABILITIES
Other current liabilities 6,830,789 1,780,405
Noncurrent liabilities 18,724,705 3,520,698
Total Liabilities 25,555,494 5,301,103
Net Position
Net investment in capital assets 96,880,712 1,263,943
Unrestricted (4,575,264) 1,439,958
Restricted - capital projects 8,477,778 -
Total Net Position 100,783,226$ 2,703,901$
CONDENSED STATEMENT OF REVENUE, EXPENSES
AND CHANGES IN NET POSITION
Operating revenue 8,883,033$ -$
Lease income - 347,049
Depreciation expense (2,117,072) (187,409)
Other operating expenses (7,646,730) (20,519)
Operating income (880,769) 139,121
Non-operating revenue (expenses):
Interest expense (737,696) (186,950)
Interest income 125,917 -
Utility administration charge - -
Operating transfers - -
Capital contributions 1,195,852 -
Change in Net Position (296,696) (47,829)
Net Position, beginning of year, as restated 101,079,922 2,751,730
Net Position, End of Year 100,783,226$ 2,703,901$
CONDENSED STATEMENT OF CASH FLOWS
Net cash provided (used) by
Operating activities (81,355)$ 297,230$
Noncapital financing activities - -
Capital and related financing activities 3,232,823 (714,213)
Investing activities (3,597,416) -
Net increase (445,948) (416,983)
Cash and cash equivalents, beginning of year 8,920,473 2,801,760
Cash and Cash Equivalents, End of Year 8,474,525$ 2,384,777$
Sewer
Department
Pretreatment
Department
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
75
15. CLOSURE AND POST-CLOSURE CARE COST
State and Federal laws and regulations require the County to place a final cover on its
landfills when they stop accepting waste. The County is also required to perform certain maintenance and monitoring functions at the site for up to thirty years after closure.
Although closure and post-closure care costs will be paid only near the date or after the
date that the landfill stops accepting waste, the County reports a portion of these closure
and post-closure care costs as a liability based on landfill capacity used as of each balance
sheet date.
The Hancock Landfill was closed in 1993. The remaining estimated costs associated with
the closure and post-closure care costs of $167,080 are reported as a liability in the Solid
Waste Fund. No current expense was recognized in the Solid Waste Fund for the year
ended June 30, 2015.
The Resh Landfill has reported a landfill post-closure care liability of $5,160,436 in the
Solid Waste Fund. The total capacity has been used. The Resh Landfill was closed in
December 2000. No current expense was recognized in the Solid Waste Fund for the year
ended June 30, 2015.
The Rubble Landfill began operating during August 1995. The estimated cost associated
with post-closure care of $2,202,400 is reported as a liability in the Solid Waste Fund at
June 30, 2015. The Rubble Landfill was closed in December 2000. No current expense was
recognized in the Solid Waste Fund for the year ended June 30, 2015.
The 40 West Landfill began operation in fiscal year 2001. The estimated life of this landfill
is approximately 120 years as of June 30, 2015, it is estimated that approximately 16.4% of
the capacity has been used. The estimated costs associated with closure and post-closure
care of $7,736,873 was reported as a liability in the Solid Waste Fund at June 30, 2015. The County will recognize $47,055,727 of estimated cost associated with the closure and
post-closure care as capacity is filled. During the fiscal year 2012 engineering re-designed
the cells at 40 West Landfill. This change in estimate increased the airspace by 4 million
cubic yards along with the life of the landfill by 62 years. This change in accounting
estimate has no effect on the total estimated cost but will extend the landfill life from 58 years to 120 years.
The above estimates are based on estimated current costs to perform all closure and post-
closure care. Actual costs may be higher due to inflation, deflation, changes in technology,
or changes in applicable laws or regulations. The County is required by state and federal laws and regulations to meet certain closure and post-closure financial assurance
requirements. The County has satisfied these requirements by demonstrating in information
submitted by the Director of Finance that they meet the Local Government Financial Test
as of June 30, 2015, as specified in 40CFR258.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
76
16. OTHER POSTRETIREMENT EMPLOYEE BENEFITS (OPEB)
County
Plan Description: The County offers postretirement health care benefits to employees who
retire from the County under normal or early retirement provisions of the pension plan. The
health care benefits are provided until the retiree is eligible for Medicare. Retirees who
exercise the one-time option for the health care benefits pay one-half of the estimated cost
of the benefits. The County pays the remaining cost as part of its self-insurance program. Currently, forty-five retirees are receiving benefits and sixty-seven employees are
retirement eligible. Expenditures for postretirement health care benefits are recognized as
retirees report claims and include a provision for estimated claims incurred but not yet
reported.
The County offered a special termination benefit to employees that retired between July 1, 1995 and September 30, 1995. Those employees are receiving health care benefits
(managed care program) from the date of retirement until they are eligible for Medicare or
turn 65. One former employee and their spouse are receiving this benefit.
Funding Policy: The County intends to fund any annual short-fall between OPEB annual
required contribution and actual pay-go expense into a legally executed trust fund. The
trust fund will be invested as a long-term pension trust, using an appropriately balanced
portfolio of equities and debt instruments, to prudently maximize long-term investment
returns.
Annual OPEB Cost and Net OPEB Obligation: The County’s annual other postretirement
benefit (OPEB) cost (expense) is calculated based on the annual required contribution of
the employer (ARC), an amount actuarially determined in accordance with the parameters
of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial
liabilities (or funding excess) over a period not to exceed 30 years. The following table
shows the components of the County’s annual OPEB cost for the year, the amount actually
contributed to the plan, and changes in the County’s net OPEB Obligation.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
77
16. OTHER POSTRETIREMENT EMPLOYEE BENEFITS (continued)
County (continued)
Components of Net OPEB Obligation
Annual Required Contribution $ 1,185,434
Interest on Net OPEB Obligation (94,017)
Adjustment to Annual Required Contribution 78,498
Annual OPEB Cost (Expense) 1,169,915
Contributions Made or Accrued 1,724,567
Increase in Net Assets (554,652)
Net OPEB Asset - Beginning of Year (1,213,123)
Net OPEB Asset - End of Year $ (1,767,775) The County’s annual OPEB cost, the percentage of annual OPEB cost contributed to the
plan, and the net OPEB obligation for the last three years as of June 30, is as follows:
2015 $ 1,169,915 147.41%(1,767,775)$
2014 1,291,864 130.97%(1,213,123)
2013 1,320,987 99.79%(813,022)
Fiscal Year
Ended June 30,
Annual OPEB
Cost
Percentage of
Annual OPEB
Cost Contributed
Net OPEB
Assets
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts
and assumptions about the probability of occurrence of events far into the future. Examples
include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are
compared with past expectations and new estimates are made about the future. The
schedule of funding progress, presented as required supplementary information following
the notes to the financial statements, presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
78
16. OTHER POSTRETIREMENT EMPLOYEE BENEFITS (continued)
County (continued)
Actuarial Methods and Assumptions: Projections of benefits for financial reporting
purposes are based on substantive plan (the plan as understood by the employer and the
plan members) and includes the type of benefits provided at the time of each valuation and
the historical pattern of sharing the benefit costs between the employer and plan members
to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short term volatility in actuarial accrued liabilities and the
actuarial value of assets, consistent with the long-term perspective of the calculations.
In the actuarial valuation for the plan year ending June 30, 2014, the projected unit credit
actuarial cost method was used. The actuarial assumptions included a 7.75% investment rate of return (net of administrative expenses), which is a blended rate of the expected long-
term investment returns on plan assets and on the employer’s own investments calculated
based on the funded level of the plan assets at the valuation date, and an annual healthcare
cost trend rate of 7.8% initially, reduced by decrements to an ultimate rate of 5% after three
years. The actuarial value of assets was determined using a standard balanced portfolio expectation for retirement plan asset returns. The unfunded actuarial accrued liability
(UAAL) is being amortized as a level dollar charge on an open basis. The remaining
amortization period as of July 1, 2013, was 24 years.
Board of Education
In addition to providing the pension benefits described above, the School System provides
postemployment health care and life insurance benefits (OPEB) for retired employees, their
spouses and dependents, and surviving spouses and dependents. On April 15, 2008, the
Board created the Board of Education of Washington County (the Trust) in order to arrange for the establishment of a reserve to pay health and welfare benefits for future retirees. The
Trust is affiliated with the Maryland Association of Boards of Education Pooled OPEB
Investment Trust, an agent multiple-employer public employee retirement system
established by the Maryland Association of Boards of Education (MABE). The Board
reserves the right to establish and amend the provisions of the Trust with respect to participants, any benefit provided thereunder, or its participation therein, in whole or in part
at any time, by resolution of its governing body and upon advance written notice to the
Trustees. The Maryland Association of Boards of Education Pooled OPEB Investment
Trust issues an annual financial report for the Trust. That report may be obtained by writing
to Maryland Association of Boards of Education, 621 Ridgely Avenue, Suite 300, Annapolis, Maryland 21401, or by calling 1-800-841-8197.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
79
16. OTHER POSTRETIREMENT EMPLOYEE BENEFITS (continued)
Board of Education (continued)
A member may retire after 25 years of service from the Retirement System, and as early as
age 55 and 15 years of service from the Pension System. Retirees can continue the same
medical coverage they had (including family coverage) as active employees. Retirees
receive a subsidy for their postretirement medical insurance based on points (Age +
Service). A minimum of 66 points (with 5 years of service) is required to receive a subsidy. The maximum subsidy of 85% is reached at 85 points (note that this is a blended subsidy
percentage based on the subsidy for each plan and the current enrollment distribution).
Retirees with less than 66 points are allowed access, but must pay 100% of the published
rates.
Funding Policy
The School System is required to contribute the annual required contribution of the
employer (ARC), an amount actuarially determined in accordance with the parameters of
GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial
liabilities (or funding excess) over a period not to exceed thirty years.
Annual OPEB Cost and Net OPEB Obligation
The School System had an actuarial valuation performed for the plan as of June 30, 2014, to determine the funded status of the plan as of that date as well as the employer’s annual
required contribution (ARC). The annual OPEB cost (expense) including current claims of
$16,986,000, including current claims, was $15,000 less than the ARC, due to adjustments
related to amortization and interest on the net OPEB obligation. The School System made contributions to the plan during the year ended June 30, 2015 of $12,679,041, resulting in a decrease of the net OPEB receivable of $4,306,959. The balance of the net OPEB
receivable at June 30, 2015 is $411,890. The School System’s annual OPEB cost, the
percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for
2015 are as follows:
2015 $ 16,986,000 74.64%(411,890)$
2014 16,324,000 75.95%(4,718,849)
2013 11,945,276 111.91%(8,644,472)
Fiscal Year
Ended June 30,
Annual OPEB
Cost
Percentage of
Annual OPEB
Cost Contributed Net OPEB Asset
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
80
16. OTHER POSTRETIREMENT EMPLOYEE BENEFITS (continued)
Board of Education (continued)
Funded Status and Funding Progress
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts
and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend.
Amounts determined regarding the funded status of the plan and the annual required
contributions of the employer are subject to continual revision as actual results are
compared with past expectations and new estimates are made about the future. The
schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents information that shows whether the actuarial
value of plan assets is increasing or decreasing over time relative to the actuarial accrued
liabilities for benefits.
The funded status of the plan as of June 30, 2015, was as follows:
Actuarial accrued liability (AAL) 185,310,000$
Actuarial value of plan assets 36,803,823
Unfunded actuarial accrued liability (UAAL) 148,506,177$
Funded ratio (actuarial value of plan assets/AAL) 19.86%
Actuarial Methods and Assumptions
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the members to that point. The actuarial
methods and assumptions used include techniques that are designed to reduce short-term
volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the
long-term perspective of the calculations. In the June 30, 2014, actuarial valuation, the entry age actuarial cost method was used. The
actuarial assumptions included a 7.5% investment rate of return (net of administrative
expenses) and an annual healthcare cost trend rate of 7.25% initially decreasing gradually
to 3.6%. Both rates include a 2.8% inflation assumption. The Plan’s unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on a closed basis. The remaining amortization period at June 30, 2015, was twenty-two years.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
81
17. CONTINGENCIES AND COMMITMENTS
County
In the normal course of operations, the County receives grant funds from various federal
and state agencies. The grant programs are subject to audit by agents of the granting
authority, the purpose of which is to ensure compliance with conditions precedent to the
granting of funds. Any liability for reimbursement which may arise as the result of these
audits is not believed to be material.
The County Commissioners and the Sheriff of Washington County are defendants in
various legal proceedings as of June 30, 2015. There are also certain unasserted claims that
could possibly be asserted. The Commissioners intend to defend all litigations against
them. In the Commissioners’ opinion, the liability, if any, in or arising from these litigations or any other legal proceedings in which the County is involved, will not have a
material adverse effect on its financial condition.
The County is committed under various contracts for the construction or acquisition of
fixed assets. These projects are generally budgeted in the Capital Projects Fund, and funding has been provided for their completion.
On June 23, 2014, the Board of County Commissioners of Washington County, Maryland
entered into a $4 million loan agreement with the Maryland Department of Business and
Economic Development and Mack Trucks, Inc. The loan proceeds were made for eligible project costs and does not require repayment unless specific employment levels are
not met. If such a condition occurs, repayments are guaranteed to DBED by the County.
Mack Trucks, Inc. is contractually obligated to the County to reimburse any payments
occurring as a result of the guarantee. As of June 30, 2015 there is no effect on amounts
reported on the County’s statement of net position or statement of activities as a result of this guarantee.
Board of Education
In the normal course of operations, the School System is subject to lawsuits and claims. In the opinion of management, the disposition of such lawsuits and claims will not have a
material effect on the School System’s financial position or results of operations.
As of June 30, 2015, the School System had entered into various school construction
commitments, which are not reflected in the financial statements since they will be funded by the State of Maryland or County sources, totaling approximately $22,422,079.
The School System entered into various school construction commitments that will be
funded by the State of Maryland or the County, totaling approximately $9,830,241 as of
June 30, 2015, and are included in encumbrances.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
82
17. CONTINGENCIES AND COMMITMENTS (continued)
Board of Education (continued)
The School System leases classroom space, cafeteria space, storage, and parking deck
passes for the Barbara Ingram School for the Arts. These leases are renewable on an annual
basis. The lease for the parking deck spaces does not have a set term. Total required
minimum monthly payments for the year ended June 30, 2015 were approximately
$94,756. Rent expense for these leases amounted to $111,961 for the year ended June 30, 2015.
The School System participates in a number of state and federally assisted grant programs,
which are subject to financial and compliance audits by the grantors or their
representatives. Such federal programs were audited in accordance with the Federal Office of Management and Budget’s Circular No. A-133, Audits of States, Local Governments,
and Non-Profit Organizations for the current year. The amount of expenditures which may
be disallowed by the granting agencies cannot be determined at this time, although the
School System expects such amounts, if any, to be immaterial.
18. COMMITTED AND ASSIGNED FUND BALANCES
Fund balances reflected in the governmental funds balance sheet as of June 30, 2015 are
categorized as follows:
General Fund Total
Non-Spendable
Inventory $ 763,939 $ - $ - $ 763,939
Long-term receivable 300,000 - - 300,000
Restricted
Programs and activities 239,861 - 619,912 859,773
Workers compensation 179,107 - - 179,107
Capital projects - 17,206,344 - 17,206,344
Committed
Contingencies 37,433,542 - - 37,433,542
Programs and activities 29,318 - - 29,318
Capital projects - 45,315,658 - 45,315,658
Assigned
Programs and activities 13,811 - 73,212 87,023
Unassigned (632,225) - (184,638) (816,863)
Totals $ 38,327,353 $ 62,522,002 $ 508,486 $ 101,357,841
Non-major
Governmental
Funds
Capital
Projects Fund
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
83
19. RETIREMENT PLAN - FIRE AND RESCUE VOLUNTEERS (continued)
On September 26, 2000, the Board of County Commissioners approved the Volunteer
Length of Service Award Program (LOSAP), a defined benefit plan for eligible volunteers of Washington County fire, rescue, emergency medical services or support organizations.
LOSAP, which will be funded entirely by the County General Fund, provides benefit
payments to volunteers who have completed certain eligibility and years of service
requirements. An active volunteer who has attained age 62 and has been credited with a
minimum of 25 years of active LOSAP Service is eligible to receive, until his or her death, a monthly benefit payment of $200, or may elect an actuarially reduced benefit in the form
of a joint survivor annuity.
An active volunteer, who has completed more than 25 years of Active LOSAP Service
Credit, is eligible to receive, until his or her date of death, an additional monthly benefit payment of $15 for each year of active LOSAP service credit in excess of 25 years, not to
exceed a total monthly benefit payment of $350. No LOSAP benefits were paid before
January 1, 2007. Generally, a volunteer must be an active volunteer on or after January 1,
2007, to be eligible for any benefit under LOSAP. LOSAP also provides for death and
disability benefits.
The 2014 calendar year census shows 800 volunteers receiving at least 50 points, which
qualifies them for LOSAP credit. 151 retired volunteers and 8 spouses are participating in
LOSAP. The County funds LOSAP in annual amounts determined by an actuary.
Investments
The table below summarizes the target asset class weighting, along with the allowable
ranges for each class.
Investment Type Range Target
Equities: Large-Cap U.S. Stocks 25-45% 35% Small-Cap U.S. Stocks 0-15% 10%
International Stocks 5-20% 15%
REITS 0-10% 5%
Fixed Income: High Yield Bonds 0-15% 10% Investment Grade Bonds 5-30% 23%
Money Market 0-10% 2%
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
84
19. RETIREMENT PLAN - FIRE AND RESCUE VOLUNTEERS
The long-term expected rate of return on pension plan investments was determined using a
standard building block approach. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset
allocation percentage and adding expected inflation. Best estimates of arithmetic assumed rates
of return for each class included in the pension plans’ general target asset allocation as of June
30, 2015 is as follows:
Investment Type
% of
Portfolio
Assumed
Rate of
Return
Equities:60%-70%9%-11%
Fixed Income:30%-40%3%-5%
Net pension liability
The net pension liability is equal to the total pension liability minus the net position of the
plan. The result as of June 30, 2015 is as follows:
Total pension liability 12,738,172$
Net position (7,963,285)
Net pension liability 4,774,887$ Net position as a percentage of total pension liability is 62.52%.
Sensitivity of the net pension liability to changes in the discount rate
The following presents the net pension liability of the plan, calculated using a discount rate of 7.75% as well as what the plan’s net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower (6.75%) or 1-percentage point higher
(8.75%) than the current rate:
1.0% decrease
(6.75%)
Current rate
7.75%
1.0%
increase
(8.75%)
Net pension liability 6,579,143$ 4,774,887$ 3,293,880$
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
85
19. RETIREMENT PLAN - FIRE AND RESCUE VOLUNTEERS (continued)
Pension expense and deferred outflows of resources and deferred inflows of resources
For the year ended June 30, 2015, the County recognized pension expense of ($53,660). As
of June 30, 2015, the County reported deferred outflows of resources and deferred inflows
of resources related to the length of service award program from the following sources:
Difference between expected and actual experience -$ -$
Change in assumptions - -
Net difference between projected and actual investment
earnings 161,215 -
Total 161,215$ -$
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
The above amounts reported as deferred outflows of resources and deferred inflows of
resources related to pensions will be recognized in the pension expense as follows:
Years Ended June 30, Amount
2016 40,304$
2017 40,304
2018 40,304
2019 40,303
Total 161,215$
20. CHANGE IN ACCOUNTING PRINCIPLE
COUNTY
Net position of the governmental activities has been restated by negative $48,132,082 due to the implementation of GASB Statement No. 68, Accounting and Financial Reporting for
Pension and related GASB Statement No. 71, Pension Transition for Contributions Made
Subsequent to the Measurement Date – an amendment of GASB Statement in recording the
beginning net pension liability and the beginning deferred outflow of resources,
contribution subsequent to the measurement date, for all the defined benefit pension plans.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2015
86
20. CHANGE IN ACCOUNTING PRINCIPLE (continued)
BOARD OF EDUCATION
Net position of the Board of Education has been restated by negative $13,981,081 due to the implementation of GASB Statement No. 68, Accounting and Financial Reporting for
Pension and related GASB Statement No. 71, Pension Transition for Contributions Made
Subsequent to the Measurement Date – an amendment of GASB Statement in recording the
beginning net pension liability and the beginning deferred outflow of resources, contribution subsequent to the measurement date, for all the defined benefit pension plans.
This page intentionally left blank.
REQUIRED SUPPLEMENTARY INFORMATION
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Schedule of Funding Progress
June 30, 2015
89
Other Postemployment Benefit (OPEB) Trust
7/1/2012 $ 9,122,297 $ 16,720,742 $ 7,598,445 54.56% $ 34,478,486 22.04%
7/1/2013 11,216,550 18,745,334 7,528,784 59.84% 35,288,757 21.33%
7/1/2014 14,285,774 19,164,845 4,879,071 74.54% 33,098,009 14.74%
UAAL as a
Percentage of
Covered
Payroll [(b-a)/c]
Covered
Payroll (c)
Funded Ratio
(a/b)
Unfunded
AAL (UAAL)
(b-a)
Actuarial
Accrued
Liability
(AAL) - Entry
Age (b)
Actuarial
Value of
Assets (a)
Actuarial
Valuation
Date
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Schedule of Changes in Pension Fund Net Pension Liability and Related Ratios - General
Employees’ Pension Fund June 30, 2015 and 2014
90
2015 2014
Service Cost: Retirement benefits Administration 3,508,850$ 6,922,217$
Interest 10,252,003 7,708,164
Benefit payments, including refunds of member contributions, death, & terminations (6,880,888) (6,004,033)
Net changes in total pension liability 6,879,965 8,626,348
Total pension liability - beginning 135,660,155 127,033,807
Total pension liability - ending (a)142,540,120$ 135,660,155$
Plan fiduciary net position
Contributions - employer 6,786,549$ 6,017,521$
Contributions - member 1,871,200 1,876,133
Net investment income 4,747,193 12,817,264
Receipts of In-kind 220,613 -
Benefit payments, including refunds of member contributions (6,880,887) (6,004,103)
Administrative expense (604,197) (238,016)
Net changes in plan fiduciary net position 6,140,471 14,468,799
Plan fiduciary net positions - beginning 85,971,016 71,502,217
Plan fiduciary net positions - ending (b)92,111,487$ 85,971,016$
County's net pension - liability - ending (a) - (b)50,428,633$ 49,689,139$
Plan fiduciary net position as a percentage of total pension liability 64.62%63.37%
Covered employee payroll 33,098,009$ 35,288,757$
Net liability as a percentage of covered payroll 152.36%140.81%
Annual money-weighted rate of return, net of investment expense 5.52%17.59%
Notes to schedule:
This information is not available for previous years.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Schedule of General Employees’ Pension Fund Employer Contributions
June 30, 2015 and 2014
91
2015 2014
Actuarially determined contribution 6,786,549$ 6,442,087$
Contributions in relation to the actuarially determined contributions 6,786,549 6,017,521
Contributions deficiency (excess)-$ 424,566$
Covered employee payroll 33,098,009$ 35,288,757$
Contributions as a percentage of covered employee payroll 20.50%17.05%
Notes to schedule
Valuation Date
Actuarially determined contributions rates are calculated as of July 1, 2013,
12 months prior to the end of the fiscal year in which contributions are reported
Methods and assumptions used to determine contribution rates:
Cost method Entry age normal
Investment return 7.75%
Mortality 83 GAM sex distinct
Turnover T4
Salary Scale 4.0% increases per year
Retirement age of DROP Election
Valuation of Assets
Notes to schedule:
This information is not available for FY13 and prior.
10% each year from two years following early retirement date to two years following
normal retirement date, 50% two years following year first eligible for normal retirement
date, 25% each of next 4 years, 100% 7 years after normal retirement date.
Market value as reported by the plan administrator, adjusted by a fraction of the
investment (gains)/losses for the plan years preceding the current valuation year.
Actuarial value can not exceed 120% of actual market value or be less than 80%.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Schedule of Changes in Pension Fund Net Pension Liability and Related Ratios - Length of
Service Award Fund June 30, 2015 and 2014
92
2015 2014
Service Cost: Retirement benefits Administration 143,037$ 147,049$
Interest 922,814 872,518
Benefit payments, including refunds of member contributions, death, & terminations (461,316) (431,634)
Net changes in total pension liability 604,535 587,933
Total pension liability - beginning 12,133,637 11,545,704
Total pension liability - ending (a)12,738,172$ 12,133,637$
Plan fiduciary net position
Contributions - employer 600,000$ 600,000$
Net investment income 381,511 1,074,025
Receipts of In-kind - 15,232
Benefit payments, including refunds of member contributions (461,316) (431,634)
Administrative expense (23,215) (27,429)
Net changes in plan fiduciary net position 496,980 1,230,194
Plan fiduciary net positions - beginning 7,466,305 6,236,111
Plan fiduciary net positions - ending (b)7,963,285$ 7,466,305$
County's net pension - liability - ending (a) - (b)4,774,887$ 4,667,332$
Plan fiduciary net position as a percentage of total pension liability 62.52%61.53%
Covered employee payroll NA NA
Net liability as a percentage of covered payroll NA NA
Annual money-weighted rate of return, net of investment expense 5.11%16.78%
Notes to schedule:
This information is not available for FY13 and prior.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Schedule of Volunteer Length of Service Award Fund Employer Contributions
June 30, 2015 and 2014
93
2015 2014
Actuarially determined contribution 600,000$ 585,843$
Contributions in relation to the actuarially determined contributions 600,000 600,000
Contributions deficiency (excess)-$ (14,157)$
Covered employee payroll NA NA
Contributions as a percentage of covered employee payroll NA NA
Notes to schedule
Valuation Date
Actuarially determined contributions rates are calculated as of July 1, 2013,
12 months prior to the end of the fiscal year in which contributions are reported
Methods and assumptions used to determine contribution rates:
Cost method Entry age normal
Investment return 7.75%
Mortality 83 GAM sex distinct
Turnover T5 Table
Salary Scale 4.0% increases per year
Retirement age Normal retirement age or
attained age, if later
Expenses Included in the normal cost
calculation
Valuation of Assets Market value as reported by
the plan administrator
Notes to schedule:
This information is not availed for previous years.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Combining Statements of Financial Schedules
June 30, 2015
94
Non-Major Governmental Funds
The Community Grant Management is a special revenue fund used to account for all activities
conducted by this department of the County. The Community Partnership’s core function is to coordinate services and identify needs of the children, youth and families of Washington County.
The Inmate Welfare Fund is a special revenue fund used to account for commissary activities at
the Washington County Detention Center and other inmate related revenue and expenses.
The Contraband Fund is a special revenue fund used for the deposit and temporary holding of
seized U.S. Currency related to Narcotics Investigations. These monies are held in escrow
pending civil or criminal court proceedings or abandonment. Released funds are used for law
enforcement related expenses within Washington County at the discretion of the Board of
Directors for the Washington County Narcotics Task Force.
The Agricultural Education Center Fund is a special revenue fund used to account for all
transactions of the Agricultural Education Center (Center). The purpose of this Center is to
promote agricultural pursuits in Washington County and to educate the general public and
members of the agricultural community in all areas regarding agriculture in the County.
The Hotel Rental Tax Fund is a special revenue fund for accounting of taxes collected on
transient charges paid to a hotel or motel located in the County, and for the distribution of the tax
revenue to the Hagerstown/Washington County Convention and Visitors Bureau, municipalities
and for special projects for the County.
The Gaming Fund is a special revenue fund for accounting of permits and licensing fees, for tip
jar and bingo gaming activity. The Gaming Fund distributes funds to the various fire and rescue
companies and charitable organizations in the County.
The Land Preservation Fund is a special revenue fund established to account for State and
County programs related to preserving agriculture land in the County. A portion of the County’s
transfer tax is used to purchase permanent easements through an installment purchase program
and a portion of the transfer tax is remitted to the State for the purchase of easements and
transferable development rights.
The Hagerstown/Eastern Panhandle Metropolitan Planning Organization (HEPMPO) Fund is a
special revenue fund used to account for transportation planning activities. The objective of the
organization is to ensure that a continuing, cooperative, and comprehensive approach for short
and long range transportation planning is established and maintained for the metropolitan area.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Combining Statements of Financial Schedules
June 30, 2015
95
Non-Major Proprietary Funds
The Public Transit Fund accounts for the activities of the public bus transportation system.
The Golf Course Fund accounts for activities at the Black Rock Golf Course including an
18-hole golf course, a full service pro shop, and a public restaurant.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Combining Balance Sheet – Non-Major Governmental Funds
As of June 30, 2015
96
Agricultural Hotel Total
Community Grant Inmate Education Rental Land Non-major
Management Welfare Contraband Center Tax Gaming Preservation HEPMPO Funds
Cash 64,994$ 113,253$ 123,792$ 46,475$ 390,282$ 1,530,980$ 410,030$ -$ 2,679,806$
Accounts receivable - - - - 217,603 98,516 - - 316,119
Due from other governmental agencies 291,915 - - - - - - 273,132 565,047
TOTAL ASSETS 356,909$ 113,253$ 123,792$ 46,475$ 607,885$ 1,629,496$ 410,030$ 273,132$ 3,560,972$
LIABILITIES, AND FUND BALANCES
Accounts payable 239,064$ 14,962$ -$ 4,554$ 284,280$ 1,558,639$ 8,345$ 98,368$ 2,208,212$
Due to other funds - - - - - - - 206,490 206,490
Accrued expenses 5,854 428 - 902 - 2,139 3,665 48 13,036
Other liabilities - - 66,082 - - - 243,857 - 309,939
Unearned revenue 94,166 - - - - 36,525 184,118 - 314,809
TOTAL LIABILITIES 339,084 15,390 66,082 5,456 284,280 1,597,303 439,985 304,906 3,052,486
Restricted 1,430 97,863 57,710 - 323,605 - 139,304 - 619,912
Committed - - - - - - - - -
Assigned - - - 41,019 - 32,193 - - 73,212
Unassigned 16,395 - - - - - (169,259) (31,774) (184,638)
TOTAL FUND BALANCES 17,825 97,863 57,710 41,019 323,605 32,193 (29,955) (31,774) 508,486
TOTAL LIABILITIES, AND FUND BALANCES 356,909$ 113,253$ 123,792$ 46,475$ 607,885$ 1,629,496$ 410,030$ 273,132$ 3,560,972$
ASSETS
LIABILITIES
FUND BALANCES
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Combining Statement of Revenue, Expenditures, and Changes in Fund Balances – Non-Major Governmental Funds
For the Year Ended June 30, 2015
97
Community
Grant
Management
Inmate
Welfare Contraband
Agricultural
Education
Center
Hotel Rental
Tax Gaming
Land
Preservation HEPMPO
Total Non-
major Funds
Other local taxes -$ -$ -$ -$ 2,048,632$ -$ 42,158$ -$ 2,090,790$
Licenses and permits - - - - - 2,129,873 - - 2,129,873
Charges for services - 314,874 - - - - - - 314,874
Revenue from uses of property - - - 38,482 - - - - 38,482
Reimbursed expenses 60 - - 2,950 - - - - 3,010
Miscellaneous revenues 1,495 74,841 24,969 - - - - 99,804 201,109
Shared taxes and grants 2,704,234 - - - - - 371,363 418,550 3,494,147
TOTAL REVENUE 2,705,789 389,715 24,969 41,432 2,048,632 2,129,873 413,521 518,354 8,272,285
Public safety - 384,174 27,035 - - 984,865 - - 1,396,074
Parks, recreation and culture - - - 201,435 - - - - 201,435
Land preservation - - - - - - 1,094,340 - 1,094,340
General operations - - - - - 154,188 - 526,494 680,682
Community promotion 2,977,392 - - - 1,996,145 984,866 - - 5,958,403
TOTAL EXPENDITURES 2,977,392 384,174 27,035 201,435 1,996,145 2,123,919 1,094,340 526,494 9,330,934
EXCESS (DEFICIENCY) OF REVENUE
OVER EXPENDITURES (271,603) 5,541 (2,066) (160,003) 52,487 5,954 (680,819) (8,140) (1,058,649)
OTHER FINANCING SOURCES
Transfers in 291,420 - - 189,190 - - 524,432 20,830 1,025,872
Transfers out - - - - (387,000) - - - (387,000)
TOTAL OTHER FINANCING SOURCES (USES)291,420 - - 189,190 (387,000) - 524,432 20,830 638,872
NET CHANGES IN FUND BALANCES 19,817 5,541 (2,066) 29,187 (334,513) 5,954 (156,387) 12,690 (419,777)
FUND BALANCES - BEGINNING OF YEAR (1,992) 92,322 59,776 11,832 658,118 26,239 126,432 (44,464) 928,263
FUND BALANCES - END OF YEAR 17,825$ 97,863$ 57,710$ 41,019$ 323,605$ 32,193$ (29,955)$ (31,774)$ 508,486$
REVENUE
EXPENDITURES
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Combining Statement of Net Position – Non-Major Proprietary Funds
As of June 30, 2015
98
Public Golf Total
Transit Course Non-Major
Fund Fund Funds
ASSETS
Current Assets:
Cash and short-term investments 513,389$ 151,192$ 664,581$
Accounts receivable 7,284 7,746 15,030
Unbilled receivables 561 - 561
Due from other governmental agencies 335,959 - 335,959
Inventories 69,474 51,977 121,451
Total current assets 926,667 210,915 1,137,582
Noncurrent Assets:
Projects under construction - 29,339 29,339
Property plant and equipment 7,531,807 4,581,481 12,113,288
Accumulated depreciation (4,216,189) (2,382,514) (6,598,703)
Total noncurrent assets 3,315,618 2,228,306 5,543,924
TOTAL ASSETS 4,242,285 2,439,221 6,681,506
LIABILITIES
Current Liabilities:
Accounts payable 57,331 22,474 79,805
Accrued expenses 35,729 28,509 64,238
Unearned revenue 30,000 550 30,550
Compensated absences 47,683 28,904 76,587
Other liabilities - 24,236 24,236
Total current liabilities 170,743 104,673 275,416
Non Current Liabilities:
Compensated absences 15,153 21,679 36,832
TOTAL LIABILTIES 185,896 126,352 312,248
NET POSITION
Net invested in capital assets 3,315,618 2,228,306 5,543,924
Unrestricted 740,771 84,563 825,334
TOTAL NET POSITION 4,056,389$ 2,312,869$ 6,369,258$
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Combining Statement of Revenue, Expenses and Changes in Fund Net Position – Non-Major
Proprietary Funds For the Year Ended June 30, 2015
99
Public Golf Total
Transit Course Non-Major
Fund Fund Funds
OPERATING REVENUE
Charges for services 445,378$ 831,113$ 1,276,491$
Miscellaneous 17,746 5,367 23,113
TOTAL OPERATING REVENUE 463,124 836,480 1,299,604
OPERATING EXPENSES
Salaries and wages 1,164,815 492,167 1,656,982
Fringe benefits 513,370 237,432 750,802
Utilities 27,616 54,087 81,703
Insurance 31,491 9,157 40,648
Repairs and maintenance 108,162 62,654 170,816
Supplies 47,070 4,244 51,314
Cost of goods sold - 97,322 97,322
Contracted services 229,553 3,093 232,646
Rentals and leases 41,758 65,112 106,870
Other operating 234,191 125,105 359,296
Uncollectible accounts 60 - 60
Controllable assets - 5,135 5,135
Depreciation 612,692 83,632 696,324
TOTAL OPERATING EXPENSES 3,010,778 1,239,140 4,249,918
OPERATING LOSS (2,547,654) (402,660) (2,950,314)
OTHER INCOME
Interest expense 30 - 30
Gain on disposal of assets (18,130) 2,389 (15,741)
TOTAL OTHER INCOME (18,100) 2,389 (15,711)
LOSS BEFORE OPERATING TRANSFERS AND GRANTS (2,565,754) (400,271) (2,966,025)
OPERATING TRANSFERS 458,950 1,351,590 1,810,540
GRANTS FOR OPERATIONS 1,337,954 - 1,337,954
LOSS BEFORE CAPITAL TRANSFERS AND GRANTS (768,850) 951,319 182,469
CAPITAL TRANSFERS - 99,000 99,000
GRANTS FOR CAPITAL PROJECTS 580,300 15,000 595,300
CHANGES IN NET POSITION (188,550) 1,065,319 876,769
NET POSITION - BEGINNING OF YEAR 4,244,939 1,247,550 5,492,489
NET POSITION - END OF YEAR 4,056,389$ 2,312,869$ 6,369,258$
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Combining Statement of Cash Flows – Non-Major Proprietary Funds
For Year Ended June 30, 2015
100
Public Golf Total
Transit Course Non-Major
Fund Fund Funds
Cash Flows from Operating Activities
Receipts from customers 1,145,878$ 839,914$ 1,985,792$
Payments to suppliers (691,670) (431,716) (1,123,386)
Payments to employees (1,683,342) (722,439) (2,405,781)
Net Cash from Operating Activities (1,229,134) (314,241) (1,543,375)
Cash Flows from Noncapital Financing Activities
Operating contributions 1,796,904 1,351,590 3,148,494
Increase (decrease) in due to/from other funds (195,830) (863,556) (1,059,386)
Net Cash from Noncapital Financing Activities 1,601,074 488,034 2,089,108
Cash Flows from Capital and Related Financing Activities
Interest paid on notes and bond payable 30 - 30
Acquisition and construction of capital assets (420,951) (139,790) (560,741)
Gain (loss) on the sale of assets (18,130) 2,389 (15,741)
Contribution for capital acquisitions 580,300 114,000 694,300
Net Cash from Capital and Related Financing Activities 141,249 (23,401) 117,848
Net change in cash 513,189 150,392 663,581
Cash, beginning of year 200 800 1,000
Cash, End of Year 513,389$ 151,192$ 664,581$
Reconciliation of Operating Loss to Net Cash from Operating Activities
Operating loss (2,547,654)$ (402,660)$ (2,950,314)$
Adjustments to reconcile operating income to net cash
from operating activities:
Depreciation 612,692 83,632 696,324
Changes in assets and liabilities:
Accounts receivable (7,183) 3,134 (4,049)
Unbilled receivables (9) - (9)
Due to/from other government entities 659,946 - 659,946
Inventories 4,918 (8,666) (3,748)
Accounts payable and other liabilities 23,313 (1,638) 21,675
Accrued expenses 5,322 9,570 14,892
Unearned revenue 30,000 300 30,300
Compensated absences (10,479) 2,087 (8,392)
Net Cash from Operating Activities (1,229,134)$ $ (314,241) $ (1,543,375)
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BUDGET AND ACTUAL SCHEDULE
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Schedule of Revenue, Expenditures, and Changes in Fund Balance-Budget and Actual
General Fund For the Year Ended June 30, 2015
103
Variance with
Budgeted Amounts Final Budget -
Original Final Actual Amounts Positive (Negative)
REVENUE
Property Taxes
Real property tax 106,636,980$ 106,636,980$ 106,526,518$ (110,462)$
Personal property tax 12,124,470 12,124,470 12,761,837 637,367
Property tax interest income 480,000 480,000 411,564 (68,436)
Other property tax 719,190 719,190 718,412 (778)
State administrative fees (568,460) (568,460) (508,043) 60,417
Property tax discounts and credits (1,473,980) (1,473,980) (1,396,755) 77,225
Total Property Taxes 117,918,200 117,918,200 118,513,533 595,333
Other Local Taxes
Income tax 72,230,000 72,230,000 73,603,292 1,373,292
Admissions and amusement tax 310,000 310,000 281,568 (28,432)
Recordation tax 5,500,000 5,500,000 6,078,677 578,677
Trailer tax 470,000 470,000 513,535 43,535
Total Other Local Taxes 78,510,000 78,510,000 80,477,072 1,967,072
Other Revenues
Licenses and permits 1,450,750 1,450,750 1,362,651 (88,099)
Court costs and fines 326,700 333,030 383,897 50,867
Charges for services 427,900 427,900 434,237 6,337
Revenues from use of property 1,141,440 1,141,440 881,502 (259,938)
Reimbursed expenses 1,126,430 1,126,430 1,212,768 86,338
Miscellaneous revenues 1,773,400 1,820,750 452,632 (1,368,118)
Grant and shared revenues 1,864,190 3,441,449 3,355,253 (86,196)
Highway revenues 1,525,160 1,582,770 1,554,706 (28,064)
Total Other Revenues 9,635,970 11,324,519 9,637,646 (1,686,873)
TOTAL REVENUE 206,064,170 207,752,719 208,628,251 875,532
EXPENDITURES
General Government
Legislative
County Commissioners 213,890 213,890 221,532 (7,642)
County Clerk 95,290 95,290 92,323 2,967
County Administrator 406,840 406,840 405,907 933
Public Relations 373,530 373,530 384,125 (10,595)
Purchasing 491,340 491,340 483,525 7,815
Total Legislative 1,580,890 1,580,890 1,587,412 (6,522)
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Schedule of Revenue, Expenditures, and Changes in Fund Balance-Budget and Actual
General Fund For the Year Ended June 30, 2015
104
Variance with
Budgeted Amounts Final Budget -
Original Final Actual Amounts Positive (Negative)
Judicial
Circuit Court 1,439,400$ 1,439,400$ 1,420,130$ 19,270$
Orphan's Court 29,820 29,820 27,243 2,577
State's Attorney 2,963,590 2,963,590 2,921,034 42,556
Sheriff - Judicial 2,271,750 2,271,750 2,258,447 13,303
Sheriff - Process Servers 127,920 134,530 129,237 5,293
Grants - 278,943 274,996 3,947
Total Judicial 6,832,480 7,118,033 7,031,087 86,946
Election Board 926,970 926,970 838,764 88,206
Financial Administration
Budget and Finance 1,404,360 1,361,220 1,321,112 40,108
Independent Auditing 70,000 70,000 59,730 10,270
Treasurer 409,070 409,070 404,491 4,579
Information Technologies 2,035,800 2,035,800 2,034,853 947
Total Financial Administration 3,919,230 3,876,090 3,820,186 55,904
County Attorney 650,690 650,690 624,484 26,206
Human Resources 648,350 648,350 669,273 (20,923)
Planning and Zoning
Planning and Zoning 638,500 638,500 625,503 12,997
Board of Zoning Appeals 53,440 53,440 42,810 10,630
Total Planning and Zoning 691,940 691,940 668,313 23,627
Public Works
Department of Public Works 326,970 326,970 228,689 98,281
Public Works - Plan Review and Permitting 1,841,550 1,955,980 1,751,200 204,780
Public Works - Engineering 1,480,510 1,480,510 1,449,157 31,353
Public Works - Construction 1,814,830 1,700,400 1,626,536 73,864
Total Public Works 5,463,860 5,463,860 5,055,582 408,278
County Owned Buildings
Martin Luther King Center 108,700 108,700 78,473 30,227
Administrative Building 219,600 219,600 166,689 52,911
Administrative Building II 91,850 91,850 88,982 2,868
Court House 562,730 562,730 540,090 22,640
County Office Building 214,610 214,610 167,842 46,768
Administration Annex 55,720 55,720 47,649 8,071
Central Services 201,770 201,770 184,400 17,370
Rental Properties 2,000 2,000 2,283 (283)
Library Maintenance 35,500 35,500 28,856 6,644
Dwyer Center 31,390 31,390 29,378 2,012
Public Facilities Annex 80,060 80,060 44,004 36,056
Total County Owned Buildings 1,603,930 1,603,930 1,378,646 225,284
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Schedule of Revenue, Expenditures, and Changes in Fund Balance-Budget and Actual
General Fund For the Year Ended June 30, 2015
105
Variance with
Budgeted Amounts Final Budget -
Original Final Actual Amounts Positive (Negative)
Community Promotion
Contributions to Non-profits 1,685,420$ 1,685,420$ 1,580,818$ 104,602$
Economic Development Commission 549,500 549,500 525,355 24,145
Total Community Promotion 2,234,920 2,234,920 2,106,173 128,747
Total General Government 24,553,260 24,795,673 23,779,920 1,015,753
Public Safety
Sheriff Departments
Patrol 9,534,430 9,572,830 9,174,373 398,457
Sheriff Auxiliary - - 36,040 (36,040)
Narcotics Task Force 632,430 634,060 625,081 8,979
Grants - 318,083 125,540 192,543
Total Sheriff Departments 10,166,860 10,524,973 9,961,034 563,939
Fire and Rescue Services
Volunteer Fire and Rescue - County Grants 7,056,310 7,056,310 6,798,569 257,741
Air Unit 43,770 55,770 56,944 (1,174)
Special Operations 384,020 372,020 373,533 (1,513)
Total Fire and Rescue Services 7,484,100 7,484,100 7,229,046 255,054
Corrections
Detention Center 13,200,620 13,200,620 12,730,678 469,942
Central Booking 832,960 832,960 820,381 12,579
Total Corrections 14,033,580 14,033,580 13,551,059 482,521
Other Public Safety
911 - Communications 4,165,790 4,165,790 3,988,537 177,253
Wireless Communications 1,343,660 1,343,660 1,298,864 44,796
Emergency Management 124,520 124,520 136,266 (11,746)
Fire and Rescue Operations 1,181,960 1,181,960 1,164,315 17,645
Medical Examiner 15,000 15,000 17,170 (2,170)
Civil Air Patrol 3,600 3,600 3,600 -
Animal Control 1,199,320 1,199,320 1,199,320 -
Grants - 741,645 606,100 135,545
Other Public Safety 8,033,850 8,775,495 8,414,172 361,323
Total Public Safety 39,718,390 40,818,148 39,155,311 1,662,837
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Schedule of Revenue, Expenditures, and Changes in Fund Balance-Budget and Actual
General Fund For the Year Ended June 30, 2015
106
Variance with
Budgeted Amounts Final Budget -
Original Final Actual Amounts Positive (Negative)
Health 2,339,270$ 2,339,270$ 2,339,270$ -$
Social Services
Total Contributions to Other Agencies 331,990 331,990 331,990 -
Grants - 238,588 239,527 (939)
Total Social Services 331,990 570,578 571,517 (939)
Education 103,810,560 103,810,560 103,810,462 98
Parks, Recreation, and Culture
Total Contributions to Other Agencies 2,892,330 2,892,330 2,892,330 -
Parks Department 1,837,750 1,837,750 1,785,623 52,127
Martin L. Snook Park Pool 123,700 123,700 119,951 3,749
Fitness and Recreation 824,440 824,440 825,024 (584)
Total Parks, Recreation, and Culture 5,678,220 5,678,220 5,622,928 55,292
Conservation of Natural Resources
Weed Control 192,170 199,210 189,358 9,852
Agricultural Extension Service 225,650 225,650 225,647 3
Cooperative Extension 38,730 38,730 38,730 -
Soil Conservation Service 132,240 132,240 132,240 -
Gypsy Moth Program 10,000 10,000 9,375 625
Total Conservation of Natural Resources 598,790 605,830 595,350 10,480
Highway 9,313,250 9,370,860 10,103,368 (732,508)
General Operations 510,010 510,010 558,112 (48,102)
Unallocated Employee Insurance and Benefits 694,270 694,270 1,445,214 (750,944)
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Schedule of Revenue, Expenditures, and Changes in Fund Balance-Budget and Actual
General Fund For the Year Ended June 30, 2015
107
Variance with
Budgeted Amounts Final Budget -
Original Final Actual Amounts Positive (Negative)
Intergovernmental
Golf Course operating transfer 151,590$ 151,590$ 1,351,590$ (1,200,000)$
HEPMPO operating transfer 7,510 7,510 7,510 -
Land Preservation operating transfer 96,810 96,810 124,432 (27,622)
Water Quality operating transfer 95,820 95,820 81,808 14,012
Public Transit operating transfer 472,270 472,270 472,270 -
Airport operating transfer 14,500 14,500 14,500 -
Capital Projects operating transfer 1,800,000 1,800,000 2,800,000 (1,000,000)
Solid Waste operating transfer 491,360 491,360 491,360 -
Grants Management operating transfer 248,280 291,420 291,420 -
Agricultural Education Center operating
transfer 189,190 189,190 189,190 -
Municipality in lieu of bank shares 38,550 38,550 38,543 7
Total Intergovernmental 3,605,880 3,649,020 5,862,623 (2,213,603)
Debt Service 14,910,280 14,910,280 14,652,478 257,802
TOTAL EXPENDITURES 206,064,170 207,752,719 208,496,553 (743,834)
EXCESS (DEFICIENCY) OF REVENUES OVER
EXPENDITURES -$ -$ 131,698$ 131,698$
OTHER FINANCING SOURCES (USES)
Principal amount of new debt for advance refunding 26,026,715 26,026,715
Deposit to escrow fund for advance refunding and
repayment of loans (26,021,529) (26,021,529)
TOTAL OTHER FINANCING SOURCES (USES)5,186$ 5,186$
NET CHANGES IN FUND BALANCE 136,884
FUND BALANCE - BEGINNING 38,190,469
FUND BALANCE - ENDING 38,327,353$
OTHER SCHEDULES
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Local Management Board - Schedule of Revenue and Expenditures - Regulatory Basis
For the Year Ended June 30, 2015
109
REVENUE
Community Partnership Agreement (CPA)
Governor's Office for Children 693,372$
Non- Community Partnership Agreement (Non-CPA)
General Fund 291,420
Other Revenue 1,555
Md State Department of Education 466,623
Dept. of Housing and Community Development 1,544,238
Total Non-Community Partnership Agreement Revenue 2,303,836
TOTAL REVENUE 2,997,208
EXPENDITURES
Community Partnership Agreement (CPA)
Administrative :
Salaries 42,718
Benefit costs 22,282
Total CPA administrative expenditures 65,000
Programs:
Rural Out of School Time Initiative 122,500
Juvenile Delinquency Prevention & Diversion 174,625
Tomorrow's Leaders 44,181
GOC-School Based Mental Health 69,650
Post-Secondary Education & Training Coordination 60,545
Family Centered Support Services 35,700
Regional Family Navigation Program 121,171
Total CPA program expenditures 628,372
Non-Community Partnership Agreement (CPA)
Administrative:
Salaries 88,372
Benefit costs 57,080
Advertising 197
Community service awards 1,666
Office supplies 912
Other Miscellaneous 12
Personal mileage 705
Printing Expense 120
Travel Expenses 964
Entertainment/business expense 262
Contracted/purchased services 100
Training 1,690
Copy machine rental 1,120
Telephone expenses 659
Total non-CPA administrative expenditures 153,859
Programs:
Teen Pregnancy Prevention 119,300
MSDE - Healthy Families 466,623
Dept. of Housing and Community Development 1,544,238
Total non-CPA program expenditures 2,130,161
TOTAL EXPENDITURES 2,977,392
EXCESS (DEFICIENCY) OF REVENUE OVER EXPENDITURES 19,816$
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Local Management Board - Schedule of Earned Reinvestment
For the Year Ended June 30, 2015
110
BALANCE AS OF JULY 1, 2014 1,429$
REVENUE
Interest Earned 1
BALANCE AS OF JUNE 30, 2015 1,430$
WASHINGTON COUNTY, MARYLAND B-1
APPENDIX B
PROPOSED FORMS OF OPINIONS OF BOND COUNSEL
PROPOSED FORM OF OPINION REGARDING THE PUBLIC IMPROVEMENT BONDS
[Date of Issuance]
County Commissioners of Washington County
Hagerstown, Maryland
Dear County Commissioners:
We have acted as Bond Counsel to County Commissioners of Washington County (the “Issuer”) in
connection with the issuance of its $___________ County Commissioners of Washington County Public Improvement
Bonds of 2016 (the “Bonds”), dated the date hereof. All capitalized terms not defined herein shall have the meanings
set forth in the Bonds.
We have examined the law and such certified proceedings and other materials as we deem necessary to render
the opinions set forth below. The scope of our engagement as bond counsel extends solely to an examination of the
facts and law incident to rendering the opinions specifically expressed herein.
As to questions of fact material to our opinion, without undertaking to verify the same by independent
investigation, we have relied upon the certified proceedings of the Issuer and certifications by public officials, without undertaking to verify the same by independent investigation.
We have assumed the accuracy and truthfulness of all public records and of all certifications, documents and other proceedings examined by us that have been executed or certified by public officials acting within the scope of
their official capacities, and we have not independently verified the accuracy or truthfulness thereof. We have also assumed the genuineness of the signatures appearing upon such public records, certifications, documents and
proceedings.
We have assumed the authenticity of all documents submitted to us as originals, the genuineness of all signatures, the conformity to original documents of all documents submitted to us as certified or photocopies and the
authenticity of the originals of such latter documents.
This opinion letter does not constitute or imply a recommendation of the market or financial value of the Bonds or an assessment of the strength or appropriateness of the covenants by the Issuer, the possibility of default,
the eligibility or suitability of the Bonds as an investment, or any other legal or financial aspect of the Bonds not expressly addressed herein.
We do not express any opinion herein regarding any law other than the law of the State of Maryland (the “State”) and the federal law of the United States of America. With respect to the executed and authenticated Bond of the issue of Bonds that we have examined, and Bonds similarly executed and authenticated and identical thereto in form, except for numbers, interest rates, denominations and maturities, we are of the opinion that, under existing Maryland and federal law as of the date hereof: (a) The Bonds are valid and legally binding general obligations of the Issuer to which its full faith and credit and taxing power are pledged, and for the payment of which the Issuer is empowered and directed to levy ad valorem taxes unlimited as to rate and amount upon all legally assessable property subject to assessment for unlimited taxation in Washington County. (b) To provide for the payment of the principal of and interest on the Bonds, the Issuer, by the adoption of the Resolution, has covenanted to levy ad valorem taxes in rate and amount sufficient for that purpose in each fiscal year in which provision must be made for the payment of such principal and interest.
WASHINGTON COUNTY, MARYLAND B-2
(c) By the terms of the Act, the Bonds, their transfer, the interest payable thereon, and any
income derived therefrom (including any profit made in the sale thereof) shall be at all times exempt from
State, county, municipal or other taxation of every kind and nature whatsoever in the State, but no opinion is
expressed as to estate or inheritance taxes, or to any other taxes not levied or assessed directly on the Bonds,
their transfer, the interest thereon or the income therefrom.
(d) Under existing statutes, regulations and decisions, and assuming the accuracy of
certifications of the County, interest on the Bonds is excludable from gross income for federal income tax purposes. Interest on the Bonds is not a tax preference item directly subject to the alternative minimum tax
imposed on individuals, corporations and other taxpayers pursuant to the Internal Revenue Code of 1986, as amended (the “Code”); however, interest on the Bonds held by certain corporations may be indirectly
subject to federal alternative minimum tax because of its inclusion in the “adjusted current earnings” of a corporate holder. Interest on the Bonds held by foreign corporations engaged in a trade or business in the
United States may be subject to the branch profits tax imposed by the Code.
The opinions set forth in this paragraph (d) are subject to the condition that the County complies with all requirements that must be satisfied subsequent to the issuance of the Bonds so that interest on the Bonds
continues to be excluded from gross income for federal income tax purposes. The County has covenanted and agreed to comply with each such requirement in its Tax Certificate and Compliance Agreement of even
date herewith (the “Tax Certificate”). Failure to comply with certain requirements may cause interest on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance
of the Bonds. We assume no responsibility for, and will not monitor, compliance by the County with the covenants and agreements contained in the Tax Certificate. In the event of noncompliance with such
covenants and agreements, available enforcement remedies may be limited by applicable provisions of law and, therefore, may not be adequate to prevent the interest on the Bonds from becoming includable in gross
income for federal income tax purposes.
Other than as set forth in the preceding paragraphs (c) and (d), we express no opinion regarding the federal or State income tax consequences arising with respect to the Bonds. It is to be understood that the rights of the owners of the Bonds and the enforceability of the Bonds and the Resolution may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights generally and by equitable principles, whether considered at law or in equity. In addition, the rights of the owners of the Bonds and the enforceability of the Bonds and the Resolution may be subject to the valid exercise of constitutional powers of the United States of America and of the sovereign police and taxing powers of the State of
Maryland or other governmental units having jurisdiction.
Our services as bond counsel have been limited to rendering the opinions expressed above based on our review of such information and proceedings as we deem necessary to opine as to the validity of the Bonds and the
tax status of the interest payable on the Bonds. We have not been engaged and have not undertaken to review the accuracy, completeness or sufficiency of the Official Statement or other offering material relating to the Bonds and,
accordingly, we express no opinion as to the accuracy, completeness or sufficiency of any such information that may have been relied upon by any person in making a decision to purchase the Bonds.
The opinions expressed above are limited to the matters set forth above, and no other opinions should be
inferred beyond the matters expressly stated. This opinion is given as of its date and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or
any changes in law that may hereafter occur.
Very truly yours,
WASHINGTON COUNTY, MARYLAND B-3
PROPOSED FORM OF OPINION REGARDING THE REFUNDING BONDS
[Date of Issuance]
County Commissioners of Washington County
Hagerstown, Maryland
Dear County Commissioners:
We have acted as Bond Counsel to County Commissioners of Washington County (the “Issuer”) in
connection with the issuance of its $___________ County Commissioners of Washington County Refunding Bonds of
2016 (the “Refunding Bonds”), dated the date hereof. All capitalized terms not defined herein shall have the meanings
set forth in the Refunding Bonds.
We have examined the law and such certified proceedings and other materials as we deem necessary to render
the opinions set forth below. The scope of our engagement as bond counsel extends solely to an examination of the
facts and law incident to rendering the opinions specifically expressed herein.
As to questions of fact material to our opinion, without undertaking to verify the same by independent
investigation, we have relied upon the certified proceedings of the Issuer and certifications by public officials, without
undertaking to verify the same by independent investigation.
We have assumed the accuracy and truthfulness of all public records and of all certifications, documents and
other proceedings examined by us that have been executed or certified by public officials acting within the scope of
their official capacities, and we have not independently verified the accuracy or truthfulness thereof. We have also
assumed the genuineness of the signatures appearing upon such public records, certifications, documents and
proceedings.
We have assumed the authenticity of all documents submitted to us as originals, the genuineness of all
signatures, the conformity to original documents of all documents submitted to us as certified or photocopies and the
authenticity of the originals of such latter documents.
This opinion letter does not constitute or imply a recommendation of the market or financial value of the
Refunding Bonds or an assessment of the strength or appropriateness of the covenants by the Issuer, the possibility of
default, the eligibility or suitability of the Refunding Bonds as an investment, or any other legal or financial aspect of
the Refunding Bonds not expressly addressed herein.
We do not express any opinion herein regarding any law other than the law of the State of Maryland (the
“State”) and the federal law of the United States of America.
With respect to the executed and authenticated Refunding Bond of the issue of Refunding Bonds that we have
examined, and Refunding Bonds similarly executed and authenticated and identical thereto in form, except for
numbers, interest rates, denominations and maturities, we are of the opinion that, under existing Maryland and federal
law as of the date hereof:
(a) The Refunding Bonds are valid and legally binding general obligations of the Issuer to
which its full faith and credit and taxing power are pledged, and for the payment of which the Issuer is
empowered and directed to levy ad valorem taxes unlimited as to rate and amount upon all legally assessable
property subject to assessment for unlimited taxation in Washington County.
(b) To provide for the payment of the principal of and interest on the Refunding Bonds, the
Issuer, by the adoption of the Resolution, has covenanted to levy ad valorem taxes in rate and amount
sufficient for that purpose in each fiscal year in which provision must be made for the payment of such
principal and interest.
(c) By the terms of the Act, the Refunding Bonds, their transfer, the interest payable thereon,
WASHINGTON COUNTY, MARYLAND B-4
and any income derived therefrom (including any profit made in the sale thereof) shall be at all times exempt
from State, county, municipal or other taxation of every kind and nature whatsoever in the State, but no
opinion is expressed as to estate or inheritance taxes, or to any other taxes not levied or assessed directly on
the Refunding Bonds, their transfer, the interest thereon or the income therefrom.
(d) Under existing statutes, regulations and decisions, and assuming the accuracy of
certifications of the County, interest on the Refunding Bonds is excludable from gross income for federal income tax purposes. Interest on the Refunding Bonds is not a tax preference item directly subject to the
alternative minimum tax imposed on individuals, corporations and other taxpayers pursuant to the Internal Revenue Code of 1986, as amended (the “Code”); however, interest on the Refunding Bonds held by
certain corporations may be indirectly subject to federal alternative minimum tax because of its inclusion in the “adjusted current earnings” of a corporate holder. Interest on the Refunding Bonds held by foreign
corporations engaged in a trade or business in the United States may be subject to the branch profits tax imposed by the Code.
The opinions set forth in this paragraph (d) are subject to the condition that the County complies
with all requirements that must be satisfied subsequent to the issuance of the Refunding Bonds so that interest on the Refunding Bonds continues to be excluded from gross income for federal income tax
purposes. The County has covenanted and agreed to comply with each such requirement in its Tax Certificate and Compliance Agreement of even date herewith (the “Tax Certificate”). Failure to comply
with certain requirements may cause interest on the Refunding Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Refunding Bonds. We assume no
responsibility for, and will not monitor, compliance by the County with the covenants and agreements contained in the Tax Certificate. In the event of noncompliance with such covenants and agreements,
available enforcement remedies may be limited by applicable provisions of law and, therefore, may not be adequate to prevent the interest on the Refunding Bonds from becoming includable in gross income for
federal income tax purposes.
Other than as set forth in the preceding paragraphs (c) and (d), we express no opinion regarding the federal or State income tax consequences arising with respect to the Refunding Bonds. It is to be understood that the rights of the owners of the Refunding Bonds and the enforceability of the Refunding Bonds and the Resolution may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights generally and by equitable principles, whether considered at law or in equity. In addition, the rights of the owners of the Refunding Bonds and the enforceability of the Refunding Bonds and the Resolution may be subject to the valid exercise of constitutional powers of the United States of America and of the sovereign police and taxing powers of the State of Maryland or other governmental units having jurisdiction. Our services as bond counsel have been limited to rendering the opinions expressed above based on our review of such information and proceedings as we deem necessary to opine as to the validity of the Refunding
Bonds and the tax status of the interest payable on the Refunding Bonds. We have not been engaged and have not undertaken to review the accuracy, completeness or sufficiency of the Official Statement or other offering material
relating to the Refunding Bonds and, accordingly, we express no opinion as to the accuracy, completeness or sufficiency of any such information that may have been relied upon by any person in making a decision to purchase
the Refunding Bonds.
The opinions expressed above are limited to the matters set forth above, and no other opinions should be inferred beyond the matters expressly stated. This opinion is given as of its date and we assume no obligation to
revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur.
Very truly yours,
WASHINGTON COUNTY, MARYLAND C-1
APPENDIX C
NOTICE OF SALE
WASHINGTON COUNTY, MARYLAND
(County Commissioners of Washington County)
$20,635,000* PUBLIC IMPROVEMENT BONDS OF 2016
$9,700,000* REFUNDING BONDS OF 2016
(Full Faith and Credit Obligations of the
County Commissioners of Washington County)
Dated Date of Delivery
DTC Book-Entry
Overview and Amortization
Electronic proposals will be received via Parity® on behalf of County Commissioners of Washington County
(the “County”) by the Chief Financial Officer of Washington County, Maryland (the “CFO”), at Room 304, 100 West
Washington Street, Hagerstown, Maryland 21740 until 10:30 a.m. Prevailing Eastern Time on Tuesday, May 3, 2016
(the “Bid Date”, unless postponed as described in this Notice of Sale) for the purchase of all (but not less than all) of
the Public Improvement Bonds of 2016 (the “Public Improvement Bonds”) and until 10:45 a.m. Prevailing Eastern
Time for the purchase of all (but not less than all) of the Refunding Bonds of 2016 (the “Refunding Bonds”)
(collectively, the Public Improvement Bonds and the Refunding Bonds are herein sometimes referred to as the
“Bonds”) of the County. The Bonds will be dated their date of delivery. Interest on the Public Improvement Bonds
will be payable on January 1, 2017, and semiannually thereafter on July 1 and January 1 until maturity or earlier
redemption. Interest on the Refunding Bonds will be payable on July 1, 2016, and semiannually thereafter on July 1
and January 1 until maturity or earlier redemption. The Public Improvement Bonds are issued under the provisions of
Chapter 60 of the Laws of Maryland of 2013 (“Chapter 60”) and Title 6 of the Code of Public Local Laws of
Washington County, Maryland (2007), as amended (the “Water and Sewer Act”), as applicable. The Refunding
Bonds are issued under the provisions of Chapter 205 of the Laws of Maryland of 2004 (“Chapter 205”), Chapter 392
of the Laws of Maryland of 2007 (“Chapter 392”), Title 6 of the Code of Public Local Laws of Washington County,
Maryland (2007), as amended (the “Water and Sewer Act”), and Section 19-207 of the Local Government Article of
the Annotated Code of Maryland, as amended (the “Refunding Act”), as applicable. Both series of the Bonds are
issued in accordance with a Resolution adopted by the Board of County Commissioners of Washington County (the
“Board”) on April 12, 2016.
Manufacturers and Traders Trust Company, Baltimore, Maryland and Buffalo, New York, will act as the
Bond Registrar and Paying Agent for each series of the Bonds.
On or prior to the Bid Date, the County may determine not to issue the Refunding Bonds. Any such determination will be communicated via BiDCOMP/Parity®/www.i-dealprospectus.com or TM3 News Service (www.tm3.com) (“TM3”) as described below under “Amendment and Postponement”. If the County so determines
not to issue the Refunding Bonds, references in this official Notice of Sale to the Refunding Bonds shall be
disregarded.
*Preliminary; subject to change
WASHINGTON COUNTY, MARYLAND C-2
The Public Improvement Bonds will be subject to principal amortization either through serial maturities or
mandatory sinking fund redemptions or a combination thereof (see “Serial and/or Term Bonds” below) on July 1 in
the years and principal amounts set forth below (the “PIB Preliminary Amounts”), subject to the provisions of
“Adjustments to Principal Amounts” herein:
Maturing
July 1*
Principal
Amount*
Maturing
July 1*
Principal
Amount*
2017 710,000$ 2027 1,045,000$
2018 740,000 2028 1,080,000
2019 770,000 2029 1,110,000
2020 805,000 2030 1,145,000
2021 835,000 2031 1,180,000
2022 870,000 2032 1,220,000
2023 905,000 2033 1,260,000
2024 940,000 2034 1,300,000
2025 980,000 2035 1,340,000
2026 1,015,000 2036 1,385,000
*Preliminary; subject to change
Public Improvement Bonds
The Refunding Bonds will be subject to principal amortization either through serial maturities or
mandatory sinking fund redemptions or a combination thereof (see “Serial and/or Term Bonds” below) on January 1
in the years and principal amounts set forth below (the “Refunding Preliminary Amounts”), subject to the provisions
of “Adjustments to Principal Amounts” herein:
Maturing
January 1*
Principal
Amount*
Maturing
January 1*
Principal
Amount*
2017 120,000$ 2024 930,000$
2018 20,000 2025 980,000
2019 20,000 2026 1,010,000
2020 810,000 2027 1,040,000
2021 840,000 2028 1,060,000
2022 870,000 2029 1,100,000
2023 900,000
*Preliminary; subject to change
Refunding Bonds
Adjustments to Principal Amounts
Pre-sale, the County reserves the right to change the PIB Preliminary Amounts and/or the Refunding
Preliminary Amounts from time to time up until 9:30 a.m. Prevailing Eastern Time on the Bid Date, by changing the
aggregate principal amount of the applicable series of the Bonds and/or the principal amount of one or more of the
maturities of the applicable series of the Bonds and, with respect to the Refunding Bonds, by adding or eliminating
maturities, including (without limitation), with respect to the Refunding Bonds, because the County has determined that
sufficient cost savings will not be achieved by refunding a portion of the outstanding 2009 Bonds identified under
“Purpose of Issue” below. Should a revision to the aggregate principal amount of the Public Improvement Bonds
and/or the principal amortization schedule for the Public Improvement Bonds be made (the “PIB Revised Amounts”)
and/or should a revision to the aggregate principal amount of the Refunding Bonds and/or the principal amortization
schedule for the Refunding Bonds be made (the “Refunding Revised Amounts” and, together with the PIB Revised
WASHINGTON COUNTY, MARYLAND C-3
Amounts, the “Revised Amounts”), such revision will be published on BiDCOMP/Parity®/www.i-dealprospectus.com
or TM3 not later than 9:30 a.m. Prevailing Eastern Time on the Bid Date. In the event that no revisions are made or
that such revisions are not published on BiDCOMP/Parity®/www.i-dealprospectus.com or TM3 before 9:30 a.m.
Prevailing Eastern Time on the Bid Date, the PIB Preliminary Amounts and the Refunding Preliminary Amounts will
constitute the PIB Revised Amounts and the Refunding Revised Amounts, respectively. Bidders shall submit bids
based on the PIB Revised Amounts and the Refunding Revised Amounts, as applicable, and the PIB Revised Amounts
and the Refunding Revised Amounts will be used to compare bids for the applicable series of the Bonds and to select a
winning bidder for each series.
After selecting the winning proposal for each series of the Bonds, the maturity schedule of either or both
series of the Bonds may be adjusted as necessary in the determination of the County’s financial advisor in increments
of $5,000. Such adjustments will not reduce or increase the aggregate principal amount of the applicable series of the
Bonds from the corresponding Revised Amounts by more than 10%. The dollar amount bid for the principal of either
series of the Bonds by the successful bidder will be adjusted proportionately to reflect any reduction or increase in the
aggregate principal amount of such series of the Bonds, but the coupon rates specified by the successful bidder for all
maturities of such series of the Bonds will not change; however, any such adjustment to the Refunding Bonds may
result in the elimination of one or more maturities of the Refunding Bonds. Any such maturity schedule adjustments
will be communicated to the successful bidder for the applicable series of the Bonds within six hours of the opening of
the bids therefor. Any such adjusted bid price will reflect changes in the dollar amount of the applicable underwriter’s
discount and original issue discount or premium, if any, but will not change the underwriter’s discount per $1,000 of
par amount of the applicable series of the Bonds from the underwriter’s discount that would have been received based
on the purchase price in the winning bid, the coupon rates or initial offering prices specified by the successful bidder.
The successful bidder for a series of the Bonds so adjusted may not withdraw its bid or change the interest rates
bid or initial reoffering prices as a result of any changes made to the principal amount of such series of the
Bonds within these limits.
Serial Bonds and/or Term Bonds
A bidder for a series of the Bonds may designate in its proposal two or more consecutive principal amounts
provided for in the applicable amortization schedule as a term bond, which matures on the maturity date of the last
included principal amount of the sequence. More than one such sequence of principal amounts may be designated as
term bonds. Any term bond so designated shall be subject to mandatory redemption in each year on the principal
payment date and in the entire amount of each serial maturity designated for inclusion in such term bond.
Purposes of Issue
The Public Improvement Bonds are to be issued to provide a portion of the financing for infrastructure
projects, environmental projects, public safety projects, public facilities and educational projects and to pay issuance
costs of the Public Improvements Bonds. The Refunding Bonds are to be issued to provide funds to refund all or a
portion of the outstanding callable maturities of the County’s Public Improvement and Refunding Bonds of 2009, dated
May 15, 2009 (“the 2009 Bonds”).
Bid Specifications
Bidders may submit a bid for the Public Improvement Bonds and/or the Refunding Bonds, provided that, a
separate bid shall be submitted for each series of the Bonds if a bidder determines to bid for both series. Each proposal
for a series of the Bonds must be submitted electronically as described below. No bid of less than 100% of par with
respect to either series of the Bonds, no bid greater that 120% of par with respect to the Public Improvement Bonds, no
bid of greater than 115% of par with respect to the Refunding Bonds, no oral or written bid, and no bid for less than all
of a series of the Bonds described in this Notice of Sale will be considered by the CFO.
WASHINGTON COUNTY, MARYLAND C-4
Each bidder shall submit one proposal on an “all or none” basis for a series of the Bonds. Each proposal must
specify the amount bid for such series of the Bonds, which amount (i) may not be less than 100% of par with respect to
either series of the Bonds, (ii) may not be more than 120% of par with respect to the Public Improvement Bonds and
(iii) may not be more than 115% of par with respect to the Refunding Bonds. Each proposal must specify in multiples
of one-eighth ( 1/8 ) or one-twentieth ( 1/20 ) of one percent (1%) the rate or rates of interest per annum which such series
of the Bonds are to bear but shall not specify (a) more than one interest rate for any Bonds of the same series having the
same maturity, (b) a zero rate of interest, (c) any interest rate for any Bonds which exceeds the interest rate stated in
such proposal for any other Bonds in such series by more than three percent (3%), or (d) for maturities 2027 through
2036, inclusive, of the Public Improvement Bonds, and for maturities 2027 through 2029, inclusive, of the Refunding
Bonds, no interest rate may be bid that is lower than the interest rate in the immediately preceding year (i.e., interest
rates must ascend or remain level on a year-to-year basis from a base year of 2026).
Electronic Bids Only
Bid proposals must be submitted by electronic bidding via Parity®, in the manner described below, and must
be received on the Bid Date by 10:30 a.m. Prevailing Eastern Time for the Public Improvement Bonds and by 10:45
a.m. Prevailing Eastern Time for the Refunding Bonds. No bid for a series of the Bonds will be received after the
respective time for receiving bids specified above. To the extent any instructions or directions set forth in Parity®
conflict with this Notice of Sale, the terms of this Notice of Sale shall control. For further information about Parity®,
potential bidders may contact Parity® at (212) 849-5021.
Disclaimer
Each prospective electronic bidder shall be solely responsible to submit its bid via Parity® as described
above. Each prospective electronic bidder shall be solely responsible to make necessary arrangements to access
Parity® for the purpose of submitting its bid in a timely manner and in compliance with the requirements of this
Notice of Sale. Neither the County nor Parity® shall have any duty or obligation to provide or assure access to
Parity® to any prospective bidder, and neither the County nor Parity® shall be responsible for proper operation of, or
have any liability for any delays or interruptions of, or any damages caused by Parity®. The County is using Parity®
as a communication mechanism, and not as the County’s agent, to conduct the electronic bidding for the Bonds. The
County is not bound by any advice and determination of Parity® to the effect that any particular bid complies with the
terms of this Notice of Sale and in particular the applicable bid parameters specified in this Notice of Sale. All costs
and expenses incurred by prospective bidders in connection with their submission of bids via Parity® are the sole
responsibility of the bidders; and the County is not responsible, directly or indirectly, for any of such costs or expenses.
If a prospective bidder encounters any difficulty in submitting, modifying, or withdrawing a bid for a series of the
Bonds, such bidder should telephone Parity® at (212) 849-5021 and notify the County’s financial advisor, Public
Consultants, Inc. by facsimile at (410) 581-9808 and by telephone at (410) 581-4820.
Electronic Bidding Procedures
Electronic bids must be submitted for the purchase of a series of the Bonds via Parity®. Bids will be
communicated electronically to the County on May 3, 2016 (or such later Bid Date as announced in accordance with
this Notice of Sale) at 10:30 a.m. Prevailing Eastern Time for the Public Improvement Bonds and at 10:45 a.m.
Prevailing Eastern Time for the Refunding Bonds. Prior to those respective times, a prospective bidder may (1) submit
the proposed terms of its bid via Parity®, (2) modify the proposed terms of its bid, in which event the proposed terms
as last modified will (unless the bid is withdrawn as described herein) constitute its bid for the applicable series of the
Bonds, or (3) withdraw its proposed bid. Once the bids are communicated electronically via Parity® to the County,
each bid will constitute an irrevocable offer to purchase the applicable series of the Bonds on the terms therein
provided, subject to this Notice of Sale. The County shall not be responsible for any malfunction or mistake made by,
or as a result of the use of the facilities of, Parity®, the use of such facilities being the sole risk of the prospective
bidder. For purposes of the electronic bidding process, the time as maintained on Parity® shall constitute the
Prevailing Eastern Time.
If any provision of this Notice of Sale shall conflict with the information provided by BiDCOMP/ Parity® as
the approved provider of electronic bidding services, this Notice of Sale shall control.
WASHINGTON COUNTY, MARYLAND C-5
Basis of Award
Proposals will be communicated electronically on the Bid Date at 10:30 a.m. Prevailing Eastern Time for the
Public Improvement Bonds and at 10:45 a.m. Prevailing Eastern Time for the Refunding Bonds. Proposals for each
series of the Bonds will be awarded on behalf of the County by the CFO. The successful bidder for each series of the
Bonds will be determined based on the lowest interest cost to the County for such series of the Bonds. The lowest
interest cost shall be determined in accordance with the true interest cost (“TIC”) method by doubling the semiannual
interest rate (compounded semi-annually) necessary to discount the debt service payments from the payment dates to
the date of the Bonds of a series and to the price bid. If two or more bidders offer to purchase a series of the Bonds at
the same lowest interest cost, then such award will be made to the bidder offering the highest purchase price. If two or
more bidders offer to purchase a series of the Bonds at the same lowest interest cost, with the same purchase price, the
County shall have the right to award all of the Bonds of such series to one bidder. The CFO will execute and deliver an
order or orders of award promptly after the apparent successful bidder for each series of the Bonds pays the applicable
Good Faith Deposit therefor provided for herein by federal funds wire transfer (see “Good Faith Deposits and Award”
below). Notwithstanding the foregoing, the County, by the CFO, reserves the right to reject any and all proposals for
either series of the Bonds and to waive any informality or irregularity in any proposal and the judgment of the CFO
with respect to such matters shall be final and binding upon all bidders with respect to the form and adequacy of any
proposal received for a series of the Bonds and as to its conformity to the terms of this Notice of Sale or with respect to
the determination to reject any and all bids for one or both series of the Bonds.
Good Faith Deposits and Award
The respective successful bidders for the Bonds shall submit good faith deposits in the amounts of
$200,000 for the Public Improvement Bonds and $100,000 for the Refunding Bonds (each, a “Good Faith Deposit”) as provided below. A Good Faith Deposit will secure the County from any loss resulting from the failure of a
successful bidder to comply with the terms of its bid. The successful bidder for each series of the Bonds shall transfer the applicable Good Faith Deposit by wire transfer directly to the County upon notification of the
preliminary award of the applicable series of the Bonds, but in any case no later than 3:00 p.m. Prevailing Eastern Time on the Bid Date (the “Deposit Deadline”). Wire instructions will be provided to the successful bidder for each
series of the Bonds by the County’s financial advisor upon notification of the preliminary award for such series.
The successful bidder for a series of the Bonds will provide as quickly as it is available evidence of the
wire transfer to the County’s financial advisor by providing to the County’s financial advisor the federal funds
reference number. The formal award of a series of the Bonds, if made, will be indicated on Parity® and shall not
be made until the County’s financial advisor has confirmation of receipt of the Good Faith Deposit therefor, and if a successful bidder fails to so deliver the applicable Good Faith Deposit by the Deposit Deadline, the County will have the option to withdraw the preliminary award for such series of the Bonds without any liability to the successful bidder and the successful bidder for such series shall be responsible to the County for all consequential damages arising from such withdrawal.
At the time of the delivery of the Bonds of each series, the Good Faith Deposit of each series will be
applied against the purchase price for the Bonds of such series or will be retained as liquidated damages upon the
failure of a successful bidder to take and pay for the applicable series of the Bonds in accordance with the terms of
its proposal. The successful bidder for a series of the Bonds shall have no right in or to the Good Faith Deposit for
such series if it fails to complete the purchase of, and payment in full of, such series of the Bonds for any reason
whatsoever, unless such failure of performance shall be caused by an act or omission of the County. No interest will
be paid upon a Good Faith Deposit to the applicable successful bidder. Notwithstanding the foregoing, should a
successful bidder fail to pay for the applicable series of the Bonds at the price and on the date agreed upon, the
County retains the right to seek further compensation for damages sustained as a result of the successful bidder so
doing.
If the aggregate principal amount of a series of the Bonds is adjusted as described above under
“Adjustments to Principal Amounts”, no adjustment will be made to the applicable Good Faith Deposit.
WASHINGTON COUNTY, MARYLAND C-6
Security
The full faith and credit and unlimited taxing power of the County are unconditionally pledged to the payment
of the principal of the Bonds and the interest to accrue thereon.
Book-Entry Only
Each series of the Bonds will be issued by means of a book-entry system with no physical distribution of bond
certificates made to the public. One bond certificate for each maturity of each series will be issued to Cede & Co., the nominee of The Depository Trust Company, New York, New York (“DTC”), and immobilized in DTC’s custody or in
the custody of the Bond Registrar and Paying Agent. The book-entry system will evidence ownership of each series of the Bonds in the principal amount of $5,000 and integral multiples thereof, with transfers of ownership interest of each
actual purchaser of a Bond effected on the records of DTC and its participants. The successful bidder for each series of the Bonds, as a condition to delivery of such series of the Bonds, shall be required to deposit the applicable bond
certificates with DTC or with the Bond Registrar and Paying Agent to be held under DTC’s “FAST” system, registered in the name of Cede & Co., DTC’s nominee. All fees due DTC shall be paid by the successful bidder for a series of the
Bonds.
Principal and interest on the Bonds will be paid to Cede & Co., nominee of DTC, as registered owner of the
Bonds on the dates such principal and interest are respectively payable.
Transfer of principal and interest payments to participants of DTC will be the responsibility of DTC, and
transfer of principal and interest payments to beneficial owners of the Bonds by participants of DTC will be the
responsibility of such participants and other nominees of beneficial owners. The County will not be responsible or
liable for such transfers of payments or for maintaining, supervising or reviewing the records maintained by DTC, its
participants or persons acting through such participants.
DTC may determine not to continue to act as securities depository for a series of the Bonds at any time by
giving notice to the County. The County may determine to select a different securities depository for a series of the
Bonds or the County may determine not to continue the book-entry system for a series of the Bonds. If the County
does not identify another qualified securities depository to replace DTC, the County will deliver replacement bonds for
the applicable series in the form of fully-registered certificates.
Optional Redemption
The Public Improvement Bonds that mature on or before July 1, 2026, are not subject to redemption at the
option of the County prior to their maturities. The Public Improvement Bonds that mature on or after July 1, 2027, are
subject to redemption at the option of the County in whole or in part on any date on or after July 1, 2026, in any order
directed by the County, at a redemption price of the principal amount of Public Improvement Bonds (or portions
thereof) to be redeemed, plus accrued interest thereon to the date fixed for redemption, without premium or penalty.
The Refunding Bonds that mature on or before January 1, 2026, are not subject to redemption at the option of the
County prior to their maturities. The Refunding Bonds that mature on or after January 1, 2027, are subject to
redemption at the option of the County in whole or in part on any date on or after January 1, 2026, in any order directed
by the County, at a redemption price of the principal amount of Refunding Bonds (or portions thereof) to be redeemed,
plus accrued interest thereon to the date fixed for redemption, without premium or penalty.
Legal Opinions
The Bonds will be issued and sold subject to approval as to legality by Funk & Bolton, P.A., Baltimore,
Maryland, bond counsel. The approving opinion of Funk & Bolton, P.A. with respect to a series of the Bonds will be
delivered, upon request, to the successful bidder for such series of the Bonds, without charge, and the text of the
applicable approving opinion will also be printed on, or attached to, each Bond.
Undertakings of the Successful Bidder(s)
Upon the preliminary award of each series of the Bonds, the successful bidder therefor shall promptly advise
the County of the initial reoffering prices to the public of each maturity of such series of the Bonds. Simultaneously
with or before delivery of a series of the Bonds, the successful bidder therefor shall furnish to the County a certificate in
WASHINGTON COUNTY, MARYLAND C-7
form and substance acceptable to bond counsel (a) certifying that a bona fide offering of such series of the Bonds has
been made to the public (excluding bond houses, brokers, and other intermediaries), and (b) stating that a substantial
portion of each maturity of such series of the Bonds has been sold to the public (excluding bond houses, brokers, and
other intermediaries) at the respective initial offering prices. Such certifications shall be based on actual facts known to
the successful bidders as of the Bid Date. For purposes of a successful bidder’s certificate, a substantial portion of a
series of the Bonds is at least 10% in par amount of each maturity of such series. If a successful bidder cannot deliver
the certificate as described above, the County’s bond counsel will be required to evaluate the facts and circumstances of
the offering and sale of the applicable series of the Bonds to confirm compliance with statutory requirements of
avoiding the establishment of an artificial price for such series.
CUSIP Numbers
It is anticipated that CUSIP identification numbers will be printed on the Bonds, but neither the failure to print
any such number on any Bond nor any error with respect thereto shall constitute cause for failure or refusal by the
successful bidder for a series of the Bonds to accept delivery of and pay for such series of the Bonds in accordance with
the terms of this Notice of Sale.
Official Statement
Within seven business days after the award of the Bonds to the successful bidders therefor on the Bid Date,
the County will authorize its Official Statement, which is expected to be substantially in the form of the Preliminary
Official Statement referred to below. The Preliminary Official Statement has been deemed final by the County for the
purpose of Rule 15c2-12 of the Securities and Exchange Commission, subject to revision, amendment and completion
in a final Official Statement. The County will also issue any supplement or amendment to the Official Statement that
may be necessary between the date of the Official Statement and the date of delivery of the Bonds. If requested and
furnished to the County in writing by a successful bidder at or before the close of business on the Bid Date, the County
will include in the Official Statement such pricing and other information relating to the reoffering of a series of the
Bonds, if any, as may be so furnished. If the successful bidders furnish no such information, the Official Statement will
include the interest rates on each series of the Bonds resulting from the proposal of the successful bidder therefor and
the other statements with respect to reoffering contained in the Preliminary Official Statement. Whether or not any
such information is included in the Official Statement, the successful bidders shall be responsible to the County and its
officials in all respects for the accuracy, fairness and completeness of such information, and for all decisions made with
respect to the use or omission of such information in any reoffering of the applicable series of the Bonds, including the
presentation or exclusion of any such information in any documents, including the Official Statement. Within seven
business days after the award of the Bonds, the successful bidders will also be furnished, without cost, with a
reasonable number of copies of the Official Statement. The successful bidders will also be furnished with any
amendment or supplement to the Official Statement, without cost, except to the extent any such amendment or
supplement is required due to a change in the reoffering information or other information provided by or on behalf of a
successful bidder.
Continuing Disclosure
In order to assist the successful bidders in complying with Securities and Exchange Commission Rule 15c2-
12(b)(5), the County will undertake, pursuant to a continuing disclosure agreement, to provide certain information
annually and notices of the occurrence of certain events. The substantially final form of Continuing Disclosure
Agreement is included in the Preliminary Official Statement as Appendix D.
Delivery of the Bonds
Delivery of the Bonds will be made to the successful bidders through the facilities of DTC on or about May
17, 2016. Payment for the Bonds shall be made in immediately available funds.
The Bonds will be accompanied by the customary closing documents, including a no litigation certificate,
effective as of the date of delivery, stating that there is no litigation pending affecting the validity of the Bonds. It shall
be a condition to the obligation of the successful bidder for each series of the Bonds to accept delivery of and pay for
such series of the Bonds that, simultaneously with or before delivery and payment for such series of the Bonds, said
successful bidder shall be furnished a certificate of the President of the Board and the CFO to the effect that, to the best
WASHINGTON COUNTY, MARYLAND C-8
of their knowledge and belief, the Official Statement (and any amendment or supplement thereto) (except for the
reoffering information and except as to information regarding DTC and DTC’s book-entry system provided by DTC, as
to which no view will be expressed) as of the Bid Date and as of the date of delivery of the Bonds does not contain any
untrue statement of a material fact and does not omit to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading and that between the Bid Date and the date
of delivery of the Bonds there has been no material adverse change in the financial position or revenues of the County,
except as reflected or contemplated in the Official Statement.
Amendment and Postponement
The County reserves the right to modify or amend this Notice of Sale prior to the Bid Date including, but not
limited to, adjusting and changing the aggregate principal amount for either series of the Bonds being offered,
determining not to issue the Refunding Bonds, and/or changing the bid specifications for either series of the Bonds;
however, such modifications or amendments shall be made not later than 9:30 a.m. Prevailing Eastern Time on the Bid
Date and communicated through BiDCOMP/Parity®/www.i-dealprospectus.com or TM3.
The County reserves the right to postpone, from time to time, the date established for the receipt of bids. Any
such postponement will be communicated through BiDCOMP/Parity®/www.i-dealprospectus.com or TM3. If any date
fixed for the receipt of bids and the sale of the Bonds is postponed, any alternative Bid Date will be announced via
BiDCOMP/Parity®/www.i-dealprospectus.com or TM3 at least 24 hours prior to such alternative Bid Date. In
addition, the County reserves the right, on the date established for the receipt of bids, to reject all bids for either series
of the Bonds and establish a subsequent date on which bids for any such series of the Bonds will again be received. If
all bids for a series of the Bonds are rejected and a subsequent date for receipt of bids for such series of the Bonds
established, notice of the subsequent Bid Date will be announced via BiDCOMP/Parity®/www.i-dealprospectus.com
or TM3 at least 24 hours prior to such subsequent Bid Date. On any such alternative or subsequent Bid Date, any
bidder may submit a proposal for the purchase of the applicable series of the Bonds in conformity in all respects with
this official Notice of Sale except for the Bid Date and except for the changes announced by
BiDCOMP/Parity®/www.i-dealprospectus.com or TM3 at the time the alternative or subsequent Bid Date and time are
announced.
Any proposal submitted shall be made in accordance with this Notice of Sale, including any modifications,
amendments or changes communicated via BiDCOMP/Parity®/www.i-dealprospectus.com or TM3 in accordance with
the provisions of this Notice of Sale.
Additional Information
The Preliminary Official Statement dated April 26, 2016, together with this Notice of Sale, will be supplied to
prospective bidders upon request made in writing to the County’s financial advisor, Public Advisory Consultants, Inc.,
25 Crossroads Drive, Suite 402, Owings Mills, Maryland 21117, or by telephone, (410) 581-4820 or by facsimile
transmission, (410) 581-9808, or by email, pac@paconsults.com.
COUNTY COMMISSIONERS OF
WASHINGTON COUNTY
By: /s/ Terry L. Baker
Terry L. Baker, President Board of County Commissioners of Washington County
WASHINGTON COUNTY, MARYLAND D-1
APPENDIX D PROPOSED FORM OF CONTINUING DISCLOSURE AGREEMENT
This Continuing Disclosure Agreement (the “Disclosure Agreement”) is executed and delivered by COUNTY COMMISSIONERS OF WASHINGTON COUNTY (the “Issuer”) in connection with the issuance of its
$_________ Public Improvement Bonds of 2016 and $________ Refunding Bonds of 2016 (collectively, the “Bonds”). The Bonds are being issued pursuant to a Resolution adopted on April 12, 2016. The Issuer covenants and agrees as
follows:
SECTION 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the Issuer for the benefit of the owners and beneficial owners of the Bonds and in order to assist the
Participating Underwriters in complying with Securities and Exchange Commission Rule 15c2-12(b)(5). The Issuer’s obligations hereunder shall be limited to those required by written undertaking pursuant to the Rule.
SECTION 2. Definitions. In addition to the definitions set forth above, which apply to any capitalized
term used in this Disclosure Agreement unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:
“Listed Events” shall mean any of the events listed in Section 4(a) of this Disclosure Agreement.
“MSRB” shall mean the Municipal Securities Rulemaking Board. To the extent the Rule is amended to
refer to any additional or different repositories, references in this Disclosure Agreement to the MSRB shall be deemed to such additional or different repositories to the extent required by the Rule. As of the date of
execution and delivery of this Disclosure Agreement, any of the notices or materials required by this Disclosure Certificate to be filed with the MSRB shall be filed with the Electronic Municipal Market Access maintained by
the MSRB at http://www.msrb.emma.org in accordance with the Rule.
“Official Statement” shall mean the Official Statement dated May__, 2016 relating to the Bonds. “Participating Underwriter” shall mean any of the original underwriters of the Bonds required to comply with the Rule in connection with offering of the Bonds.
“Rule” shall mean Rule 15c2-12 adopted by the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as the same may be amended from time to time.
SECTION 3. Provision of Annual Financial Information, Operating Data and Audited Information.
(a) The Issuer shall provide to the MSRB annual financial information and operating data generally consistent with the information contained under the headings “General Fund Revenues and Expenditures”, “General
Fund Balance Sheet” and “General Obligation and Revenue Bonds” in the Official Statement, such information to be made available within 240 days after the end of the Issuer’s fiscal year, commencing with the fiscal year ending June 30,
2016.
(b) The Issuer shall provide to the MSRB annual audited combined financial statements for the Issuer, such information to be made available within 240 days after the end of the Issuer’s fiscal year, commencing with the
fiscal year ending June 30, 2016, unless the audited financial statements are not available on or before such date, in which event said financial statements will be provided promptly when and if available. In the event that audited
financial statements are not available within 240 days after the end of the Issuer’s fiscal year (commencing with the fiscal year ending June 30, 2016), the Issuer will provide unaudited financial statements within said time period.
(c) The presentation of the financial information referred to in paragraph (a) and in paragraph (b) shall be
made in accordance with the same accounting principles as utilized in connection with the presentation of applicable comparable financial information included in the Official Statement, provided, that the Issuer may modify the accounting
principles utilized in the presentation of financial information by amending this Disclosure Agreement pursuant to the
D-2 WASHINGTON COUNTY, MARYLAND
provisions of Section 7 hereof. Changes in Generally Accepted Accounting Principles, where applicable to financial
information to be provided by the Issuer, shall not require the Issuer to amend this Disclosure Agreement.
(d) If the Issuer is unable to provide the annual financial information and operating data within the applicable time periods specified in (a) and (b) above, the Issuer shall send in a timely manner a notice of such failure to
the MSRB.
(e) If the Issuer changes its fiscal year, it will notify the MSRB of the change (and of the date of the new fiscal year end) prior to the next date by which the Issuer would otherwise be required to provide financial
information and operating data pursuant to this Section 3.
(f) The financial information and operating data to be provided pursuant to this Section 3 may be set forth in full in one or more documents or may be incorporated by specific reference to documents available to the
public on the MSRB’s Internet Website or filed with the Securities and Exchange Commission.
(g) All information provided to the MSRB pursuant to subsections (a), (b) or (d) of this Section 3 shall be in an electronic format as prescribed by the MSRB.
SECTION 4. Reporting of Listed Events.
(a) This Section 4 shall govern the giving of notices of the occurrence of any of the following Listed
Events with respect to the Bonds:
i) principal and interest payment delinquencies; ii) non-payment related defaults, if material;
iii) unscheduled draws on debt service reserves reflecting financial difficulties; iv) unscheduled draws on credit enhancements reflecting financial difficulties;
v) substitution of credit or liquidity providers, or their failure to perform; vi) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final
determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events
affecting the tax-exempt status of the Bonds; vii) modifications to rights of Bond holders, if material;
viii) Bond calls, if material, and tender offers; ix) defeasances;
x) release, substitution, or sale of property securing repayment of the Bonds, if material; xi) rating changes;
xii) bankruptcy, insolvency, receivership or similar event of the Issuer; xiii) the consummation of a merger, consolidation, or acquisition involving the Issuer or the sale of all or
substantially all of the assets of the Issuer, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement
relating to any such actions, other than pursuant to its terms, if material; and xiv) appointment of a successor or additional trustee or the change of name of a trustee, if material.
For the purpose of the event identified in clause (xii) of this Section 4(a), the event is considered to occur when any
of the following occur: the appointment of a receiver, fiscal agent or similar officer for the Issuer in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or
governmental authority has assumed jurisdiction over substantially all of the assets or business of the Issuer, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but
subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction
over substantially all of the assets or business of the Issuer.
(b) Notice of any of the Listed Events identified in Section 4(a) shall be given to the MSRB in a timely manner not in excess of ten (10) business days after the occurrence of the event.
WASHINGTON COUNTY, MARYLAND D-3
(c) All information provided to the MSRB pursuant to this Section 4 shall be in an electronic format as prescribed by the MSRB.
SECTION 5. Termination of Reporting Obligations. The Issuer’s obligations under this Disclosure
Agreement shall terminate upon the payment in full of all of the Bonds either at their maturity or by early redemption. In addition, the Issuer may terminate its obligations under this Disclosure Agreement if and when the
Issuer no longer remains an obligated person with respect to the Bonds within the meaning of the Rule.
SECTION 6. Dissemination Agent. The Issuer may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge any such
Dissemination Agent, with or without appointing a successor Dissemination Agent.
SECTION 7. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Agreement, the Issuer may amend this Disclosure Agreement, and any provision of this Disclosure Agreement may be waived, if
such amendment or waiver is supported by an opinion of counsel, expert in federal securities laws, to the effect that such amendment or waiver would not, in and of itself, cause the undertakings herein to violate the Rule if such amendment or
waiver had been effective on the date hereof but taking into account any subsequent change in or official interpretation of the Rule. To the extent applicable, the reasons for any amendment and the impact of the change in the type of
operating data or financial information being provided will be explained in information provided with the annual financial information containing the amended operating data or financial information.
SECTION 8. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent
the Issuer from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in any disclosure made
pursuant to Section 3(a) or (b) hereof or notice of occurrence of a Listed Event in addition to that which is required by this Disclosure Agreement. If the Issuer chooses to include any information in any disclosure made pursuant to
Section 3(a) or (b) hereof or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement, the Issuer shall have no obligation under this Disclosure Agreement to update such
information or include it in any future disclosure made pursuant to Section 3(a) or (b) hereof or notice of occurrence of a Listed Event.
SECTION 9. Limitation of Remedies. The Issuer shall be given written notice at the address set forth
below of any claimed failure by the Issuer to perform its obligations under this Disclosure Agreement, and the Issuer shall be given 15 days to remedy any such claimed failure. Any suit or other proceeding seeking further redress with
regard to any such claimed failure by the Issuer shall be limited to specific performance as the adequate and exclusive remedy available in connection with such action. Written notice to the Issuer shall be given to the Chief Financial
Officer, Washington County Administration Building, Room 304, 100 W. Washington Street, Hagerstown, MD 21740, or at such alternate address as shall be specified by the Issuer with disclosures made pursuant to Section 3(a) or (b)
hereof or a notice of occurrence of a Listed Event.
SECTION 10. Relationship to Bonds. This Disclosure Agreement constitutes an undertaking by the Issuer that is independent of the Issuer’s obligations with respect to the Bonds; any breach or default by the Issuer
under this Disclosure Agreement shall not constitute or give rise to a breach or default under the Bonds.
SECTION 11. Law of Maryland. This Disclosure Agreement, and any claim made with respect to the performance by the Issuer of its obligations hereunder, shall be governed by, subject to, and construed according to the
laws of the State of Maryland.
SECTION 12. Limitation of Forum. Any suit or other proceeding seeking redress with regard to any claimed failure by the Issuer to perform its obligations under this Disclosure Agreement must be filed in the Circuit
Court for Washington County, Maryland.
SECTION 13. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the owners, including beneficial owners, from time to time of the Bonds, and shall create no rights in any other person or entity.
D-4 WASHINGTON COUNTY, MARYLAND
SECTION 14. Compliance with MSRB Requirements. All documents provided to the MSRB pursuant to
this Disclosure Agreement and the Rule shall be accompanied by identifying information as prescribed by the MSRB.
Date: ____________________, 2016
ATTEST: COUNTY COMMISSIONERS OF WASHINGTON COUNTY
______________________________ By: _______________________________________
Vicki C. Lumm, County Clerk Terry L. Baker, President Board of County Commissioners
of Washington County