HomeMy WebLinkAbout04.25.2017 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. Notice is given that the Board of County Commissioners of Washington County,
Maryland will meet in closed session to discuss personnel matters, to consult with counsel, to obtain legal advice, and to discuss businesses moving
into the county from outside the state in accordance with Section 10-508 State Government Article, Annotated Code of Maryland.
BOARD OF COUNTY COMMISSIONERS
April 25, 2017
Agenda
10:00 A.M. INVOCATION AND PLEDGE OF ALLEGIANCE
CALL TO ORDER, President Terry L. Baker
APPROVAL OF MINUTES –April 11, 2017
10:05 A.M. COMMISSIONERS’ REPORTS AND COMMENTS
10:15 A.M. REPORTS FROM COUNTY STAFF
10:30 A.M. ADOPTION OF BOND RESOLUTION – Brenda Lampard
11:00 A.M. CITIZENS PARTICIPATION
11:15 A.M. RECOGNITION OF PATRICK SPEAKER – WINNER OF TWO SPECIAL
OLYMPICS BRONZE MEDALS
11:35 A.M. 60/40 MATCH COMMITMENT FOR THE MD AGRICULTURAL LAND
PRESERVATION PROGRAM – Eric Seifarth
11:50 A.M. BETHEL GARDENS – PAYMENT IN LIEU OF TAXES (PILOT) PROPOSAL –
Andrew Wilkinson
12:05 P.M. EMERGENCY SOLUTIONS GRANT APPLICATION – Stephanie Lapole
12:15 P.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; to consider a matter that concerns the
proposal for a business or industrial organization to locate, expand, or remain in the State; and to consult with counsel to
obtain legal advice on a legal matter.)
12:45 P.M. Break
6:00 P.M. JOINT EVENING MEETING WITH THE MAYOR AND HAGERSTOWN CITY
COUNCIL LOCATION: City Hall, 1 E. Franklin Street, 2nd Floor, Hagerstown, MD
**Agenda proposed by the City of Hagerstown**
Terry L. Baker, President
Jeffrey A. Cline, Vice President
John F. Barr
Wayne K. Keefer
LeRoy E. Myers, Jr.
100 West Washington Street, Suite 1101 | Hagerstown, MD 21740-4735 | P: 240.313.2200 | F: 240.313.2201
WWW.WASHCO-MD.NET
Open Session Item
SUBJECT: County Commissioners of Washington County Public Improvement
Bonds of 2017 Authorizing Resolution
PRESENTATION DATE: April 25, 2017
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, a series of general obligation bonds in the aggregate principal amount not to
exceed $13,780,000 for the purpose of financing costs of certain public facilities and projects, 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, a series of general obligation bonds for the
purpose of financing the cost of certain public facilities and projects (see attachment). The
contemplated bonds will not exceed $13,780,000 in aggregate principal amount ($12,000,000
tax-supported and $1,780,000 self-supported). Certain details 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 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) adjusting the aggregate principal amount of the bonds,
adjusting the amortization schedule for the bonds, and/or changing the principal, interest and/or
optional redemption dates In addition, authority to award or reject the bonds at the sale, and to
make certain post-sale adjustments contemplated by the resolution, is delegated to the Chief
Financial Officer, who shall act by order.
DISCUSSION: Proceeds from the bonds will be used to fund costs of certain
infrastructure, public safety, public facilities, educational and environmental public facilities and
projects. There is no additional “new money” being requested other than as was approved in the
2017 Capital Budget and subsequently reduced by $2,245,000. Issuance costs are expected to
be funded from pay-go funds or from the net premium received from the successful bidder fo r
the bonds.
FISCAL IMPACT: Annual bond issuance has been included in the County’s annual
debt affordability analysis.
Board of County Commissioners of Washington County, Maryland
Agenda Report Form
CONCURRENCES: County Administrator and 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 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.
ATTACHMENTS: Resolution, schedule of public facilities and projects to be funded
from the bonds, and draft Preliminary Official Statement.
AUDIO/VISUAL NEEDS: N/A
RESOLUTION NO. RS-2017-____
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, A SERIES OF ITS GENERAL OBLIGATION
BONDS DESIGNATED $13,780,000 “COUNTY COMMISSIONERS OF WASHINGTON
COUNTY PUBLIC IMPROVEMENT BONDS OF 2017”, SUBJECT TO ADJUSTMENT AS
PROVIDED HEREIN, PURSUANT TO THE PROVISIONS OF, AS APPLICABLE, TITLE 6
OF THE CODE OF PUBLIC LOCAL LAWS OF WASHINGTON COUNTY (2007), AND
CHAPTER 60 OF THE LAWS OF MARYLAND OF 2013, EACH AS AMENDED AS
APPLICABLE, FOR THE PUBLIC PURPOSES OF 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, EDUCATIONAL AND
ENVIRONMENTAL PROJECTS, TOGETHER WITH ANY RELATED ARCHITECTURAL,
FINANCIAL, LEGAL, PLANNING OR ENGINEERING SERVICES; PRESCRIBING THE
TERMS AND CONDITIONS OF SAID BONDS AND THE TERMS AND CONDITIONS
UPON WHICH SAID 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; 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 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 and $12,103,000 of its County Commissioners of Washington County Public Improvement
Bonds of 2016 pursuant to the authority of the 2013 Act.
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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 $13,780,000 (the “New Money Bonds”) 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 are being issued to finance the cost of certain
public facilities and projects as more particularly described in Section 2 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.
The Water and Sewer Act and the 2013 Act are together referred to as the “Acts”.
The New Money Bonds, as authorized to be issued and sold by this Resolution, are a
single series of bonds for the purposes of financing the cost of certain public facilities and
projects in Washington County, all as described herein.
References to in this Resolution to “principal amount” or “principal amounts” shall be
construed as “par amount” or “par amounts”, respectively.
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 2 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 $13,780,000
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 2 hereof, and shall evidence such borrowing by the issuance of a series of its
bonds in the aggregate principal amount not to exceed $13,780,000 and designated “County
Commissioners of Washington County Public Improvement Bonds of 2017” (the “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 Bonds to adjust the
aggregate principal amount of the Bonds as set forth in Section 3 hereof upward or downward
(so long as such aggregate principal amount, as adjusted, does not exceed $13,780,000), to
eliminate one or more of the maturities of the Bonds provided for in Section 3 hereof and/or to
adjust the principal amounts of each maturity of the Bonds upward or downward, due to tax
considerations, due to market considerations, in order to restructure the amortization schedule for
the Bonds to meet financial considerations impacting the County and/or in order to reduce the
proceeds of the Bonds to be applied to any of the contemplated public facilities or projects
provided for in Section 2 hereof, and such adjustment (i) shall be reflected in the Preliminary
Official Statement provided for in Section 19 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 11 hereof if such
determination is made after the release of such Preliminary Official Statement.
Section 2. Subject to net original issue discount, if any, and adjustments made in
connection with the sale of the Bonds (including as contemplated in Section 1 hereof), the
projects and purposes on account of which the Bonds are issued and the approximate amount of
the par value of proceeds of the Bonds allocated to each class of projects are identified as
follows:
Proceeds Use
$8,257,000 Infrastructure Projects – Bonds
1,368,000 Public Safety Projects –Bonds
944,000 Public Facilities Projects –Bonds
1,431,000 Educational Projects – Bonds
1,780,000 Environmental Projects – Bonds
Notwithstanding the foregoing allocation, the County, without notice to or the consent of the
registered owners of the Bonds, may reallocate the approximate amount of the par value of the
proceeds of the 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 3. The Bonds shall be dated their dated date and shall be issued in the
denominations of $5,000 each or any integral multiple thereof. The Bonds shall bear interest
from their dated date. Subject to the further provisions of this Section 3, interest on the Bonds
shall be payable on January 1, 2018 and on each July 1 and January 1 thereafter until maturity or,
as applicable, prior redemption. Each January 1 or July 1 on which interest is due on the Bonds
is referred to herein as an “Interest Payment Date”.
Subject to the provisions of this Resolution, the Bonds shall mature or be subject to
mandatory sinking fund redemption as designated by the successful bidder for the Bonds, on July
1 of the years and in the amounts as follows:
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Year
(July 1)
Principal Amount
Year
(July 1)
Principal Amount
2018 $440,000 2028 $705,000
2019 465,000 2029 730,000
2020 490,000 2030 750,000
2021 515,000 2031 775,000
2022 540,000 2032 800,000
2023 570,000 2033 825,000
2024 595,000 2034 855,000
2025 630,000 2035 885,000
2026 660,000 2036 915,000
2027 685,000 2037 950,000
Note: The aggregate principal amount of, and aggregate principal amount of each maturity of,
the 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 11 hereof. In addition, the aggregate principal
amount of, and/or the aggregate principal amount of each maturity of, the Bonds is subject to
adjustment after receipt of bids in accordance with the provisions of the official Notice of Sale
provided for in Section 11 hereof.
The foregoing provisions of this Section 3 are also subject to the provisions of Sections 1,
11 and 12 hereof.
Subject to the provisions of Section 11 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 the Bonds shall be paid at the rate or rates named by the successful bidder for 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 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 are maintained in Book-Entry Form (as hereinafter defined),
payments of principal or redemption price of the Bonds shall be made as described in Section 5
hereof. At any other time, the principal or redemption price of each Bond 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 the Bonds as of the close of
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business on the 15th calendar day of the month immediately preceding each Interest Payment
Date (the “Record Date”). So long as the Bonds are maintained in Book-Entry Form, payment of
interest on the Bonds shall be made as described in Section 5 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 the Bonds (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 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 the Bonds may be listed and upon such notice as may be required
by such exchange.
Section 4. The Bonds shall be issued as fully registered bonds registered on the 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 the Bonds. The Bonds
shall be initially issued in the form of authenticated, fully registered Bonds in the amount of each
separate maturity of the Bonds.
Section 5. The provisions of this Section 5 shall apply to the Bonds so long as 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 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 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.
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(b) Transfer of ownership interests in 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 the Bonds (the “Beneficial Owners”). The
Beneficial Owners will not receive certificates representing their ownership in the Bonds, except
as hereafter provided.
(c) The principal or redemption price of and interest on the Bonds shall be payable to
the Depository, or registered assigns, as the registered owner of the Bonds, in same day funds on
each date on which the principal or redemption price of or interest on the Bonds is due as set
forth in this Resolution and in 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 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 the Bonds
with another Depository or discontinue the maintenance 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 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 the Bonds, or (ii) such Depository
determines not to continue to act as a securities depository for 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 the Bonds in Book-Entry Form, the County will issue
replacement bonds (the “Replacement Bonds”) 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 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 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).
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In the event that Replacement Bonds are to be issued to the Participants or to the
Beneficial Owners with respect to 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 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 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 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 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 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 the Bonds.
For purposes of this Section 5, 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 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 6. (a) The Bonds that mature on or before July 1, 2027 are not subject to
redemption at the option of the County prior to their maturities. The Bonds maturing on and
after July 1, 2028 shall be redeemable at the option of the County, in whole or in part, on any
date on or after July 1, 2027, 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 particular maturities or
portions of maturities of the Bonds to be so redeemed shall be determined in the sole discretion
of the County.
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(b) Notwithstanding any provisions contained herein, during any period in which the
Bonds are maintained pursuant to a Book-Entry System, redemption of the Bonds shall occur in
accordance with the Depository’s standard procedures for redemption of obligations such as the
Bonds.
(c) Additional provisions relating to the optional redemption of the Bonds and the
mandatory sinking fund redemption of the Bonds (if applicable) are provided for in the form of
Bond set forth in Section 8 hereof.
The provisions of this Section 6 are also subject to the provisions of Section 11 hereof.
Section 7. 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 approving legal
opinion of Bond Counsel with respect to the Bonds. 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 8. 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 in certain
circumstances, and such language shall be deleted from or included in the final form of
Bonds, as appropriate.
No. R-___ $______________________
UNITED STATES OF AMERICA
STATE OF MARYLAND
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
PUBLIC IMPROVEMENT BOND OF 2017
Annual Interest Rate Maturity Date Bond Date Cusip Number
July 1, ____ ________, 2017 937751___
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
January 1, 2018 and semiannually thereafter on July 1 and January 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 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”).
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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 2017” (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)
Principal
Amount
Interest Rate
Maturing
(July 1)
Principal Amount
Interest Rate
[COMPLETE AMORTIZATION SCHEDULE FOR THE BONDS]
11
[Include the following only to extent the successful bidder for the Bonds designates term
bonds--The Bonds maturing on July 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 July 1, 2027 are not subject to redemption at the
option of the County prior to their respective maturities. The Bonds maturing on and after July
1, 2028 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 July 1, 2027, 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 in whole or in part shall be selected by such
means and 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 or
cause to be given 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.
12
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 (or portions thereof) so called for redemption shall become due and payable
at the redemption price provided for redemption of such Bonds (or portions thereof) on such
date, interest on such Bonds (or portions thereof) shall cease to accrue and the registered owners
of such Bonds so called for redemption in whole or in part 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 whole or in part 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 (or portions thereof) 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 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 5 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.]
13
The Bonds are issued pursuant to the authority of Title 6 of the Code of Public Local
Laws of Washington County (2007), and Chapter 60 of the Laws of Maryland of 2013, as
amended (collectively, the “Act”), and in accordance with Resolution No. RS-2017-__ of the
Board of County Commissioners of the County adopted on ____________, 2017 (the
“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, 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
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.
14
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
15
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 2017”.
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Bond Registrar and Paying Agent
By: ____________________________________________
Authorized Signatory
16
[BONDS IN BOOK-ENTRY FORM ONLY] -
PAYMENT GRID
Date of Principal Principal Holder
Payment Amount Paid Amount Outstanding Signature
__________ ____________ _________________ ______________
__________ ____________ _________________ ______________
__________ ____________ _________________ ______________
__________ ____________ _________________ ______________
__________ ____________ _________________ ______________
__________ ____________ _________________ ______________
__________ ____________ _________________ ______________
__________ ____________ _________________ ______________
__________ ____________ _________________ ______________
__________ ____________ _________________ ______________
__________ ____________ _________________ ______________
__________ ____________ _________________ ______________
__________ ____________ _________________ ______________
17
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
18
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)
19
Section 9. 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 8 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 8 hereof, to reflect matters determined in accordance
with Sections 1, 3, 6, 11 or 12 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 by such officer shall be conclusive evidence of the approval
by the County of all changes in the form of the Bonds and of the due execution of the Bonds by
the County.
Section 10. 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 11. 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 19 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 9, 2017, subject to the further provisions of this Section 11. 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, 3 or 6 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 the
Bonds, modifying the manner of adjusting the amortization schedule for the Bonds pre- or post-
sale, modifying or eliminating the maximum interest rate for the Bonds, modifying or
eliminating the maximum spread between the lowest and highest interest rates bid with respect to
the Bonds by a bidder, or modifying the amount of or method of delivery for the 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 the Bonds and the maturities thereof in
the manner and in accordance with Sections 1 or 3 hereof and this Section 11 and the Notice of
Sale. The form of the Notice of Sale as contained in the final Preliminary Official Statement
20
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 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 shifts in market conditions, 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 9, 2017, 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, 2017, 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 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 A, 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, 3, 6 or 11 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 l2. Promptly after the sale of the Bonds, and in accordance with the terms and
conditions of the sale 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 County and bond
counsel to the County, is hereby authorized and delegated the authority to deliver one or more
21
orders determining the final aggregate principal amount 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), and/or fixing the interest rate or rates payable on 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 the Bonds (any such rejection also to be made by order of the
Chief Financial Officer). 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 the
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 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 the Bonds are so rejected
by the Chief Financial Officer, 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.
Section 13. Expenses relating to the issuance and sale of the Bonds, including, without
limitation, the cost of printing the Bonds and advertising their sale and the fees and expenses of
legal counsel and the financial advisor to the County, may be paid from the net premium
constituting a portion of the gross proceeds received from the sale of the Bonds or from any
other funds available to the County. In the event the date of the Bonds is adjusted in accordance
with Section 11 hereof to be a date other than the date of delivery, any accrued interest received
on the sale of the Bonds shall be applied to the first interest payment on the Bonds. Any net
premium received from the sale 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”) or other applicable law. After providing for payment of
costs of issuance from net premium, if applicable, and making such provision relating to net
premium and accrued interest thereon, as applicable, the balance of the proceeds of the sale of
the Bonds shall be deposited in separate accounts to be used as described in Section 2 hereof for
the purpose of financing the public facilities and projects as described in Section 2 hereof. Any
proceeds of the Bonds not required for the purposes stated in Section 2 hereof 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.
Pending expenditure as contemplated hereby, the Chief Financial Officer may invest all
or part of such balance of the proceeds 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 14. (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 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.
22
(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.
23
Section 15. 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 be
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 or otherwise coming due 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 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.
The Bonds shall be deemed to be paid and no longer to be outstanding when payment of
the principal of the Bonds plus interest thereon to the due dates thereof (whether any 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 the Bonds with
respect to which such deposit is made shall have been paid or the payment thereof provided for.
Section 16. 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 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 governmental
charge that may be imposed in relation thereto and any other expenses, including counsel fees, of
24
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 17. 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 18. 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 and a $12,103,000 principal portion of the
County’s Public Improvement Bonds of 2016.
Section 19. 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
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.
25
Section 20. In order to assist any Participating Underwriter (as hereafter defined) for 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 SEC Rule 15c2-
12.
Section 21. 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 22. The provisions of this Resolution shall be liberally construed in order to
effectuate the transactions contemplated by this Resolution.
[CONTINUED ON FOLLOWING PAGE]
26
Section 23. This Resolution shall take effect from the date of its adoption.
Adopted this _______________ day of __________________, 2017.
(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
#195263;50052.034
A-1
EXHIBIT A
Form of Advertisement
SUMMARY NOTICE OF BOND SALE
WASHINGTON COUNTY, MARYLAND (County Commissioners of Washington County)
Public Improvement Bonds of 2017
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 (the “Bonds”) on
Tuesday, May 9, 2017
at the offices of the County, 100 West Washington Street, Hagerstown, Maryland 21740, Room
3100. Bids for the Bonds will be received until 11:00 a.m. Prevailing Eastern Time. The Bonds
will be dated the date of their delivery, will bear interest payable semi-annually on the first days
of July and January, commencing on January 1, 2018, and will be issuable in denominations of
$5,000 each or multiples thereof. Principal of the 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.
The aggregate principal amount of the Bonds, and the aggregate principal amount of each
maturity 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 and optional redemption dates are subject to adjustment pre-sale as set
forth in the Preliminary Official Statement and the official Notice of Sale.
Any bid for the Bonds must conform to the terms and conditions set forth in the official
Notice of Sale. This announcement does not constitute the solicitation of bids to purchase the
Bonds. The sale 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 Deputy 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 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
Approved Amount Proposed Proposed Amount
Project Name 2017 Bond Reductions 2017 Bond
Infrastructure
Bridges:
Dogstreet Road Bridge W5932P $856,000 $856,000
Roads:
Crayton Blvd Extended 484,000 484,000
Eastern Blvd at Antietam Drive 1,387,000 1,387,000
Southern Blvd Phase I 969,000 969,000
Colonel Henry K. Douglas Drive Ext Phase I 20,000 20,000
Professional Ct Ext-Phase I Bridge over Antietam 1,236,000 1,236,000
Pavement Maintenance and Rehabilitation Program 2,373,000 2,373,000
Fuel Center-Central Highway 250,000 250,000
Fuel Tank-Eastern Highway 250,000 250,000
Drainage:
Bottom Road Drainage 256,000 256,000
Independence Road Drainage 23,000 23,000
Pondsville Road Drainage 153,000 153,000
Public Safety Projects
Detention Center Building Improvements 450,000 450,000
Emergency Services Vehicle - Hazmat Unit 306,000 306,000
Police, Fire and Emergency Services Training Facility 612,000 612,000
Public Facilities
County Administration Building Exterior Renovations 357,000 357,000
County Building Renovations 33-35 W. Washington 587,000 587,000
Educational Projects
Jonathan Hager Elementary School 1,431,000 1,431,000
Environmental Projects
New Roof At Conococheague WwTP 128,000 128,000
Pump Station Upgrades 510,000 510,000
Conococheague WwTP-ENR Upgrades*2,245,000 (2,245,000)*0
Resh Road Gas Trench 1,020,000 1,020,000
Gas Mitigation System 122,000 122,000
$16,025,000 ($2,245,000)$13,780,000
Tax-Supported $12,000,000 $0 $12,000,000
Self-Supported 4,025,000 (2,245,000)1,780,000
$16,025,000 ($2,245,000)$13,780,000
*The Conococheague WwTP ENR Upgrades will be financed with Maryland Water Quality debt at a lower rate than bond debt.
Washington County, Maryland
Description of 2017 Projects
RATINGS: Fitch:
Moody’s:
S&P:
PRELIMINARY OFFICIAL STATEMENT DATED MAY 2, 2017
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”.
$13,780,000*
WASHINGTON COUNTY, MARYLAND
(COUNTY COMMISSIONERS OF WASHINGTON COUNTY)
PUBLIC IMPROVEMENT BONDS OF 2017
Dated: Date of delivery
Due: July 1, as shown below
Interest Payable: January 1 and July 1
First Interest Payment Due: January 1, 2018
Denomination: Integral multiples of $5,000
Form: Registered, book-entry only through the facilities of The Depository Trust Company (“DTC”)
Optional Redemption: The Bonds maturing on or after July 1, 2028 are redeemable prior to maturity at the County’s option as set forth in “THE BONDS—
Redemption” herein.
Security: The Bonds are general obligations of County Commissioners of Washington County (the “County”) for the payment of which its full
faith and credit and unlimited taxing power are pledged (see “THE BONDS—Sources of Payment” herein).
Maturing Principal Interest Maturing Principal Interest
July 1*Amount*Rate**July 1*Amount*Rate**
2018 440,000$ 2028 705,000$
2019 465,000 2029 730,000
2020 490,000 2030 750,000
2021 515,000 2031 775,000
2022 540,000 2032 800,000
2023 570,000 2033 825,000
2024 595,000 2034 855,000
2025 630,000 2035 885,000
2026 660,000 2036 915,000
2027 685,000 2037 950,000
$13,780,000*
MATURITIES, PRINCIPAL AMOUNTS, INTEREST RATES, PRICES OR YIELDS, AND CUSIPS
Price or
Yield**CUSIP
Price or
Yield**CUSIP
County Commissioners of Washington County
Public Improvement Bonds of 2017
*Preliminary; subject to change
**The interest rates and prices or yields shown above are those resulting from the successful bid for the Bonds on May 9, 2017 and were furnished by the
successful bidder. Other information concerning the terms of the reoffering of the Bonds, if any, should be obtained from the successful bidder and not
from the County. (See “MISCELLANEOUS--Sale at Competitive Bidding” herein.)
Conditions Affecting Issuance: The Bonds are offered when, as and if issued, subject to, among other conditions, the delivery of the Bonds and the approving legal
opinion of Funk & Bolton, P.A., Bond Counsel, with respect thereto and other conditions specified in the official Notice of Sale. Delivery will occur through the facilities
of DTC on or about May 23, 2017.
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:
No dealer, broker, salesman or other person has been authorized by the County or the successful bidder for the Bonds to give any information or to make any
DRAFT
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
mu st 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 the Bonds may over-allot or effect transactions which stabilize or maintain the market price 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 (a part of S&P Global Inc.), and the County does not take any responsibility for the accuracy thereof. The CUSIP number for any specific
maturity is subject to change after issuance of the Bonds in certain circumstances. The County has not agreed to, and there is no obligation to, update this Official Statement
to reflect any change or correction in the assigned CUSIP numbers set forth on the cover page of this Official Statement. The use of CUSIP numbers in this Official
Statement 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
Robert J. Slocum, 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 AND PAYING 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……………………………………... 30
Description of Bonds…………………………………………... 1 Fund Structure………………………………………….. 30
DTC and Book-Entry Only System…………………………… 2 Basis of Accounting, Measurement Focus, and Financial
Book-Entry Only System—Miscellaneous……………………. 3 Statement Presentation….……………………….….... 30
Authorization………………………………………………….. 4 Accounting Enterprise System….………………….….... 30
Application of Proceeds…………………….…….…………… 4 Capital Budget Preparation Software…………………... 31
Redemption…………….………………….…………….……. 4 Distinguished Budget Presentation Award……………... 31
Sources of Payment….………………………………………… 5 Budget Process and Schedule…………………….……. 31
Bondholders’ Remedies.………………………………………. 5 General Fund Revenues and Expenditures…..……..….. 33
Tax Matters……………………………………………..….…. 6 Anticipated Results for Fiscal Year 2017……………….. 35
Sources of Tax Revenue….……………………………. 35
General Fund Balance Sheet…………………………... 40
Key Financial Statistics………………………………... 41
II. GOVERNMENT AND ADMINISTRATION DEBT AND CAPITAL REQUIREMENTS
Location………………………………………………………. 8 V. Debt Management Policy………………………….…… 42
Form of Government…………………………..……………... 8 General Obligation and Revenue Bonds.……………..… 42
Legislative and Administrative Officials……………….….… 9 Water and Sewer Bonds…………………………….….. 43
Washington County Government Organizational Chart.….…. 12 Capital Lease Obligations and Other Contracts…….….. 45
County Employment…………………………………………. 12 Special Obligation Bonds………………………………. 45
Pension and Retirement System……………………………… 12 Bonded Indebtedness of Incorporated Municipalities….. 46
Other Post-Employment Benefits…………………………….. 13 Direct and Underlying Debt……………………….…… 46
Insurance……………………………………………………... 14 Debt Service Requirements on County Debt.……….….. 47
Certain Services and Responsibilities……………………….... 14 Anticipated Future Financing…………………………... 50
Capital Requirements…………………………………... 50
III. ECONOMIC AND DEMOGRAPHIC INFORMATION MISCELLANEOUS
Department of Business Development…………….………….. 21 VI. Litigation………………………………………….……. 51
Business Development…..………….………………………… 22 Ratings…………………………………………….…..... 51
Foreign Trade Zone……………….…………………………... 24 Continuing Disclosure Undertaking………………..…... 51
Utilities, Transportation, and Communication….………..…… 24 Sale at Competitive Bidding……………………….…... 51
Population….……………………..…..………….….………… 25 Legal Matters………………………………….……….. 52
Income …..……………..…………..………………….………. 26 Independent Auditors……………………………….….. 52
Area Labor Supply…..…………………………………..…….. 26 Financial Advisor………………………………….…… 52
Employment…………..……………………………………..… 27
Unemployment Rate…..……………………………..………… 27 Appendix A - General Purpose Financial
Construction Activity…..……………………………………... 28 Statements……………………….…….. A
Housing Starts……………………………………………….... 28 Appendix B - Proposed Form of Opinion of Bond
Agriculture……………………………………………………. 29 Counsel…………………………..…….. B
Appendix C - Notice of Sale …………………..……… C
Appendix D - Proposed Form of Continuing Disclosure
Agreement…………………..……….….. D
THE BONDS
Washington County, Maryland 1
I. The Bonds
Introduction
The purpose of this Official Statement, including the cover page and appendices, is to provide information for
prospective purchasers and others regarding County Commissioners of Washington County (the “County”) and its $13,780,000*
Public Improvement Bonds of 2017 (the “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 Sara Greaves, Deputy Director
of Budget and Finance of the County, Washington County Administration Building, 100 West Washington Street, Room 3100,
Hagerstown, Maryland 21740; telephone: (240) 313-2300; email: sgreaves@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 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 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 cover page of this Official Statement on January 1, 2018, 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. 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. 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 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 are maintained in book-entry form, payments of principal of and interest on the Bonds will be
made as described below under “DTC and Book-Entry Only System.” At any other time the principal amount of the Bonds 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 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-regist ered 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 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 ser vicing 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 stat utory 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 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 are required to be printed and delivered.
The County may decide to discontinue use of the system of book-entry-only transfers for the Bonds through DTC (or a
successor securities depository). In that event Bond certificates 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
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, payments of
interest, principal and redemption price and transfer and exchange of the Bonds will be made as described above under “THE
BONDS—Description of Bonds”.
THE BONDS
Washington County, Maryland 4
Authorization
The 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 Resolution No. RS-17- __ adopted by the Board of County Commissioners of Washington
County (the “Board”) on April 25, 2017 (the “Resolution”).
Chapter 60 and the Water and Sewer 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 Chief Financial Officer of the County (the “CFO”).
Application of Proceeds
Proceeds of the Bonds, exclusive of any premium paid by the successful bidder therefor, will be applied to costs of the
following projects:
Amount*
Infrastructure Projects 8,257,000$
Environmental Projects 1,780,000
Education Projects 1,431,000
Public Safety Projects 1,368,000
Public Facilities 944,000
13,780,000$
*Preliminary; subject to change
Use*
Any premium received by the County will be applied to costs of issuance of the Bonds or additional costs of the projects, or a
combination thereof.
Redemption
Optional Redemption
The Bonds that mature on or before July 1, 2027 are not subject to redemption at the option of the County prior to their
maturities. The Bonds that mature on or after July 1, 2028 are subject to redemption at the option of the County as a whole or in
part at any time on or after July 1, 2027, 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.
[Mandatory Sinking Fund Redemption
The 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 foregoing subsection will be completed with respect to each term bond of the Bonds, if any, designated by the successful
bidder for the Bonds in accordance with the official Notice of Sale. See Appendix C hereto.]
THE BONDS
Washington County, Maryland 5
Selection of Bonds for Redemption; Notice of Redemption
If fewer than all of the Bonds of any one maturity shall be called for redemption, the particular Bonds or portions of
Bonds 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 are maintained in book-entry form, the selection of individual ownership interests
in the 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 outstanding are to be redeemed by redemption , the County shall give or cause to be
given 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 (or portions thereof) 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 in whole or in part 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 (or portions thereof) 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.
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.
THE BONDS
Washington County, Maryland 6
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.
Bond Counsel’s opinion 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 opinion 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 from Bond proceeds 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.
THE BONDS
Washington County, Maryland 7
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.
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 form of opinion of Bond Counsel to be delivered with respect to the Bonds
upon issuance.
GOVERNMENT AND ADMINISTRATION
Washington County, Maryland 8
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 charged with the supervision of the departments and agencies of the County and
oversight of day-to-day operations in conformity with all 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. 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. The CFO reports directly to the Board.
GOVERNMENT AND ADMINISTRATION
Washington County, Maryland 9
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 Coun ty 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 ser vice 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 recently completed a one-year term 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 County Commissioner, was appointed to fill a vacancy on the Board of County
Commissioners on March 25, 2016 by Maryland Governor Lawrence J. Hogan , Jr. and assumed office on April 5, 2016. 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 10
Administrative Officials
ROBERT J. SLOCUM, County Administrator, holds a Bachelor of Science degree in Civil Engineering from the
University of Arizona and is a licensed professional engineer in the State of Maryland. He was appointed as County
Administrator effective March 28, 2017 after serving Washington County for 15 years in various capacities. 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 and in 2013 he was promoted to Director of the Division of
Engineering and Construction where he was responsible for the Engineering, Construction Management and Inspections, and Plan
Review and Permitting Departments. He is the Building Code Official for Washington County and is a member of the County
Engineers Association of Maryland, the American Society of Civil Engineers, the Institute of Transportation Engineers, the
Maryland Traffic Engineers Council, and the National Society of Professional Engineers.
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 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.
SARA L. GREAVES, C.P.A., Deputy Director of Budget and Finance, holds a B.S. degree in Accounting from the
University of Maryland University College. She earned a Master of Business Administration degree from Frostburg State
University. Mrs. Greaves was hired by Washington County in 2012 as an accountant and was promoted to Deputy Director in
2014. 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 continues to serve as a volunteer paramedic/firefighter with this organization.
GOVERNMENT AND ADMINISTRATION
Washington County, Maryland 11
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 Maryland Municipal Stor mwater Association, 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.
GOVERNMENT AND ADMINISTRATION
Washington County, Maryland 12
Washington County Government Organizational Chart
County Employment
As of June 30, 2016 the County employed 778 full -time employees and 546 part-time employees, including seasonal
positions. The County has a compensation and classification plan, which is complemented by a performance evaluation system.
There are 149 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 1,120 participants as of June 30, 2016. 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 33% 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 18.70% 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 13
The following table presents the pension and retirement contributions and unfunded liabilities of the County and certain
County agencies for completed fiscal years 2013 through 2016 and for fiscal year 2017. The County has already paid the
$7,009,448 amount reflected in the “Total” column in the table below, which payment is the aggregate of the amounts reflected in
the columns “Current Service Costs” and “Recommended Payment for Unfunded Accrued Liability” for fiscal year 2017, which
began on July 1, 201 6.
As of
July 1
Current
Service Costs
Recommended
Payment for Unfunded
Accrued Liability Total
Unfunded
Accrued Liability
2016 $1,454,253 $5,555,195 $7,009,448 $55,888,691
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
Source: Bolton Partners, 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.
Please refer to Notes 1 and 11 to the financial statements for fiscal year 2016 set forth in Appendix A to this Official
Statement and to the Required Supplementary Information included with the financial statements of the County for fiscal year
2016 set forth in Appendix A to this Official Statement for additional information regarding the County’s pension obligations.
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
participating in the County’s health plan 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, 2016, 51 retirees
were receiving OPEB benefits and 20 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.
GOVERNMENT AND ADMINISTRATION
Washington County, Maryland 14
$ 1,203,000
$ 133,000
$ (130,000)
$ 1,206,000
$ 1,485,600
$ (279,600)
$ (1,767,775)
$ (2,047,375)
Source: Bolton Partners, 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
Please refer to Note 16 to the financial statements for fiscal year 2016 set forth in Appendix A to this Official Statement
and the Required Supplementary Information included with the financial statements of the County for fiscal year 2016 set forth
in Appendix A to this Official Statement for additional information regarding the County’s OPEB obligations.
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 22,545 students (including 644 in pre-kindergarten),
in 46 elementary and secondary schools, which include middle and combined schools. The staff to student ratio in 2015-16
averaged better than one staff member for every 22.25 pupils; the average unrestricted pupil expenditure was $11,937 for the
2015-16 school year.
The largest General Fund appropriation by the County in its adopted budget for fiscal year 2017 is $94,844,030 for
the Board of Education, which represents 44.79% of the General Fund budget. This appropriation is for operating
expenditures. In addition, the County appropriated $2,316,000 in its capital budget for fiscal year 2017 for Board of
Education projects.
Washington County’s high school graduation rate for the 2015-2016 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
91.06%92.06%90.65%95.00%92.17%93.68%87.61%
Source: Maryland Board of Education
Training/Higher Education
Within a 70-mile radius of the Count y 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.
GOVERNMENT AND ADMINISTRATION
Washington County, Maryland 15
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 28 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).
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 $9,543,050 in its fiscal year 2017 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
$646,000 in its capital budget for fiscal year 2017 for HCC projects.
Kaplan University-Hagerstown, a private institution since 1938, offers one doctoral degree, 25 master degree programs,
25 bachelor degrees, eight associate degrees and 31 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 13 undergraduate and 30 graduate degree programs from seven
respected universities within the Maryland system: Frostburg State University, University of Maryland University College,
University of Marylan d College Park, University of Maryland Eastern Shore, 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 16
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. Another update of the Comprehensive Plan is now in progress,
with adoption expected in late 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 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 County has also devised an analysis and mitigation protocol to
manage the effects of increases in public school enrollments that result from new residential development.
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 17
Hospital and Medical Care
Meritus Health
Meritus Health, located in Hagerstown, Maryland, is the largest health care provider in Western Maryland. As a
community-focused, not-for -profit system, Meritus Health’s programs span the continuum of health care, ranging from inpatient
care to occupational health services to physician practices and outpatient care.
Meritus Medical Center, which opened in 2010, is a state-of -the-art, Joint Commission-accredited hospital with 243
licensed beds in single-patient rooms. Services offered include a special care nursery, a level III trauma program, a primary stroke
center and a wound center, as well as a cardiac diagnostic laboratory. Hospital services that address outpatient needs include the
John R. Marsh Cancer Center, Total Rehab Care, Meritus Diabetes Education, Meritus Home Health, Meritus Medical Laboratory
and Equipped for Life.
Meritus Medical Group, with close to 100 physicians and advanced practice professionals, is a medical neighborhood of
primary and specialty care practices offering comprehensive, coordinated health care services to all ages.
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 2017 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 199 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, Washingt on 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 18
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 101 sworn personnel and 97 radio-dispatched vehicles. The Sheriff’s
Office is respon sible for the operation of the Detention Center, which has a capacity of 450 inmates. In October 2016, a Day
Reporting Center opened that provides treatment services to non -violent offenders with drug and/or alcohol addictions. The State
Police has 34 troopers assigned to the local barrack, which is located just south of Hagerstown. The Hagerstown Police
Department has a full-time force of 105 officers. The Hancock Police Department employs five full -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 two 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. Th e 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 area s 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 19
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 environmentally
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
pell ets 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.
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
gallons per day. The County is in the process of upgrading its wastewater facilities to comply with the State’s enhanced
GOVERNMENT AND ADMINISTRATION
Washington County, Maryland 20
nutrient removal (“ENR”) strategy. The Winebrenner Treatment Plant ENR upgrade began construction in fiscal year 2015
and was completed in the fall of 2016. The Conococheague Wastewater Treatment Plant ENR upgrade began construction in
the fall of 2016 and is scheduled to be complete in 2018.
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, 2016. 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……………...……1,339 1,560 $654.56
Residential
No. of No. of Annual (Avg)
Services EDUs User Rate
Full Service …………...………7,071 10,518 $614.92
Collection Service Only .….…3,713 5,140 $219.36
Wholesale ………………….…5 3,487
Total……………………..…..…10,789 19,145
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 115,000 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 21
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 six 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 and as approved by the Board.
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 Annua l 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 2016-17 (fiscal year 2017), the City of Hagerstown, the Town of Hancock, and the County
granted $60,970, $932, and $554,054, respectively, in real property tax credits for private capital investment. The State of
Maryland is expected to reimburse $30,485 to the City of Hagerstown, $466 to the Town of Hancock, and $279,027 to the
County for these credits.
ECONOMIC AND DEMOGRAPHIC INFORMATION
Washington County, Maryland 22
Business Development
New and Expanding Businesses
In 2016 the County experienced new and expanding businesses highlighted by the creation of more than 480 new
jobs and known new investments of approximately $64.6 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 2016 and 2017 that are expected to provide an additional 395 new jobs
and an additional $53.6 million of new investments are noted in the following table:
Completed/
Expected Project #New
Company Name Business Type Completion Cost (1)Jobs (1)
Sharrett Collision Center Retail 1Q16 $1,000,000 0
America's First Incorporated Energy Manufacturing 1Q16 $12,000,000 70
Tempur Sealy International Manufacturing 1Q16 $5,000,000 120
Cycle Aviation Maintenance and Repair 2Q16 $150,000 40
Lenox Incorporated Retail/Distribution 2Q16 $3,000,000 14
Mission BBQ Restaurant 3Q16 $1,300,000 25
Antietam Brewery Bar and Brewery 4Q16 $500,000 0
Cushwa Brewing Company, Inc.Bar and Brewery 4Q16 $425,000 4
Lanco-Pennland Cheese Manufacturing 4Q16 $23,000,000 90
Love's Travel Center Retail 4Q16 $14,000,000 25
Pinnacle Foods, Inc.Manufacturing 4Q16 $4,200,000 100
Sub-totals $64,575,000 488
Fahrney-Keedy Senior Living/Nursing Home 4Q17 $10,000,000 30
Harvest, Inc.Manufacturing 4Q17 $5,000,000 125
Kind Therapeutics, Inc.Manufacturing 4Q17 $4,000,000 40
Sierra Nevada Corporation Manufacturing 1Q18 $4,500,000 0
Pepsi Bottling Manufacturing 2Q18 $2,100,000 0
Cosmo Films Manufacturing 3Q18 $5,000,000 100
Dot Foods, Inc.Warehouse/Distribution 4Q18 $23,000,000 100
Sub-totals $53,600,000 395
$118,175,000 883
Source: Washington County Department of Business Development
(1) Estimates based on company announcements.
Totals for Projects Announced in 2016/2017:
New Jobs/Construction
New Jobs/Construction
New Jobs/Renovation
New Jobs/Construction
New Jobs/Construction
New Jobs/Renovation
New Jobs/Construction
New Jobs/Construction
New Jobs/Construction
New Jobs/Construction
New Jobs/Construction
Construction
Construction
New Jobs/Expansion
Type of
Activity
Hagerstown-Washington County, Maryland -- Significant Business Activity for 2016/2017
Completed Projects Announced in 2016
Projects Under Development Announced in 2016/2017
New Construction
New Jobs/Construction
Construction
New Jobs/Construction
ECONOMIC AND DEMOGRAPHIC INFORMATION
Washington County, Maryland 23
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 location s 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 ………………….…....……………..…450 139 Private
Friendship Town Center ………………………………………….161 161 Private
Cascade Town Centre…...………………….…....……………..…400 400 Public
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 24
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 in crease 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 1,700 acres from five 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 serve s 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
Baltimore-Washington Thurgood Marshall International Airport (“BWI”) and Pittsburgh International Airport via Southern
Airways 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 17 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, BWI, and Ronald
Reagan Washington National airports are located within 70 miles of Hagerstown.
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
ECONOMIC AND DEMOGRAPHIC INFORMATION
Washington County, Maryland 25
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 Monday-Saturday circulation of 27,000, and a Sunday
circulation of 32,000. 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 2016.
Percent Percent Percent
Year Population Change Population Change Population Change
2016 149,585 1.5 6,016,447 3.9 323,127,513 4.6
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 Planning, Maryland State Data Center for 2016
Population Growth
State of Maryland United StatesWashington County
ECONOMIC AND DEMOGRAPHIC INFORMATION
Washington County, Maryland 26
Income
Median household Effective Buying Income (“EBI”) in Washington County was estimated at $56,228 for the year 2016.
The median household EBI for Washington County, the State of Maryland and the United States are estimated as follows:
2016 2015 2014 2013 2012
Washington County $56,228 $56,477 $55,700 $54,239 $48,984
State of Maryland 74,551 74,149 72,345 71,707 52,108
United States 53,889 53,482 52,176 51,771 41,644
Source: MD Brief Economic Facts for 2013-2016; Nielsen-Claritas, Inc. for 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 21.6% 15.3% 23.0%
$25,000 - $49,999 23.2 17.9 23.5
$50,000 - $74,999 20.3 17.1 17.8
$75,000 - $99,999 13.2 13.4 12.1
$100,000 - $149,999 13.7 18.2 13.1
$150,000 - $199,999 4.7 9.0 5.1
$200,000 and over 3.2 9.2 5.3
Distribution of Effective Buying Income (2015)
Source: MD Brief Economic Facts based on U.S. Bureau of the Census released in 2016
Area Labor Supply
Washington County has an available civilian labor force of approximately 77,732. In addition, businesses draw
employees from Allegany, Garrett 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 431,000.
ECONOMIC AND DEMOGRAPHIC INFORMATION
Washington County, Maryland 27
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……………………………………………………………2,185
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 6.8% between 2012 and 2016. The following table indicates the
County’s average unemployment rate as compared with the State of Maryland for the five most recent calendar years.
2016 2015 2014 2013 2012
Washington County 5.1%5.8%6.9%7.4%8.6%
State of Maryland 4.4%5.2%5.8%6.1%6.8%
Unemployment Rate – Annual Average
Source: Maryland Department of Labor, Licensing and Regulation
ECONOMIC AND DEMOGRAPHIC INFORMATION
Washington County, Maryland 28
Construction Activity
Construction activity during the years 2012-2016 in Washington County is provided below:
Year Ended
Dec. 31 Number Value Number Value Number Value
2016 172 $40,510 1,977 $99,632 2,149 $140,142
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
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)
159
177
158
207
133
Source: Washington County Department of Permits and Inspections
2012
Year Ended
December 31
2016
2015
2014
2013
Multi-family housing starts in the County were nominal during 2016, 2014, 2013 and 2012. During the year ended
December 31, 2015, there were five, 24-unit multi-family buildings constructed.
ECONOMIC AND DEMOGRAPHIC INFORMATION
Washington County, Maryland 29
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 30
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
consid ers 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 31
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 2017 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 13 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 32
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 $25,000 require Board approval. Any
transfer out of contingency requires the approval of the Board.
The CFO reviews the project status and revenues before any issuance of debt. Any modification to a project and/or
the total debt to be issued based upon this review is required to be approved by the Board either for an increase or decrease in
total borrowing amount or for a change in the total borrowing source.
FINANCIAL INFORMATION
Washington County, Maryland 33
General Fund Revenues and Expenditures
The General Fund’s major function is to provide funding for education, public safety, courts, planning, permits, public
works, parks and recreation, general operations, and economic development. The major revenue sources to provide these
programs and services for the public are: Real and Personal Property Tax, Income Tax and Recordation Tax. The following table
displays the County’s General Fund actual revenues and expenditures compared to the final budget for fiscal year 2016, budgeted
revenues and expen ditures for fiscal year 2017, and the proposed budget for fiscal year 2018.
Fiscal Year 2016 Fiscal Year 2017 Fiscal Year 2018
Final Actual Original Proposed
Budget Amounts Budget (1)Budget
REVENUES
Property Tax
Real Property Tax………………………………………………………106,977,350$ 108,378,572$ 108,354,710$ 111,037,170$
Personal Property Tax…………………………………………………12,497,840 14,449,229 12,950,000 13,757,540
Property Tax Interest Income…………………………………………480,000 409,974 430,000 430,000
Other Property Tax……………………………………………………714,020 666,620 651,720 784,290
State Administrative Fees ……………………………………………(525,000) (578,891) (600,000) (580,000)
PropertyTax Discounts, Credits, and Fees…………………………(1,469,020) (1,323,558) (1,310,480) (1,731,590)
Total Property Taxes………………………………………………118,675,190$ 122,001,946$ 120,475,950$ 123,697,410$
Other Local Taxes
Income Tax………………………………………………………………74,910,000$ 75,208,180$ 77,500,000$ 82,000,000$
Admissions and Amusement Tax……………………………………300,000 274,939 300,000 280,000
Recordation Tax…………………………………………………………5,800,000 6,539,448 5,800,000 6,000,000
Trailer Tax………………………………………………………………470,000 544,979 500,000 525,000
Total Other Local Taxes……………………………………………81,480,000$ 82,567,546$ 84,100,000$ 88,805,000$
Other Revenues
Licenses and Permits……………………………………………………1,260,200$ 1,316,242$ 1,310,200$ 1,379,300$
Court Costs and Fines…………………………………………………330,300 252,384 302,300 2,753,600
Charges for Services……………………………………………………388,850 477,971 679,750 835,210
Revenues from Use of Property………………………………………976,550 1,074,126 979,250 564,200
Reimbursed Expenses…………………………………………………1,145,170 1,011,679 1,052,770 1,303,610
Miscellaneous Revenues………………………………………………426,310 493,792 396,710 185,500
Grant and Shared Revenues……………………………………………7,162,210 6,349,348 2,460,720 2,292,230
Highway Revenues….….…………………………………………….1,688,310 1,720,771 2,175,890 2,416,500
Total Other Revenues………………………………………………13,377,900$ 12,696,313$ 9,357,590$ 11,730,150$
TOTAL REVENUES…………………………………………………213,533,090$ 217,265,805$ 213,933,540$ 224,232,560$
EXPENDITURES
General Government………………………………………………………26,853,460$ 25,392,800$ 25,047,240$ 26,882,560$
Public Safety………………………………………………………………43,777,700 41,898,282 43,071,310 43,145,400
Health………………………………………………………………………2,339,270 2,339,270 2,339,270 2,339,270
Social Services……………………………………………………………446,020 454,165 373,390 424,390
Education……………………………………………………………………104,109,040 104,109,040 104,387,080 106,743,410
Parks, Recreation, and Culture……………………………………………5,640,500 5,586,517 5,738,860 5,974,980
Conservation of Natural Resources……………………………………651,730 669,041 677,840 691,840
Highway...…..…………………………………………………………….9,619,400 9,821,132 10,365,890 10,567,610
General Operations…………………………………………………………610,960 596,080 490,020 437,720
Unallocated Employee Insurance and Benefits…………………………699,330 1,738,720 704,640 4,644,030
Intergovernmental…………………………………………………………3,850,190 9,427,062 5,263,000 7,176,780
Debt Service………………………………………………………………14,935,490 13,818,901 15,475,000 15,204,570
TOTAL EXPENDITURES…………………………………………213,533,090$ 215,851,010$ 213,933,540$ 224,232,560$
EXCESS OF REVENUES OVER EXPENDITURES -$ 1,414,795$ -$ -$
Source: Washington County Department of Budget and Finance
(1) Budget revisions are possible until the close of the year on June 30, 2017. Amendments to date to the fiscal year 2017 budget since its adoption have not been material.
Fiscal Years 2016, 2017 and 2018
County Commissioners of Washington County
Budget Comparison
General Fund
FINANCIAL INFORMATION
Washington County, Maryland 34
The following table displays the County’s General Fund revenues and expenditures on a GAAP basis with additional
ratios for fiscal years 2012 through 2016.
2016 2015 2014 2013 2012
Revenues:
Taxes, interest and penalties…………………………………204,569,492$ 198,990,605$ 194,994,560$ 194,197,780$ 191,600,621$
Shared taxes and grants ………………………………………6,349,348 3,355,253 3,377,036 3,566,550 3,547,046
Licenses and permits …………………………………………1,316,242 1,362,651 1,187,285 1,149,568 1,278,654
Revenues from use of money and property ………………..1,074,126 881,502 945,977 988,019 1,066,799
Charges for services…………………………………………..477,971 434,237 451,814 448,406 497,092
Other revenue …………………………………………………1,757,855 2,049,297 1,793,593 2,389,892 2,026,413
Highway revenue ……………………………………………1,720,771 1,554,706 1,697,840 1,683,821 1,291,748
Total revenues ……………………………………….217,265,805$ 208,628,251$ 204,448,105$ 204,424,036$ 201,308,373$
Expenditures:
General government ………………………………………….25,392,800$ 23,779,920$ 21,474,148$ 19,725,043$ 19,552,837$
Public safety …………………………………………………41,898,282 39,155,311 36,352,815 35,020,519 33,771,477
Health …………………………………………………………2,339,270 2,339,270 2,339,270 2,339,270 2,876,643
Social services …………………………………………………454,165 571,517 934,217 2,321,055 2,248,270
Education ……………………………………………………104,109,040 103,810,462 103,418,590 101,816,613 101,693,900
Recreation and culture …………………………...…………..5,586,517 5,622,928 5,271,404 5,436,653 5,230,239
Conservation of natural resources ………………………….669,041 595,350 568,873 556,845 514,055
Intergovernmental ……………………………………………38,543 38,543 38,543 38,543 38,543
General operations ……………………………………………2,337,705 2,003,326 4,956,600 6,131,561 2,947,076
Highway...…………………………………………….……..9,821,132 9,953,368 9,872,245 8,622,908 9,262,056
Debt service:
Principal ……………………………………………9,748,588 10,147,504 9,901,824 9,878,013 9,216,975
Interest ……………………………………....…….4,070,313 4,504,974 4,109,946 4,352,421 4,371,195
Total Expenditures …………………………..…….206,465,396$ 202,522,473$ 199,238,475$ 196,239,444$ 191,723,266$
Excess of revenues over expenditures ……………….……..10,800,409$ 6,105,778$ 5,209,630$ 8,184,592$ 9,585,107$
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……..7,078,184 26,026,715 - - -
Deposit to escrow fund for advance refunding and
repayment of loans………………………………………(7,075,279) (26,021,529) - - -
Operating transfers in ……………………………..………- - - - -
Operating transfers out ……………………………..…….(9,388,519) (5,974,080) (5,915,929) (7,980,296) (9,318,716)
Total other financing sources(uses) ……..………..(9,385,614)$ (5,968,894)$ (5,859,381)$ (7,977,257)$ (8,525,136)$
Excess of revenues and other sources over
expenditures and other uses ……………………………1,414,795$ 136,884$ (649,751)$ 207,335$ 1,059,971$
Fund balances at beginning of year ………………………..38,327,353 38,190,469 38,840,220 38,632,885 37,572,914
Fund balance at end of year ……………………………….39,742,148$ 38,327,353$ 38,190,469$ 38,840,220$ 38,632,885$
Fund Balance:
As a percent of revenue ……………………………18.3%18.4%18.7%19.0%19.2%
As a percent of expenditures ………………………19.2%18.9%19.2%19.8%20.2%
Committed, Assigned and Unassigned Fund Balance:38,122,456$ 36,844,446$ 37,162,054$ 37,503,352$ 37,427,426$
As a percent of revenue ……………………………17.5%17.7%18.2%18.3%18.6%
As a percent of expenditures ………………………18.5%18.2%18.7%19.1%19.5%
Debt Service:13,818,901$ 14,652,478$ 14,011,770$ 14,230,434$ 13,588,170$
As a percent of revenue ……………………………6.4%7.0%6.9%7.0%6.7%
As a percent of expenditures ………………………6.7%7.2%7.0%7.3%7.1%
Source: Washington County Department of Budget and Finance
County Commissioners of Washington County
Statement of Revenues, Expenditures and Changes in Fund Balance
General Fund
Year Ended June 30
FINANCIAL INFORMATION
Washington County, Maryland 35
Anticipated Results for Fiscal Year 2017
Fiscal year 2017 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 2017 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
2017.
Sources of Tax Revenue
Ad valorem property taxes, the County’s largest source of tax revenues, were 60% of total tax revenues in both fiscal
years 2015 and 2016. During the same period, income tax revenues as a percentage of total tax revenues were 37% in fiscal year
2015, and 36.8% in fiscal year 2016. The following table presents the County’s tax revenues by source for each of the last five
fiscal years as well as the budgeted amounts for fiscal year 2017.
Fiscal Year Local Property Local Income Other Local
Ended June 30 Taxes (1)Taxes Taxes (2)
Budgeted 2017 $ 204,595,940 $ 120,495,940 $ 77,500,000 $ 6,600,000
2016 204,569,492 122,001,946 75,208,180 7,359,366
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
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 2016 was $1,627,582 and the credit for fiscal year 2017 is budgeted at $1,559,109.
FINANCIAL INFORMATION
Washington County, Maryland 36
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 $2,211,120,257 for the fiscal year ended June 30, 2016 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.
2016 2015 2014 2013 2012
$11,889,530 $11,798,859 $11,918,538 $12,310,975 $12,740,518
172,128 162,536 167,959 161,054 162,932
405,500 390,610 375,606 350,000 379,500
$12,467,158 $12,352,005 $12,462,103 $12,822,029 $13,282,950
0.9%(0.9)%(2.8)%(3.5)%(6.4)%
$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 2017. As of the date of this
Official Statement, there are no proposed changes to the County or State property tax rates for fiscal year 2018.
FINANCIAL INFORMATION
Washington County, Maryland 37
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
2016 $ 122,703,971 $ 122,397,609 99.75 $ 122,899,961 100.16 $ 480,714 0.39
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
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 38
Principal Taxpayers
The 20 largest taxpayers in the County as of June 30, 2016, ranked by assessed value, are listed below.
Percentage of
Assessed Assessed
Value Value
Outlet Village of Hagerstown…………………………………….…………100,457,460$
PR Valley Limited Ptsp…………….……………………………….……..…96,895,700
Potomac Edison….………………………………………..………….……...83,180,320
Liberty Property Limited…….………………………………...………….…73,065,267
FedEx Ground Package System Inc..…..…………………………………..69,928,974
Bowman Group….....………………………….……………………………..62,816,183
Washington Real Estate……………………………….……...…………….60,579,990
Staples of Maryland LLC …………………………………………………..49,361,487
IIT Hagerstown Dist. Ctr……………………………………………………47,897,167
254 Hagerstown/Citigroup/Citicorp..……………………………...………45,460,840
Sub ‑total $ 689,643,388 5.53%
Mack Trucks Inc…………………………………….……………………….37,437,940
Verizon-Maryland….…………………………………...……………………37,131,690
Walmart Stores/Wal-Mart R.E./Sam's R.E./Sam's East..………….…...…35,865,250
2007 East Greencastle Pike………………………………………………….34,360,000
Lowe's Home Centers Inc………………………………………..………….33,741,960
Tractor Supply Company.………………………………………………..…31,286,060
FR Hagerstown LLC …………………………..……………………………30,622,633
GP Hagerstown Limited Ptsp..…….……………………………………….30,035,200
CSX Transportaion CSX Minerals….…………………..…………………29,789,610
ARCP MT Hagerstown…..…….………….……………………………….28,691,800
Total $ 1,018,605,531 8.17%
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 1.75%, 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, 2016 were $6,539,448. 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, 2016 were $8,675,608.
FINANCIAL INFORMATION
Washington County, Maryland 39
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 for all public school construction
projects and capital improvements that have been approved by the State of Maryland Board of Public Works. The cost of
acquiring land is not a construction cost and therefore does not qualify for State funding.
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, 2016, an aggregate of $11,305,187 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
$940,237, which was for the Small Urban Area Public Transportation Grant. The County also received a total of $8,772,996 in
federal and State funds for capital projects in the fiscal year ended June 30, 2016. The County projects that $4,784,884 in federal
and State funds will be received in fiscal year 2017 for operations and $4,793,068 in federal and State funds will be received for
capital projects.
During the fiscal year ended June 30, 2016, the Board of Education received $165,992,901 in State funds and
$24,283,744 in federal funds for operating and food service expenses. In fiscal year 2017, the Board of Education anticipates
receiving $168,615,533 in State funds and $22,171,927 in federal funds for operations.
FINANCIAL INFORMATION
Washington County, Maryland 40
General Fund Balance Sheet
The following table indicates the County’s General Fund balance sheet for each of the five most recent fiscal years.
2016 2015 2014 2013 2012
ASSETS
Cash and short-term investments ……………………….162,083$ 32,999$ 40,971$ 252,052$ 315,956$
Investment in U.S. Government
Agency Securities ………………………………..91,452,894 110,533,955 118,065,564 130,562,407 135,948,740
Property taxes receivable (net) ………………………….357,582 535,177 588,451 376,599 1,051,056
Accounts receivable ……………………………………..503,433 416,161 265,824 374,571 407,981
Due from other funds …………………………………….- - - 10,000 20,000
Due from other governments ……………………………16,757,732 16,373,944 11,838,036 10,811,977 15,804,020
Inventories ……………………………………...……….790,714 763,940 578,396 741,870 816,175
Other assets …………………………………….………..962,586 1,398,654 955,704 742,564 666,189
Total assets ……………………………………..110,987,024$ 130,054,830$ 132,332,946$ 143,872,040$ 155,030,117$
LIABILITIES
Accounts payable ………………………………………2,514,765$ 1,413,769$ 1,621,862$ 1,421,068$ 2,230,907$
Accrued expenses ………………………………………1,404,296 1,086,819 940,300 1,150,895 786,727
Liabilities on unpaid claims ……………………….……1,892,223 1,833,471 2,115,251 2,015,593 2,220,225
Due to other funds ……………………………………..55,483,023 77,037,235 83,418,109 95,120,905 100,568,990
Unearned revenue ………………………………………346,841 306,901 283,880 3,463,212 9,279,273
Other liabilities ………………………………………….1,350,527 1,868,922 1,895,975 1,860,147 1,311,110
Total liabilities …………………………………..62,991,675$ 83,547,117$ 90,275,377$ 105,031,820$ 116,397,232$
DEFERRED INFLOWS OF RESOURCES
Unavailable Revenues…………………………………..8,253,201$ 8,180,360$ 3,867,100$ -$ -$
FUND EQUITY
Nonspendable ………………………………………….1,090,714$ 1,063,939$ 661,513$ 136,667$ 24,713$
Restricted ……………………………………………….528,978 418,968 366,902 1,200,201 1,180,746
Committed ………………………………………………38,104,831 36,830,635 37,141,183 37,452,097 36,294,934
Assigned ………………………………..………………17,625 13,811 20,871 23,679 1,132,492
Unassigned (1)………………………………..……………- - - 27,576 -
Total fund equity ……………………...………39,742,148$ 38,327,353$ 38,190,469$ 38,840,220$ 38,632,885$
Total liabilities and fund equity ……………..110,987,024$ 130,054,830$ 132,332,946$ 143,872,040$ 155,030,117$
Source: Washington County Department of Budget and Finance
(1) 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 41
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 2017.
Fiscal Year Revenues Fund Balance
Fund Balance as
Percentage of
Revenues
Reserves as
Percentage of
Revenues
2016 $ 217,265,805 $ 39,742,148 18.29%17.55%
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
Source: Washington County Department of Budget and Finance
DEBT AND CAPITAL REQUIREMENTS
Washington County, Maryland 42
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, 2016, was
$22,265,278. The unused authorization available under Chapter 60 prior to the issuance of the Bonds is $37,734,722.
The County is authorized by State law to issue its bonds for the purpose of refunding any of its outstanding bonds,
including the payment of any redemption premium and interest accrued to the date of redemption, purchase or maturity of the
bonds being refunded.
As part of the annual budget process, an annual debt affordability analysis is prepared by the Office of Budget and
Finance. It is an effective tool for debt planning and management.
The Solid Waste operation was classified as a fund separate from the Highway Fund in 1996. It has paid for debt from
generated revenues since that time. In 2002, the County reclassified the Solid Waste Fund as an enterprise fund. The debt paid
out of revenues generated by that fund is considered self-supporting debt. In 2011, the County implemented GASB Statement
No. 54 of the Governmental Accounting Standards Board, Fund Balance Reporting and Governmental Fund Type Definitions.
Based on this GASB Statement, the Highway Fund did not meet the criteria of a special revenue fund and was consolidated into
the General Fund.
The following table sets forth the amount of the County’s general obligation bonded debt issued and outstanding as of
June 30, 2016, exclusive of certain water and sewer bonds (see “Water and Sewer Bonds” herein). Outstanding bonds as of such
date do not include those maturities of the Public Improvement Bonds of 2007, Public Improvement Bonds of 2008 and Public
Improvement Bonds of 2009 for the payment of which non-callable direct obligations of the United States have been placed in
escrow. Outstanding amounts have not been adjusted for discounts or premiums.
DEBT AND CAPITAL REQUIREMENTS
Washington County, Maryland 43
Statement of General Obligation Bonded Debt
Issued and Outstanding*
As of June 30, 2016
Amount Outstanding
Date of Amount General Solid Airport
Issue Issued Fund Waste Fund Fund Total
Public Improvement Bonds……………………May 2007 16,000,000$ 1,237,743$ 252,257$ -$ 1,490,000$
Public Improvement Bonds……………………June 2008 18,539,530 (1) 1,700,617 - - 1,700,617
Public Improvement and Refunding Bonds..June 2009 18,371,300 (2) 2,403,995 659,722 - 3,063,717
Public Improvement Series A Bonds………..May 2010 6,992,993 (3) 2,673,853 1,058,413 - 3,732,266
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 6,610,541 1,919,459 - 8,530,000
Public Improvement Bonds…………………..May 2011 14,170,000 9,261,436 2,723,564 - 11,985,000
Public Improvement Bonds…………………..May 2012 12,068,100 (5) 10,719,653 - - 10,719,653
Refunding Bonds………………………………May 2012 7,740,000 4,658,330 26,010 745,660 5,430,000
Public Improvement Bonds…………………..May 2013 12,000,000 11,095,000 - - 11,095,000
Refunding Bonds………………………………May 2013 12,540,000 12,221,610 173,390 - 12,395,000
Public Improvement Bonds…………………..May 2014 14,000,000 13,535,000 - - 13,535,000
Public Improvement Bonds…………………..May 2015 12,000,000 (6) 12,000,000 - - 12,000,000
Refunding Bonds……………………………..May 2015 25,573,470 (7) 21,425,944 1,682,526 - 23,108,470
Public Improvement Bonds…………………..May 2016 12,103,000 (8) 12,000,000 103,000 - 12,103,000
Refunding Bonds……………………………..May 2016 7,317,990 (9) 6,396,940 921,050 - 7,317,990
MWQFA (10) Financing Cell 3…………………Nov 2004 2,498,427 - 1,221,970 - 1,221,970
MWQFA (10) Solid Waste Refinancing………Feb 2005 7,248,761 1,588,810 4,364,951 - 5,953,761
MWQFA (10) Resh Road Cap Phase I………..Dec 2006 5,000,000 3,008,693 - - 3,008,693
227,664,578$ 139,495,278$ 17,860,206$ 745,660$ 158,101,144$
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) Total issue amount for all County funds was $20,635,000.
(9) Total issue amount for all County funds was $9,455,000.
(10) 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 44
The following table sets forth the amount of the County’s water and sewer debt issued and outstanding as of June 30,
2016. 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$ 2,484,878$
Public Improvement Bonds……………………June 2008 1,410,470 (1)129,383
Public Improvement & Refunding Bonds…...…June 2009 3,758,700 (2)506,283
Public Improvement Series A Bonds…………May 2010 867,007 (3)462,734
Taxable Build America Series B Bonds………May 2010 1,203,993 (4)1,203,993
Public Improvement Bonds……………………May 2012 5,696,900 (5)5,060,347
Public Improvement Bonds……………………May 2015 3,460,000 (6)3,460,000
Refunding Bonds……………………………….May 2015 821,530 (7)821,530
Public Improvement Bonds……………………May 2016 8,532,000 (8)8,532,000
Refunding Bonds……………………………….May 2016 2,137,010 (9)2,137,010
MWQFA (10)Loan ………………………………Mar 2000 3,620,697 1,011,794
MWQFA (10)Loan ………………………………May 2004 8,091,063 3,061,063
MWQFA (10)Loan ………………………………Oct 2006 560,000 321,734
MWQFA (10)Loan ………………………………May 2015 2,553,000 2,553,000
52,319,338$ 31,745,749$
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) Total issue amount for all County funds was $20,635,000.
(9) Total issue amount for all County funds was $9,455,000.
(10) Maryland Water Quality Financing Administration.
Statement of Water and Sewer Bonded Debt
Issued and Outstanding
As of June 30, 2016
Assessed Value of Property in Washington County $12,467,158,000
Debt Limit: % of Assessed Value (1)10%
Water and Sewer Borrowing Limitation 1,246,716,000
Water and Sewer Debt 31,745,749
Debt Margin 1,214,970,251
Ratio of Water and Sewer Debt to Assessed Value 0.25%
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, 2016
Water and Sewer Bonded Debt
DEBT AND CAPITAL REQUIREMENTS
Washington County, Maryland 45
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, 2016 was $71,293. 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 special taxing district revenue bonds for the purpose of financing or refinancing 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
wast e 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 hospit al
development (within the meaning of the State law). The special taxing district 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 created one Special Taxing District and issued bonds 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.
Pursuant to State law, Washington County may also establish a contiguous area as a development district, and borrow
money by issuing and selling tax increment financing revenue bonds (“TIF bonds”) for the purpose of financing or refinancing the
cost of acquiring property interests, site removal, surveys and studies, relocation of businesses or residents, installation of utilities,
construction of parks and playgrounds, other needed improvements including roads to, from or in the development district,
parking and lighting, construction or rehabilitation of buildings for a governmental purpose or use, reserves or capitalized interest,
bond issuance costs or payment of existing indebtedness for such purposes. The list of projects to which TIF bonds may be
applied is expanded for RISE zones and sustainable communities (within the meaning of State law). In addition, Washington
County may apply TIF bond proceeds for demolition or site removal on privately owned property; pedestrian or vehicular bridges
or overpasses (including railroad crossings and related improvements); or parking lots, facilities or structures that are publicly or
privately owned or available for public or private use. TIF bonds are payable from real property tax revenues derived from the
increase in assessed value of real property located within a development district over a base assessment established in accordance
with State law and any other revenues pledged by the County as permitted by State law. The County may determine to pledge its
full faith and credit and unlimited taxing power to the payment of TIF bonds; if it does not do so, the TIF bonds are payable solely
from incremental tax revenues derived from real properties located within a development district and any other revenues that the
County determines to pledge to such TIF bonds. Under State law, the County may also pledge incremental County tax revenues
and other revenues to support TIF bonds issued for qualifying purposes by a municipality within the County or the Maryland
Economic Development Corporation.
Between fall 2016 and early 2017, the County established two separate development districts: (i) the Conococheague
Development District, consisting of approximately 137 acres, and (ii) the Cascade Development District, consisting of most of the
acreage comprising the former Fort Ritchie Military Reservation. To date, the County has not passed a bond ordinance
authorizing the issuance of TIF bonds for either established development district. Commencing with the tax year beginning July
1, 2017, and until TIF bonds are issued with respect to either desi gnated development district, the County may use incremental tax
revenues, if any, derived from properties within such development districts for any legal purpose.
DEBT AND CAPITAL REQUIREMENTS
Washington County, Maryland 46
Bonded Indebtedness of Incorporated Municipalities
Eight of the nine incorporated municipalities of Washington County have outstanding indebtedness in the aggregate
amount of $86,610,103 as of June 30, 2016. The County is not obligated to pay such debt or the interest thereon and neither the
faith and credit nor taxing power of the County is pledged to the payment of principal or interest on such indebtedness.
Amount
7,913,958$
698,663
984,993
70,939,759
1,661,374
1,824,422
603,567
1,983,367
Total 86,610,103$
Source: Washington County Department of Budget and Finance
Towns
County Commissioners of Washington County
Outstanding Underlying Debt
As of June 30, 2016
Boonsboro…………………….…….….……
Smithsburg………………………….………..
Williamsport……………………….…………
Hancock………………………………….…..
Keedysville…………………………….....….
Clear Spring…………………..……...………
Funkstown……………………………….….
Hagerstown……...…………………..………
Direct and Underlying Debt
The following schedules present the County’s bonded debt outstanding as of June 30, 2016, 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, 2016
(Excludes this Issue)
Direct Debt - Tax-Supported:
General Government Debt (1)…………………………………..139,495,278$
Direct Debt - Self-Supported:
Solid Waste ….…………………………………………………..17,860,206
Water and Sewer ….…………………………………………….31,745,749
Airport ….………………………………………………………..745,660
Total Direct Debt…………………………………………………….189,846,893
Underlying Debt……………………………………………………..86,610,103
Overall Bonded Debt………………………………………………..276,456,996$
Source: Washington County Department of Budget and Finance
(1) Includes Highway debt which is currently considered tax-supported.
DEBT AND CAPITAL REQUIREMENTS
Washington County, Maryland 47
Per Capita (Estimated Population 149,585):
Direct Tax-Supported Debt (1)………………………….933$
Overall Bonded Debt…………………………………….1,848$
Percentage of Assessed Value of $12,467,158,000:
Direct Tax-Supported Debt (1)…………………………1.12%
Overall Bonded Debt……………………………………2.22%
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, 2016
(Excludes this Issue)
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 Value (000)Capita of Assessed Value
2016 $139,495 149,585 $12,467,158 $933 1.12
2015 137,325 149,573 12,352,005 918 1.11
2014 135,764 150,460 12,462,103 902 1.09
2013 131,784 150,055 12,822,029 879 1.03
2012 129,672 148,830 13,282,950 870 0.98
Source: Washington County Department of Budget and Finance
Direct
Tax-Supported
Debt (000)
Debt Service Requirements on County Debt
The following tables set forth the debt service requirements for the County’s general obligation bonded debt as of June
30, 2016, adjusted to reflect issuance of the Bonds, and the rapidity of repayment for the County’s direct tax-supported debt.
DEBT AND CAPITAL REQUIREMENTS
Washington County, Maryland 48
Year Self-Supporting Debt Service Total Debt Service
Ending
June 30 Principal Interest Total Principal Interest Total Principal Interest Total
2017 10,170,735$ 4,474,924$ 14,645,659$ 3,608,192$ 2,715,934$ 6,324,126$ 13,778,927$ 7,190,858$ 20,969,785$
2018 10,033,914 4,408,534 14,442,448 4,393,451 2,841,221 7,234,672 14,427,365 7,249,754 21,677,119
2019 8,932,960 4,063,504 12,996,464 4,916,903 2,782,180 7,699,083 13,849,863 6,845,684 20,695,547
2020 9,201,097 3,718,214 12,919,311 4,308,425 2,717,151 7,025,576 13,509,522 6,435,365 19,944,887
2021 9,643,509 3,369,467 13,012,976 3,193,843 940,863 4,134,706 12,837,352 4,310,330 17,147,682
2022 8,806,296 3,019,947 11,826,243 3,317,346 856,005 4,173,351 12,123,642 3,875,952 15,999,594
2023 8,750,106 2,697,534 11,447,640 3,482,881 772,438 4,255,319 12,232,987 3,469,972 15,702,959
2024 8,806,469 2,362,042 11,168,511 2,299,457 681,178 2,980,635 11,105,926 3,043,220 14,149,146
2025 8,722,312 2,056,372 10,778,684 2,256,704 600,395 2,857,099 10,979,016 2,656,767 13,635,783
2026 8,227,284 1,763,676 9,990,960 2,214,630 521,631 2,736,261 10,441,914 2,285,307 12,727,221
2027 7,745,015 1,505,528 9,250,543 2,291,061 456,482 2,747,543 10,036,076 1,962,010 11,998,086
2028 7,723,860 1,256,027 8,979,887 2,330,184 391,599 2,721,783 10,054,044 1,647,626 11,701,670
2029 5,654,129 1,038,675 6,692,804 2,105,952 328,033 2,433,985 7,760,081 1,366,708 9,126,789
2030 5,036,859 854,569 5,891,428 1,784,263 265,851 2,050,114 6,821,122 1,120,420 7,941,542
2031 5,223,885 678,944 5,902,829 1,843,286 209,075 2,052,361 7,067,171 888,019 7,955,190
2032 4,579,351 509,013 5,088,364 1,428,878 157,893 1,586,771 6,008,229 666,906 6,675,135
2033 3,959,655 360,814 4,320,469 1,244,639 117,104 1,361,743 5,204,294 477,918 5,682,212
2034 3,265,576 234,807 3,500,383 889,792 85,593 975,385 4,155,368 320,400 4,475,768
2035 2,573,765 129,389 2,703,154 917,686 59,153 976,839 3,491,451 188,542 3,679,993
2036 1,633,075 52,928 1,686,003 944,467 31,824 976,291 2,577,542 84,752 2,662,294
2037 805,426 12,080 817,506 579,575 8,695 588,270 1,385,001 20,775 1,405,776
139,495,278$ 38,566,988$ 178,062,266$ 50,351,615$ 17,540,298$ 67,891,913$ 189,846,893$ 56,107,286$ 245,954,179$
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, 2016
DEBT AND CAPITAL REQUIREMENTS
Washington County, Maryland 49
Year Outstanding Debt Service Bonds of 2017
Ending
June 30 Principal Interest Total Principal Interest Total Principal Interest Total
2017 13,778,927$ 7,190,858$ 20,969,785$ -$ -$ -$ 13,778,927$ 7,190,858$ 20,969,785$
2018 14,427,365 7,249,754 21,677,119 - - - 14,427,365 7,249,754 21,677,119
2019 13,849,863 6,845,684 20,695,547 - - - 13,849,863 6,845,684 20,695,547
2020 13,509,522 6,435,365 19,944,887 - - - 13,509,522 6,435,365 19,944,887
2021 12,837,352 4,310,330 17,147,682 - - - 12,837,352 4,310,330 17,147,682
2022 12,123,642 3,875,952 15,999,594 - - - 12,123,642 3,875,952 15,999,594
2023 12,232,987 3,469,972 15,702,959 - - - 12,232,987 3,469,972 15,702,959
2024 11,105,926 3,043,220 14,149,146 - - - 11,105,926 3,043,220 14,149,146
2025 10,979,016 2,656,767 13,635,783 - - - 10,979,016 2,656,767 13,635,783
2026 10,441,914 2,285,307 12,727,221 - - - 10,441,914 2,285,307 12,727,221
2027 10,036,076 1,962,010 11,998,086 - - - 10,036,076 1,962,010 11,998,086
2028 10,054,044 1,647,626 11,701,670 - - - 10,054,044 1,647,626 11,701,670
2029 7,760,081 1,366,708 9,126,789 - - - 7,760,081 1,366,708 9,126,789
2030 6,821,122 1,120,420 7,941,542 - - - 6,821,122 1,120,420 7,941,542
2031 7,067,171 888,019 7,955,190 - - - 7,067,171 888,019 7,955,190
2032 6,008,229 666,906 6,675,135 - - - 6,008,229 666,906 6,675,135
2033 5,204,294 477,918 5,682,212 - - - 5,204,294 477,918 5,682,212
2034 4,155,368 320,400 4,475,768 - - - 4,155,368 320,400 4,475,768
2035 3,491,451 188,542 3,679,993 - - - 3,491,451 188,542 3,679,993
2036 2,577,542 84,752 2,662,294 - - - 2,577,542 84,752 2,662,294
2037 1,385,001 20,775 1,405,776 - - - 1,385,001 20,775 1,405,776
189,846,893$ 56,107,286$ 245,954,179$ -$ -$ -$ 189,846,893$ 56,107,286$ 245,954,179$
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, 2016
Adjusted to Reflect Issuance of the Bonds*
Total Debt Service
Public Improvement
DEBT AND CAPITAL REQUIREMENTS
Washington County, Maryland 50
Number Principal Principal
of Years Amount Percent Amount Percent
5 47,982,215$ 34.40 -$
10 91,294,682 65.45 -
15 122,678,430 87.94 -
20 138,689,852 99.42 -
25 139,495,278 100.00 -
Source: Washington County Department of Budget and Finance
Rapidity of Direct Tax-Supported Debt Principal Payment
June 30, 2016
Before Issuance of Bonds After Issuance of Bonds
Anticipated Future Financing
The County currently anticipates obtaining loans in the maximum principal amount of $1,849,660 from the Maryland
Water Quality Financing Administration (“MWQFA”) during Summer 2017 for purposes of upgrading the Conococheague
Wastewater Treatment Plant. The loans will be evidenced by two separate general obligation bonds issued by the County to
MWQFA. One bond will be subject to scheduled amortization and is expected not to exceed $1,387,245 in principal amount.
The other bond is expected not to exceed $462,415 in principal amount, will have no scheduled amortization, and will be subject
to forgiveness if the County does not default under its loan agreement with MWQFA relating to such bond in the 10 years
following issuance. If the County defaults on the bond subject to forgiveness, MWQFA may declare the entire principal amount
of such bond advanced to the County immediately due and payable, with interest accruing from the date of declaration. The
County expects to pay debt service on the MWQFA loans in the first instance from revenues of the wastewater system, but each
bond will be backed by a pledge of the County’s full faith and credit and unlimited taxing power.
The County currently anticipates issuing additional general obligation bonds for approximately $14.6 million in fiscal
year 2018, $14.1 million in fiscal year 2019, and $21.2 million in fiscal year 2020. These debt issuance amounts are for planning
purposes and subject to change as part of the annual budgeting process.
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 51
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
Fitch Ratings, Moody’s Investors Service, Inc., and S&P Global 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 (S&P Global Ratings) 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 9, 2017, in accordance with the official Notice
of Sale (a copy of which is attached as Appendix C). The interest rates shown on the cover page of this Official Statement are
the interest rates resulting from the award of the Bonds at the competitive bidding. The prices or yields shown on the cover page
of this Official Statement were furnished by the successful bidder for the Bonds. All other information concerning the nature
and terms of any re-offering should be obtained from the successful bidder for the Bonds and not from the County.
MISCELLANEOUS
Washington County, Maryland 52
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 the Bonds is conditioned upon delivery by Bond Counsel of an
opinion relating to the Bonds substantially in the form set forth in Appendix B to this Official Statement. The certified text of
the approving legal opinion for the Bonds will be printed on or attached to the Bonds. Independent Auditors
The financial statements as of June 30, 2016, 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.
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, 2016
JUNE 30, 2016
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 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 – Length of
Service Award Fund
Schedule of Volunteer Length of Service Award Fund Employer Contributions
90
91
92
93
94
COMBINING AND INDIVIDUAL FUND STATEMENTS
Combining Statements of Financial Schedules 95
Combining Balance Sheet – Non-Major Governmental Funds 97
Combining Statement of Revenue, Expenditures, and Changes in Fund Balances – Non-Major
Governmental Funds 98
Combining Statement of Net Position – Non-Major Proprietary Funds 99
Combining Statement of Revenue, Expenses, and Changes in Fund Net Position – Non-Major
Proprietary Funds 100
Combining Statement of Cash Flows – Non-Major Proprietary Funds 101
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
SINGLE AUDIT REPORTING
Report on Internal Control Over Financial Reporting and On Compliance and Other Matters
Based on an Audit of Financial Statements Performed In
Accordance with Government Auditing Standards 114
Report on Compliance for Each Major Federal Program and Report on Internal Control Over
Compliance In Accordance With the Uniform Guidance
116
Schedule of Expenditures of Federal Awards 119
Notes to the Schedule of Expenditures of Federal Awards 121
Schedule of Findings and Questioned Costs 122
Schedule of Prior Year Findings 124
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, 2016, 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
and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States. 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
the County Commissioners of Washington County, Maryland, as of June 30, 2016, and the
respective changes in its 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.
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.
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 and the schedule of expenditures of
Federal awards as required by the audit requirements of Title 2 U.S. Code of Federal Regulations
(CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements
for Federal Awards (Uniform Guidance) are presented for purposes of additional analysis and
are not a required part of the basic financial statements.
3
The accompanying combining and individual fund statements, local management board
schedules, schedule of earned reinvestments, and the schedule of expenditures of Federal Awards
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, local
management board schedules, schedule of earned reinvestment, and the schedule of expenditures
of Federal awards are fairly stated in all material respects in relation to the basic financial
statements as a whole.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
October 28, 2016 on our consideration of the County’s internal control over financial reporting
and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant
agreements, and other matters. The purpose of that report is to describe the scope of our testing
of internal control over financial reporting and compliance and the results of that testing, and not
to provide an opinion on internal control over financial reporting or on compliance. That report is
an integral part of an audit performed in accordance with Government Auditing Standards in
considering the County’s internal control over financial reporting and compliance.
Hunt Valley, Maryland
October 28, 2016
4
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2016
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 (its 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.
5
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2016
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 ten 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, Fort
Ritchie Redevelopment (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 19-22 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 28-85 of this report.
6
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2016
Financial Analysis on Government-Wide Financial Statements
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.
In addition to this MD&A, required supplementary information can be found on page 88-92 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 $534.0 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
2016 2015 2016 2015 2016 2015
Current and other assets $121,816,117 $126,911,860 $49,331,328 $46,434,529 $171,147,445 $173,346,389 -1.3%
Capital assets 435,484,009 431,053,835 250,581,641 248,459,872 686,065,650 679,513,707 1.0%
Total Assets 557,300,126 557,965,695 299,912,969 294,894,401 857,213,095 852,860,096 0.5%
Deferred Outflow of Resources 19,080,590 5,596,709 845,049 738,144 19,925,639 6,334,853 214.5%
Current and other liabilities 27,743,719 29,696,546 15,827,259 14,617,381 43,570,978 44,313,927 -1.7%
Long-term liabilities 204,374,462 191,169,520 64,383,659 57,515,145 268,758,121 248,684,665 8.1%
Total Liabilities 232,118,181 220,866,066 80,210,918 72,132,526 312,329,099 292,998,592 6.6%
Deferred Inflow of Resources 5,387,342 - 25,446,173 26,246,880 30,833,515 26,246,880 17.5%
Net Investment in Capital Assets 364,108,056 372,167,279 210,070,287 211,859,499 574,178,343 584,026,778 -1.7%
Restricted Net Assets 18,764,043 17,206,344 11,662,919 8,477,778 30,426,962 25,684,122 18.5%
Unrestricted Net Assets (43,996,906) (46,677,285) (26,632,279) (23,084,138) (70,629,185) (69,761,423) -1.2%
Total Net Position $338,875,193 $342,696,338 $195,100,927 $197,253,139 $533,976,120 $539,949,477 -1.1%
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 $574.2 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, $30.4 million, represents
resources that are subject to external restrictions on how they may be used. The remaining portion is unrestricted net
assets of ($70.6) million.
Unrestricted net assets in governmental activities have been reduced by $53.4 million in long-term debt, resulting in
unrestricted net assets of ($44.0) 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 $47.8 million and Hagerstown Community
College of $5.6 million. The capital assets acquired with these bonds are not reflected in the County’s primary
government financial statements.
7
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2016
Washington County, Maryland
Change in Net Position
(Government-Wide)
Governmental Activities Business-type Activities Total
2016 2015 2016 2015 2016 2015
Program revenues:
Charges for Services $ 5,652,679 $ 5,854,869 $ 19,990,682 $ 19,166,051 $ 25,643,361 $ 25,020,920
Operating Grants and Contributions 10,748,861 6,543,220 1,612,742 1,382,948 12,361,603 7,926,168
Capital Grants and Contributions 4,236,228 14,054,269 6,919,581 2,746,149 11,155,809 16,800,417
General Revenues:
Property Taxes 122,058,501 118,534,624 - - 122,058,501 118,534,624
Local Taxes 88,774,286 90,220,815 - - 88,774,286 90,220,815
Other 3,078,809 3,416,030 898,079 725,043 3,976,888 4,141,073
Total Revenues 234,549,364 238,623,827 29,421,084 24,020,191 263,970,448 262,644,017
Program Expenses:
General Government 22,855,397 32,163,683 - - 22,855,397 32,163,683
Public Safety 45,580,165 46,584,797 - - 45,580,165 46,584,797
Health 2,339,270 2,339,270 - - 2,339,270 2,339,270
Social Services 454,165 571,517 - - 454,165 571,517
Education 111,107,381 113,491,068 - - 111,107,381 113,491,068
Parks and Recreation 6,189,629 6,791,711 - - 6,189,629 6,791,711
Natural Resources 3,548,014 1,690,246 - - 3,548,014 1,690,246
Community Promotion 5,685,839 5,959,702 - - 5,685,839 5,959,702
Highways and Streets 34,514,432 16,037,762 - - 34,514,432 16,037,762
Interest on long-term debt 4,455,552 4,167,500 - - 4,455,552 4,167,500
Business-type Activities:
Water Quality - - 13,064,911 12,707,818 13,064,911 12,707,818
Solid Waste - - 7,651,494 7,720,049 7,651,494 7,720,049
Public Transit - - 3,209,682 3,010,778 3,209,682 3,010,778
Airport - - 8,078,548 7,993,635 8,078,548 7,993,635
Golf Course - - 1,209,326 1,239,140 1,209,326 1,239,140
Total Expenses 236,729,844 229,797,256 33,213,961 32,671,420 269,943,805 262,468,676
Change in Net Position before
transfers (2,180,480) 8,826,570 (3,792,877) (8,651,229) (5,973,357) 175,341
Transfers (1,640,665) (2,946,208) 1,640,665 2,946,208 - -
Change in Net Position
(3,821,145) 5,880,362 (2,152,212) (5,705,021) (5,973,357) 175,341
Net Position – Beginning of year 342,696,338 384,948,058 197,253,139 202,958,160 539,949,477 587,906,218
Change in Accounting Principle
- (48,132,082) - - - (48,132,082)
Net Position – Beginning of year, as
restated - 336,815,976 - 202,958,160 - 539,774,136
Net Position – End of year $338,875,193 $342,696,338 $195,100,927 $ 197,253,139 $533,976,120 $ 539,949,477
8
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2016
The County’s net position decreased by $5,973,357 during fiscal year 2016; total net position as of June 30, 2016
was $533.9 million, representing a 1.1% decrease.
Governmental Activities (government-wide) – Change in Net Position:
Net position in governmental activities decreased by $3.8 million. Key factors in this decrease are as follows:
Property tax revenue came within $3.30 million or 2.8% of 2016 projections. Personal property tax
reflected an increase over projections by $2.06 million or 15.63% due to increased inventory and new
business.
Income Tax revenue exceeded budget by $.3 million or .4% as a result of continued decreases in the
unemployment rate which show a 12.7% improvement over prior year actual. The average
unemployment rate was 9.8% in 2010; 9.3% in 2011; 8.3% in 2012; 7.9% in 2013; 7.0% in 2014; 6.2%
in 2015; and 5.4% in 2016. The current unemployment rate as of August 2016 is 5.2%.
Recordation Tax revenue exceeded budget by $.7 million or 12.8%. The County’s housing inventory has
decreased since 2011; average home prices are up from 2011; large transaction activity was up. Fiscal
year 2016 large commercial recordings accounted for approximately 21% of the tax collected as
compared to 24% in 2015.
Other revenues such as permits, licenses, non-use of fund balance fell short of budget by $.7 million.
An additional transfer of $5.6 million was made to the Highway, Golf Course, and Capital Projects funds
to cover overruns due to snow storms, additional operating subsidy and for future project funding.
Overall public safety expenditures reflect savings of $1.9 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 costs exceeded projections by $1 million and is related to an additional contribution of $.5
million to the pension plan and health insurance cost overages.
Remaining cost centers accounted for $2.4 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 $3.2 million; 2) recording of debt proceeds greater than debt principal payments decreasing net assets
by $2.7 million; 3) compensated absences and post-retirement benefits earned exceeded financial
resources used by $2.4 million; and 4) difference in revenues and expenditures recognized between
governmental funds and the statement of activities increasing net assets by $1.5 million. These activities
are reported differently on the government-wide statements vs. the fund statements.
Capital Improvement Projects decreased by $4.2 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 $.3 million decrease in
fund balance activity.
Business-type Activities (government-wide) – Change in Net Position:
Business-type activities decreased the County’s net position by $2.2 million. Key elements of this decrease are as
follows:
9
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2016
Financial Analysis on Government Fund Financial Statements
Water Quality’s net position increased by $2.6 million, for a total of $121.5 million in net assets. The $2.6
million net gain includes $3 million in depreciation expense and the anticipated use of dedicated reserves in the
Water Quality’s long range financial plan for self sufficiency.
Solid Waste’s total net position decreased by $1.4 million for a total of $5.1 million, mainly related to
depreciation expense of $3 million. The 40 West landfill site was re-designed which changed the total life from
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 compliance
with State financial assurance requirements. In addition the County is involved in a public/private partnership to
convert landfill operations to a Waste-to-Energy facility. This new process is expected to convert at least 95%
of waste to energy sources and is currently in the permitting process.
Airport’s total net position is $62.4 million, representing a $3.1 million decrease. The net decrease is mainly the
result of increased depreciation related to the runway acquisition of which a majority was funded with federal
and 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
$98.3 million, a decrease of $3.1 million. Approximately $38.1 million of this amount is designated for the
general fund cash reserve and $59.6 million is restricted or committed for construction projects and designated
programs. In the combined governmental activities the County maintains ten separate funds. Shown below are
fund balances and net changes in fund balance for each.
Governmental Activities Fund Balance Net Change in Fund Balance
2016 2015 % Change 2016 2015 % Change
General Fund $ 39,742,148 $ 38,327,353 3.7% $ 1,414,795 $ 136,884 933.6%
Capital Improvement Fund 58,357,887 62,522,002 -6.7% (4,164,115) (8,620,685) -51.7%
Community Grants Mgt 5,776 17,825 -67.6% (12,049) 19,817 -160.8%
Inmate Welfare Fund 111,042 97,863 13.5% 13,179 5,541 137.9%
Contraband Fund 13,480 57,710 -76.6% (44,230) (2,066) 2040.9%
Agricultural Education Fund 14,972 41,019 -63.5% (26,047) 29,187 -189.%
Hotel Rental Tax Fund (143,319) 323,605 -144.3% (466,924) (334,513) 39.6%
Gaming Fund 35,117 32,193 9.1% 2,924 5,954 -50.9%
Land Preservation Fund 170,693 (29,955) -669.8% 200,648 (156,387) -228.3%
HEPMPO (22,915) (31,774) -27.9% 8,859 12,690 -30.2%
Total $ 98,284,881 $ 101,357,841 -3.0% $ (3,072,960) $ (8,903,578) -65.5%
10
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2016
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,
2016.
The General Fund is the chief operating fund of the County. At the end of the current fiscal year total fund
balance reached $39.7 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
$38.1 million that is for cash reserve while $1.6 million is reserved for specific program funds.
The General Fund, fund balance increased by approximately $1.4 million during the current fiscal year. Key
factors related to this change are:
Major Revenue Factors:
Property tax revenue came within $3.3 million or 2.8% of 2016 projections. Personal property tax
reflected an increase over projections by $2.0 million or 15.6% due to increased inventory and new
business.
Income Tax revenue exceeded budget by $.3 million or .4% as a result of continued decreases in the
unemployment rate which show a 12.7% improvement over prior year actual. The average
unemployment rate was 9.8% in 2010; 9.3% in 2011; 8.3% in 2012; 7.9% in 2013; 7.0% in 2014; 6.2%
in 2015; and 5.4% in 2016. The current unemployment rate as of August 2016 is 5.2%.
Recordation Tax revenue exceeded budget by $.7 million or 12.8%. The County’s housing inventory has
decreased since 2011; average home prices are up from 2011; large transaction activity was up. Fiscal
year 2016 large commercial recordings accounted for approximately 21% of the tax collected as
compared to 24% in 2015.
Other revenues such as permits, licenses, non-use of fund balance fell short of budget by $.8 million.
Major Expenditure Factors:
An additional transfer of $5.6 million was made to the Highway, Golf Course, and Capital Projects funds
to offset operating shortfalls, negative fund balance and for future project costs.
Overall public safety expenditures reflect savings of $1.9 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.
Taxes
90%
Charges for
Services
2%
Other
Revenues
2%
Shared Taxes
and Grants
6%
Summary of Inflows
All Governmental Funds
General
10%
Public Safety
18%
Education
42%Debt Service
6%
Capital Costs
12%
Programs &
Services
12%
Summary of Outflows
All Governmental Funds
11
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2016
Unallocated costs exceeded projections by $1 million and are related to an additional contribution of $.5
million to the pension plan and health insurance cost overages.
Remaining cost centers accounted for $2.4 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.
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 $58.4
million 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 $4.2 million for the current fiscal
year. 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 $.2 million. The net decrease in fund balance during the current year was $.3 million. These
funds 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
2016 2015 % Change 2016 2015 % Change
Water Quality $ 121,496,560 $ 118,932,196 2.2% $ 2,564,364 $ (134,844) -2001.7%
Solid Waste 5,093,876 6,471,820 -21.3% (1,377,944) (2,000,162) -31.1%
Airport 62,413,162 65,479,865 -4.7% (3,066,703) (4,446,784) -31.0%
Public Transit 3,624,312 4,056,389 -10.7% (432,077) (188,550) 129.2%
Black Rock 2,473,017 2,312,869 6.9% 160,148 1,065,319 -85.0%
Total $ 195,100,927 $ 197,253,139 -1.1% $ (2,152,212) $ (5,705,021) -62.3%
The following reflects the inflows and outflows of the business-type activity funds for the fiscal year ending June
30, 2016.
Charges for
Services
64%
Operating
Grants
10%
Capital
Grants
23%
Other
3%
Sources of Inflows
Business Type Activities
Depreciation
39%
Personnel
34%
Operating
22%
Debt Costs
5%
Sources of Outflows
Business Type Activities
12
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2016
General Fund Budgetary Analysis – Government Fund Financial Statement Basis
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”.
Washington County, Maryland
General Fund Budgetary Analysis
As of June 30, 2016
(Government Fund Basis)
Category
Budgetary Amounts Actual Difference
Original Final
Org. Budget
vs. Final
Budget
Final Budget
vs. Actual
Revenues:
Property Tax $118,675,190 $118,675,190 $122,001,946 $ - $3,326,756
Local Tax 81,480,000 81,480,000 82,567,546 - 1,087,546
Other Revenue 8,097,510 13,377,900 12,696,313 5,280,390 (681,587)
Total Revenues 208,252,700 213,533,090 217,265,805 5,280,390 3,732,715
Expenses:
General Government 25,242,390 26,853,460 25,392,800 1,611,070 1,460,660
Public Safety 40,284,610 43,777,700 41,898,282 3,493,090 1,879,418
Health and Social Services 2,677,340 2,785,290 2,793,435 107,950 (8,145)
Education 104,109,040 104,109,040 104,109,040 - -
Parks, Recreation, Natural Resources 6,270,670 6,292,230 6,255,558 21,560 36,672
Highways and Streets 9,591,340 9,619,400 9,821,132 28,060 (201,732)
General Operations 622,300 610,960 598,985 (11,340) 11,975
Unallocated Costs 699,330 699,330 1,738,720 - (1,039,390)
Intergovernmental 3,820,190 3,850,190 9,427,062 30,000 (5,576,872)
Debt Service 14,935,490 14,935,490 13,818,901 - 1,116,589
Total Expenses 208,252,700 213,533,090 215,853,915 5,280,390 (2,320,825)
Other Financing Sources (Uses) - - 2,905 - 2,905
Net Increase in Assets - 06/30/16 $ - $ - $ 1,414,795 $ - $ 1,414,795
Original Budget vs. Final Budget:
The net budgetary change of $5.3 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 $5.3 million.
Final Budget vs. Actual Results:
Revenue was over budget by $3.7 million and expenditures were over budget by $2.3 million yielding a $1.4 million
net increase. Property Tax experienced an increase of $3.3 million over budget or 2.8%. Income Tax revenue
exceeded budget by .4% or $.3 million. Recordation Tax exceeded final budget by $.7 million or 12.8%. Other
revenues fell short by $.8 million mainly due to the grants being budgeted in total and often crossing fiscal years.
13
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2016
Offsetting the revenue change were expenditure net overages of $2.3 million, resulting from additional transfers to
the Highway, Golf Course, and Capital Improvement funds of $5.6 million to cover overruns due to snow storms,
additional operating subsidy and for future project funding. Offsetting these overruns were savings of $3.3 million
recognized from retirement incentives, fuel price variances, and differences in payments made for both LOSAP and
debt service.
The County’s investment in capital assets for its governmental and business-type activities as of June 30, 2016,
amounts to $666 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
2016 2015 2016 2015 2016 2015 %
Change
Land and Land Improvement $93,337,991 $90,761,013 $68,795,678 $70,823,766 $162,133,669 $161,584,779 0.3%
Building and Improvements 66,352,086 61,595,344 44,366,741 45,815,344 110,718,827 107,410,688 3.1%
Facilities, Lines, and Mains - - 85,255,600 86,042,590 85,255,600 86,042,590 -0.9%
Vehicles 4,232,010 3,186,856 1,603,632 2,110,825 5,835,642 5,297,681 10.2%
Infrastructure 238,958,038 232,846,628 - - 238,958,038 232,846,628 2.6%
Machinery and Equipment 2,477,742 2,848,053 3,156,022 3,137,909 5,633,764 5,985,962 -5.9%
Office/Computer Equipment 13,096,379 13,166,918 173,472 393,266 13,269,851 13,560,184 -2.1%
Treatment Plant - - 43,795,328 32,139,702 43,795,328 32,139,702
36.3%
Total $418,454,246 $404,404,812 $247,146,473 $240,463,402 $665,600,719 $644,868,214 3.2%
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 48-51 of this report.
Capital Asset Administration – Government Wide Statements
Airport Facilities,
$2,463,575 , 5%
Infrastructure,
$24,205,207 , 47%
Vehicles & Equipment,
$5,669,809 , 11%
Winebrenner WwTP,
$12,568,180 , 25%
Senior Community Center,
$6,154,838 , 12%
Capital Asset Acquistions
14
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2016
Economic Factors and Fiscal Year 2017
At the end of the current fiscal year, the County had total outstanding debt, excluding capital leases, of $199 million.
This amount was comprised of debt backed by the full faith and credit of the County and user fees. The debt
increased by a net of $10 million, the result of net principal payments of $11 million and new borrowings of $21
million. Funds borrowed were used for infrastructure projects of $17 million and educational projects of $4 million.
Washington County, Maryland
Outstanding Debt
(Government – Wide)
Instrument Type Governmental Activity Business-type Activity Total Outstanding Debt %
Change
2016 2015 2016 2015 2016 2015
General Obligation Bonds $142,436,609 $139,136,640 $39,600,931 $32,786,306 $182,037,540 $171,922,946 5.9%
Maryland Water Quality Bonds 4,597,503 4,888,398 12,534,512 12,241,277 17,132,015 17,129,675 0.0%
Total $147,034,112 $144,025,038 $52,135,443 $45,027,583 $199,169,555 $189,052,621 5.4%
The County’s credit ratings for fiscal year 2016 are as follows: 1) Standard and Poor’s rated AA+, 2) Fitch rated
AA+, and 3) Moody’s Investors Service rated Aa1.
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 2016 was 5.0% compared to 6.1% in June of 2015. The
unemployment rate reached a high of 9.8% in 2010 and has been improving steadily due to job growth in the
service industry, specifically within the categories of trade, transportation, and utilities, professional services,
and education and health services.
Water and sewer rates were increased for the 2017 budget year. The water and sewer revenue requirements
were increased 3.5% and 3.4%, respectively. This revenue increase is based on financial information formulated
annually from the County’s cost of service model.
Washington County has entered into a public/private partnership that will promote the use and development of
domestic energy. Phase I will include a refuse-derived facility while Phase II is to generate low-cost clean-
burning diesel, gasoline, jet fuel, home heating fuel and nitrogen 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 international benchmark in environmentally responsible waste
management.
Debt Administration
15
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2016
Requests for Information
On July 12, 2016, the Board of County Commissioners entered into a Memorandum of Understanding with the
Pen Mar Development Corporation. The purpose of this MOU was to set forth the agreement between parties
concerning the transfer and development of real property located at the former Ft. Ritchie in Cascade,
Maryland. On September 15, 2016, Pen Mar Development Corporation conveyed, for no monetary
consideration, all real property, contracts, leases, liabilities, and personal property not specifically excluded and
held by Pen Mar to the Board.
Washington County has reserved construction funds for the Urban Improvement Project which strives to
develop and revitalize the downtown district. Funding for this project includes a combination of County, City,
State, and private developer contributions.
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.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Statement of Net Position
For the Year Ended June 30, 2016
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 5,751,143$ 42,753,103$ 48,504,246$ 22,467,730$ 70,971,976$
Investments 91,688,709 - 91,688,709 22,006,950 113,695,659
Property taxes receivable, net of allowance 357,582 - 357,582 - 357,582
Accounts receivable, net of allowance 1,205,195 1,596,910 2,802,105 324,653 3,126,758
Interest receivable 125,528 - 125,528 - 125,528
Unbilled receivables 206,251 2,027,025 2,233,276 - 2,233,276
Due from other governmental agencies 18,501,552 2,418,718 20,920,270 8,517,111 29,437,381
Internal balances 504,588 (504,588) - - -
Inventories 790,714 285,572 1,076,286 233,794 1,310,080
Other assets 41,622 - 41,622 2,003,325 2,044,947
Net other post employment benefits assets 2,053,375 - 2,053,375 - 2,053,375
Recoverable disbursements 239,858 - 239,858 - 239,858
Notes receivable 350,000 250,000 600,000 - 600,000
Projects under construction 17,029,761 3,435,168 20,464,929 18,390,191 38,855,120
Property, plant, and equipment, net 418,454,248 247,146,473 665,600,721 222,723,728 888,324,449
TOTAL ASSETS 557,300,126 299,408,381 856,708,507 296,667,482 1,153,375,989
DEFERRED OUTFLOWS OF RESOURCES
Loss on refunding 3,632,325 845,049 4,477,374 - 4,477,374
Net pension activity 15,448,265 - 15,448,265 4,358,393 19,806,658
TOTAL DEFERRED OUTFLOWS OF RESOURCES 19,080,590 845,049 19,925,639 4,358,393 24,284,032
Current Liabilities:
Current maturities of long-term obligations 10,170,734 3,608,192 13,778,926 - 13,778,926
Current maturities of capital lease obligations 12,356 12,321 24,677 7,756,121 7,780,798
Current maturities of installment purchase contracts 146,006 - 146,006 - 146,006
Accounts payable 7,816,609 2,871,681 10,688,290 8,332,766 19,021,056
Accrued expenses 1,422,815 555,611 1,978,426 21,398,389 23,376,815
Accrued interest 2,218,304 6,068,969 8,287,273 - 8,287,273
Unearned revenue 377,166 1,512,881 1,890,047 1,695,755 3,585,802
Compensated absences 1,971,659 390,588 2,362,247 376,416 2,738,663
Landfill closure and post-closure costs - 223,070 223,070 - 223,070
Other liabilities 1,715,847 79,358 1,795,205 5 1,795,210
Liabilities for unpaid claims 1,892,223 - 1,892,223 - 1,892,223
Total current liabilities 27,743,719 15,322,671 43,066,390 39,559,452 82,625,842
Noncurrent Liabilities:
Unearned revenue - 640,290 640,290 - 640,290
Compensated absences 1,308,742 180,717 1,489,459 6,970,907 8,460,366
Long-term obligations 136,863,377 48,527,251 185,390,628 13,444,644 198,835,272
Capital lease obligations 20,107 26,509 46,616 2,870,924 2,917,540
Installment purchase contracts - - - - -
Landfill closure and post-closure costs - 15,008,892 15,008,892 - 15,008,892
Net pension liability 66,182,236 - 66,182,236 18,386,392 84,568,628
Total noncurrent liabilities 204,374,462 64,383,659 268,758,121 41,672,867 310,430,988
TOTAL LIABILITIES 232,118,181 79,706,330 311,824,511 81,232,319 393,056,830
Service concession arrangements - 25,446,173 25,446,173 - 25,446,173
Net pension activity 5,387,342 - 5,387,342 1,637,107 7,024,449
TOTAL DEFERRED INFLOWS OF RESOURCES 5,387,342 25,446,173 30,833,515 1,637,107 32,470,622
NET POSITION
Net investment in capital assets 364,108,056 210,070,287 574,178,343 230,486,874 804,665,217
Restricted for:
John Howard Trust 241,640 - 241,640 - 241,640
Capital projects 18,522,403 11,662,919 30,185,322 - 30,185,322
Unrestricted (43,996,906) (26,632,279) (70,629,185) (12,330,425) (82,959,610)
TOTAL NET POSITION 338,875,193$ 195,100,927$ 533,976,120$ 218,156,449$ 752,132,569$
Primary Government
LIABILITIES
DEFERRED INFLOWS OF RESOURCES
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Statement of Activities
For the Year Ended June 30, 2016
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 22,855,397$ 4,313,500$ 1,174,141$ 621,339$
Public safety 45,580,165 1,338,969 4,380,152 -
Health 2,339,270 - - -
Social services 454,165 - - -
Education 111,107,381 - - 3,987
Parks, recreation and culture 6,189,629 210 61,840 74,620
Natural resources 3,548,014 - 2,338,224 -
Community promotion 5,685,839 - 1,779,262 -
Highways and streets 34,514,432 - 1,015,242 3,536,282
Interest on long-term debt 4,455,552 - - -
Total governmental activities 236,729,844 5,652,679 10,748,861 4,236,228
Business-type activities
Water quality 13,064,911 10,854,288 20,054 4,048,461
Solid waste 7,651,494 5,454,581 - -
Airport 8,078,548 2,434,904 139,299 2,248,823
Public transit 3,209,682 424,397 1,453,389 429,697
Black rock golf course 1,209,326 822,512 - 192,600
Total business-type activities 33,213,961 19,990,682 1,612,742 6,919,581
TOTAL PRIMARY GOVERNMENT 269,943,805$ 25,643,361$ 12,361,603$ 11,155,809$
Component unit:
Board of Education 347,865,770$ 13,463,658$ 58,673,315$ 5,649$
General revenue:
Taxes
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
NET POSITION - END OF YEAR
Program Revenue
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Statement of Activities
For the Year Ended June 30, 2016
The accompanying notes are an integral part of this financial statement.
18
Component Unit
Governmental
Activities
Business-Type
Activities Total
Board of
Education Total
(16,746,417)$ -$ (16,746,417)$ -$ (16,746,417)$
(39,861,044) - (39,861,044) - (39,861,044)
(2,339,270) - (2,339,270) - (2,339,270)
(454,165) - (454,165) - (454,165)
(111,103,394) - (111,103,394) - (111,103,394)
(6,052,959) - (6,052,959) - (6,052,959)
(1,209,790) - (1,209,790) - (1,209,790)
(3,906,577) - (3,906,577) - (3,906,577)
(29,962,908) - (29,962,908) - (29,962,908)
(4,455,552) - (4,455,552) - (4,455,552)
(216,092,076) - (216,092,076) - (216,092,076)
- 1,857,892 1,857,892 - 1,857,892
- (2,196,913) (2,196,913) - (2,196,913)
- (3,255,522) (3,255,522) - (3,255,522)
- (902,199) (902,199) - (902,199)
- (194,214) (194,214) - (194,214)
- (4,690,956) (4,690,956) - (4,690,956)
(216,092,076) (4,690,956) (220,783,032) - (220,783,032)
- - - (275,723,148) (275,723,148)
122,058,501 - 122,058,501 - 122,058,501
88,774,286 - 88,774,286 - 88,774,286
1,115,007 200,001 1,315,008 371,173 1,686,181
1,639,121 - 1,639,121 - 1,639,121
638,476 703,713 1,342,189 468,128 1,810,317
- - - 257,886,746 257,886,746
(313,795) (5,635) (319,430) - (319,430)
(1,640,665) 1,640,665 - - -
212,270,931 2,538,744 214,809,675 258,726,047 473,535,722
(3,821,145) (2,152,212) (5,973,357) (16,997,101) (22,970,458)
342,696,338 197,253,139 539,949,477 235,153,550 775,103,027
338,875,193$ 195,100,927$ 533,976,120$ 218,156,449$ 752,132,569$
Primary Government
Net (Expense) Revenue and Changes in Net Position
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Balance Sheet – Governmental Funds
As of June 30, 2016
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 162,083$ 3,351,281$ 2,237,779$ 5,751,143$
Investments 91,452,894 235,815 - 91,688,709
Property taxes receivable, net of allowance 357,582 - - 357,582
Accounts receivable, net of allowance 503,433 387,033 314,729 1,205,195
Interest receivable 124,855 673 - 125,528
Unbilled receivables 206,251 - - 206,251
Due from other funds - 56,333,230 - 56,333,230
Due from other governmental agencies 16,757,732 1,154,596 589,224 18,501,552
Recoverable disbursements 239,858 - - 239,858
Notes receivable 350,000 - - 350,000
Other assets 41,622 - - 41,622
Inventories 790,714 - - 790,714
TOTAL ASSETS 110,987,024$ 61,462,628$ 3,141,732$ 175,591,384$
LIABILITIES, DEFERRED INFLOWS
OF RESOURCES, AND FUND BALANCES
LIABILITIES:
Accounts payable 2,514,765$ 3,104,479$ 2,197,365$ 7,816,609$
Due to other funds 55,483,023 - 345,619 55,828,642
Accrued expenses 1,404,296 12 18,507 1,422,815
Other liabilities 1,350,527 250 365,070 1,715,847
Liabilities for unpaid claims 1,892,223 - - 1,892,223
Unearned revenue 346,841 - 30,325 377,166
TOTAL LIABILITIES 62,991,675 3,104,741 2,956,886 69,053,302
DEFERRED INFLOWS OF RESOURCES:
Unavailable revenues 8,253,201 - - 8,253,201
FUND BALANCES:
Nonspendable 1,090,714 - - 1,090,714
Restricted 528,978 18,522,403 349,888 19,401,269
Committed 38,104,831 39,835,484 - 77,940,315
Assigned 17,625 - 50,089 67,714
Unassigned - - (215,131) (215,131)
TOTAL FUND BALANCES 39,742,148 58,357,887 184,846 98,284,881
TOTAL LIABILITIES, DEFERRED INFLOWS
OF RESOURCES, AND FUND BALANCES 110,987,024$ 61,462,628$ 3,141,732$ 175,591,384$
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Reconciliation of Balance Sheet of Governmental Funds to Statement of Net Position
As of June 30, 2016
The accompanying notes are an integral part of this financial statement.
20
Fund balance of governmental funds 98,284,881$
Capital assets, net 418,454,246
Projects under construction 17,029,761
Net other post employment benefits 2,053,375
Unavailable revenue 8,253,201
13,693,248
Long-term obligations (147,034,112)
Installment purchase obligations (146,006)
Capital lease obligations (32,463)
Accrued interest payable-net of IRS subsidy (2,218,301)
Compensated absences and net pension liability (69,462,637)
Net position of governmental activities 338,875,193$
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
funds
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Statement of Revenue, Expenditures, and Changes in Fund Balances - Governmental Funds
For the Year Ended June 30, 2016
The accompanying notes are an integral part of this financial statement.
21
REVENUE
General property taxes 122,001,946$ -$ -$ 122,001,946$
Other local taxes 82,567,546 3,934,781 2,255,673 88,758,000
Licenses and permits 1,316,242 - 2,158,533 3,474,775
Court costs and fines 252,384 - - 252,384
Charges for services 477,971 - 325,629 803,600
Revenue from uses of property 1,074,126 - 40,881 1,115,007
Reimbursed expenses 1,011,679 - 4,639 1,016,318
Miscellaneous revenues 493,792 437,804 144,684 1,076,280
Shared taxes and grants 6,349,348 2,184,691 4,471,066 13,005,105
Highway 1,720,771 - - 1,720,771
Total Revenue 217,265,805 6,557,276 9,401,105 233,224,186
EXPENDITURES
Current:
General government 25,392,800 - - 25,392,800
Public safety 41,898,282 - 1,450,632 43,348,914
Health 2,339,270 - - 2,339,270
Social services 454,165 - - 454,165
Education 104,109,040 - - 104,109,040
Parks, recreation and culture 5,586,517 - 226,038 5,812,555
Natural resources 669,041 - 2,873,263 3,542,304
Intergovernmental 38,543 - - 38,543
General operations 2,337,705 - 170,691 2,508,396
Community promotion - - 5,685,975 5,685,975
Highways and streets 9,821,132 - - 9,821,132
Debt service 13,818,901 - - 13,818,901
Capital outlay:
General government - 6,050,137 - 6,050,137
Public safety - 1,174,908 - 1,174,908
Highways and streets - 16,440,597 - 16,440,597
Education - 6,998,341 - 6,998,341
Parks and recreation - 82,098 - 82,098
Total Expenditures 206,465,396 30,746,081 10,406,599 247,618,076
Excess (Deficiency) Of Revenue
Over Expenditures 10,800,409 (24,188,805) (1,005,494) (14,393,890)
OTHER FINANCING SOURCES (USES)
Transfers in - 7,630,000 981,854 8,611,854
Transfers out (9,388,519) (564,000) (300,000) (10,252,519)
Principal amount of new debt for advance refunding 7,078,184 - - 7,078,184
Deposit to escrow fund for advance refunding and
and repayment of loans (7,075,279) - - (7,075,279)
Proceeds of bond sale - 12,958,690 - 12,958,690
TOTAL OTHER FINANCING SOURCES (USES)(9,385,614) 20,024,690 681,854 11,320,930
NET CHANGES IN FUND BALANCE 1,414,795 (4,164,115) (323,640) (3,072,960)
FUND BALANCES - BEGINNING OF YEAR 38,327,353 62,522,002 508,486 101,357,841
FUND BALANCES - END OF YEAR 39,742,148$ 58,357,887$ 184,846$ 98,284,881$
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, 2016
The accompanying notes are an integral part of this financial statement.
22
Net changes in fund balances in governmental funds (3,072,960)$
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
es timated useful lives as depreciation expense. This is the amount by which
capital outlay exceeded depreciation in the current period.
Capital outlay capitalized 19,809,160$
Depreciation (16,631,325) 3,177,835
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.(361,396)
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 (12,961,595)$
Payments of installment purchase principal 351,794
Payments of lease principal 167,077
Payments of debt principal 9,721,412 (2,721,312)
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 earned exceeded the financial resources used.(2,386,263)
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.1,542,951
Change in net position of governmental activities (3,821,145)$
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Statement of Net Position - Proprietary Funds
For the Year Ended June 30, 2016
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
25,896,038$ 16,380,459$ 100$ 476,506$ 42,753,103$
1,347,379 193,535 39,013 16,983 1,596,910
1,727,150 286,931 12,019 925 2,027,025
427,924 - 1,407,899 582,895 2,418,718
- 250,000 - - 250,000
106,271 13,866 44,616 120,819 285,572
Total current assets 29,504,762 17,124,791 1,503,647 1,198,128 49,331,328
2,797,048 49,473 588,647 - 3,435,168
195,402,351 66,999,223 152,736,662 12,251,143 427,389,379
(64,077,074) (44,740,718) (64,406,186) (7,018,928) (180,242,906)
Total noncurrent assets 134,122,325 22,307,978 88,919,123 5,232,215 250,581,641
TOTAL ASSETS 163,627,087 39,432,769 90,422,770 6,430,343 299,912,969
DEFERRED OUTFLOWS OF RESOURCES
477,187 344,400 23,462 - 845,049
LIABILITIES
2,104,597 1,415,925 87,670 - 3,608,192
12,321 - - - 12,321
2,172,108 229,929 345,013 124,631 2,871,681
405,043 52,110 24,609 73,849 555,611
5,807,258 247,256 14,455 - 6,068,969
- - 504,588 - 504,588
164,533 548,096 800,002 250 1,512,881
225,249 69,441 27,029 68,869 390,588
- 223,070 - - 223,070
7,300 - 44,260 27,798 79,358
Total current liabilities 10,898,409 2,785,827 1,847,626 295,397 15,827,259
640,290 - - - 640,290
99,663 30,504 12,933 37,617 180,717
30,942,843 16,858,070 726,338 - 48,527,251
Capital lease obligations 26,509 - - - 26,509
- 15,008,892 - - 15,008,892
Total noncurrent liabilities 31,709,305 31,897,466 739,271 37,617 64,383,659
TOTAL LIABILITIES 42,607,714 34,683,293 2,586,897 333,014 80,210,918
DEFERRED INFLOWS OF RESOURCES
Service concession arrangements - - 25,446,173 - 25,446,173
Net Position
112,621,973 4,110,983 88,105,115 5,232,215 210,070,287
11,585,919 77,000 - - 11,662,919
(2,711,332) 905,893 (25,691,953) 865,114 (26,632,279)
TOTAL NET POSITION 121,496,560$ 5,093,876$ 62,413,162$ 6,097,329$ 195,100,927$
Loss on refundings
Current Assets:
Cash and short-term investments
Accounts receivable, net
Unbilled receivables
Due from other governmental agencies
Inventories
Noncurrent Assets:
Projects under construction
Property, plant and equipment
Accumulated depreciation
Notes Receivable
Compensated absences
Landfill closure and post-closure costs
Other liabilities
Current Liabilities:
Current maturities of long-term obligations
Accounts payable
Accrued expenses
Accrued interest
Due to other funds
Unearned revenue
Current maturities of capital lease obligations
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
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Statement of Revenue, Expenses and Changes in Net Position - Proprietary Funds
For the Year Ended June 30, 2016
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 10,854,288$ 5,454,581$ 2,434,904$ 1,246,909$ 19,990,682$
Miscellaneous 352,980 325,904 3,569 21,260 703,713
TOTAL OPERATING REVENUE 11,207,268 5,780,485 2,438,473 1,268,169 20,694,395
OPERATING EXPENSES
Salaries and wages 3,761,195 1,277,155 569,546 1,702,251 7,310,147
Fringe benefits 2,269,897 608,754 295,823 755,650 3,930,124
Utilities 875,664 51,010 180,892 81,779 1,189,345
Insurance 118,872 31,644 45,964 46,864 243,344
Repairs and maintenance 344,556 - 93,497 197,263 635,316
Supplies 269,253 88,744 11,650 40,799 410,446
Cost of goods sold - - - 97,963 97,963
Contracted services 211,311 1,713,300 58,567 455,757 2,438,935
Rentals and leases 21,981 1,986 5,954 122,210 152,131
Other operating 1,124,659 337,743 245,663 274,335 1,982,400
Uncollectible accounts 24 (324) (60,726) - (61,026)
Controllable assets 52,678 13,527 83,883 2,045 152,133
Depreciation 2,990,424 3,033,149 6,511,913 642,092 13,177,578
TOTAL OPERATING EXPENSES 12,040,514 7,156,688 8,042,626 4,419,008 31,658,836
OPERATING LOSS (833,246) (1,376,203) (5,604,153) (3,150,839) (10,964,441)
OTHER INCOME (EXPENSE)
Interest expense (1,024,397) (494,806) (35,922) - (1,555,125)
Interest income 193,820 1,665 4,541 (25) 200,001
Gain (loss) on disposal of assets (8,023) - 4,209 (1,821) (5,635)
TOTAL OTHER INCOME (EXPENSE)(838,600) (493,141) (27,172) (1,846) (1,360,759)
LOSS BEFORE OPERATING TRANSFERS AND
GRANTS (1,671,846) (1,869,344) (5,631,325) (3,152,685) (12,325,200)
OPERATING TRANSFERS 167,695 491,400 64,500 753,070 1,476,665
GRANTS FOR OPERATING 20,054 - 139,299 1,453,389 1,612,742
NET LOSS BEFORE CAPITAL TRANSFERS AND
GRANTS (1,484,097) (1,377,944) (5,427,526) (946,226) (9,235,793)
CAPITAL TRANSFERS - - 112,000 52,000 164,000
CAPITAL GRANTS AND CONTRIBUTIONS 4,048,461 - 2,248,823 622,297 6,919,581
NET CHANGES IN NET POSITION 2,564,364 (1,377,944) (3,066,703) (271,929) (2,152,212)
NET POSITION - BEGINNING OF YEAR 118,932,196 6,471,820 65,479,865 6,369,258 197,253,139
NET POSITION - END OF YEAR 121,496,560$ 5,093,876$ 62,413,162$ 6,097,329$ 195,100,927$
Enterprise Funds
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Statement of Cash Flows – Proprietary Funds
For Year Ended June 30, 2016
The accompanying notes are an integral part of this financial statement.
25
Water Solid
Quality Waste Ai rport Non-major
Fund Fund Fund Funds Total
Cash Flows from Operating Activities
Receipts from customers $17,562,230 $10,981,889 $ 686,782 $ 1,723,414 $ 30,954,315
Payments to suppliers (1,541,156) (2,601,726) (579,518) (2,001,913) (6,724,313)
Payments to employees (5,971,073) (2,118,026) (856,867) (2,265,503) (11,211,469)
Net Cash from Operating Activities 10,050,001 6,262,137 (749,603) (2,544,002) 13,018,533
Cash Flows from Noncapital Financing Activities
Operating contributions 187,749 491,400 203,799 2,206,459 3,089,407
Increase (decrease) in due to/from other funds 732,280 - 504,588 - 1,236,868
Net Cash from Noncapital Financing Activities 920,029 491,400 708,387 2,206,459 4,326,275
Cash Flows from Capital and Related Financing Activities
Interest paid on notes and bond payable (1,960,323) (499,881) (39,692) (25) (2,499,921)
Acquisition and construction of capital assets (11,651,447) (613,725) (2,715,530) (522,983) (15,503,685)
Gain (loss) on the sale of assets - - 4,209 (1,821) 2,388
Contribution for capital acquisitions 4,048,461 - 2,360,823 674,297 7,083,581
Proceeds from/payments on notes and bonds payable 8,511,032 (1,254,334) (263,766) - 6,992,932
Net Cash from Capital and Related Financing Activities (1,052,277) (2,367,940) (653,956) 149,468 (3,924,705)
Cash Flows from Investing Activities
Interest on investments 193,820 1,665 4,541 - 200,026
Net change in cash 10,111,573 4,387,262 (690,631) (188,075) 13,620,129
Cash, Beginning of Year 15,784,465 11,993,197 690,731 664,581 29,132,974
Cash, End of Year $25,896,038 $16,380,459 $ 100 $ 476,506 $ 42,753,103
Non-Cash Operating Activities
Loss on refunding $ 477,187 $ 344,400 $ 23,462 $ - $ 845,049
Non-Cash Capital and Related Financing Activities
Capital lease $ (11,738) $ - $ - $ - $ (11,738)
from Operating Activities
Operating loss $ (833,246) $(1,376,203) $ (5,604,153) $(3,150,839) $(10,964,441)
Adjustments to reconcile operating income to net cash
from operating activities:
Depreciation 2,990,424 3,033,149 6,511,913 642,092 13,177,578
Changes in assets and liabilities:
Accounts receivable (191,802) 46,367 (18,753) (1,953) (166,141)
Unbilled receivables (332,251) 9,513 19,490 (364) (303,612)
Due to/from other government entities 6,800,662 5,130,323 (951,721) (54,336) 10,924,928
Notes receivable - (250,000) - - (250,000)
Inventories (9,773) (15) (12,369) 632 (21,525)
Accounts payable and other liabilities 1,487,615 (194,112) 98,195 44,826 1,436,524
Accrued expenses 50,667 14,718 7,777 13,173 86,335
Landfill closure - (169,969) - - (169,969)
Unearned revenue 78,353 15,201 (800,707) (30,300) (737,453)
Compensated absences 9,352 3,165 725 (6,933) 6,309
Net Cash from Operating Activities $10,050,001 $ 6,262,137 $ (749,603) $(2,544,002) $ 13,018,533
Enterprise Funds
Reconciliation of Operating Loss to Net Cash
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Statement of Net Position – Fiduciary Funds
As of June 30, 2016
The accompanying notes are an integral part of this financial statement.
26
ASSETS
Cash and short-term investments 6,768,327$ 126,849$ 1,878,714$ 64,719$ 3,304,980$
Investments, at fair value:
US Government obligations 12,297,602 1,121,897 2,159,848 - -
Corporate bonds and obligations 7,388,761 498,778 1,007,995 - -
Fixed income securities 5,841,710 593,088 1,508,719 - -
Corporate stock 26,523,984 2,018,841 4,078,272 - -
Equity funds 34,385,579 3,136,137 6,424,415 62,992 -
Accounts receivable 141,346 11,452 23,142 - -
Due from other funds - - - 5 -
TOTAL ASSETS 93,347,309 7,507,042 17,081,105 127,716 3,304,980
LIABILITIES
Accounts payable - - - - 46,830
Due to other funds - - - - -
Due to student groups - - - - 3,258,150
TOTAL LIABILITIES - - - - 3,304,980
NET POSITION
Held in trust for pension and OPEB 93,347,309 7,507,042 17,081,105 - -
Held in trust for scholarships - - - 127,716 -
NET POSITION 93,347,309$ 7,507,042$ 17,081,105$ 127,716$ -$
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, 2016
The accompanying notes are an integral part of this financial statement.
27
ADDITIONS
Contributions:
Employer 6,621,156$ -$ 1,006,600$ -$
Plan members 1,873,710 - - -
Gifts and contributions - - - 29,200
Receipts of In-kind 420,253 41,632 57,611 -
Total Contributions 8,915,119 41,632 1,064,211 29,200
Investment Income:
Realized and unrealized gains (losses)(2,903,171) (276,316) (461,506) -
Interest and dividends 1,040,831 88,455 164,688 3,641
Other income 2,666,177 258,252 462,826 -
Total Investment Income 803,837 70,391 166,008 3,641
TOTAL ADDITIONS 9,718,956 112,023 1,230,219 32,841
DEDUCTIONS
Benefits 7,789,289 490,872 - -
Scholarship expenses - - - 31,846
Administrative expenses 693,845 77,394 113,658 -
TOTAL DEDUCTIONS 8,483,134 568,266 113,658 31,846
CHANGES IN NET POSITION 1,235,822 (456,243) 1,116,561 995
NET POSITION - BEGINNING OF YEAR 92,111,487 7,963,285 15,964,544 126,721
NET POSITION - END OF YEAR 93,347,309$ 7,507,042$ 17,081,105$ 127,716$
Pension Trust LOSAP Trust OPEB Trus t
Private Purpose
Trust
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2016
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, 2016 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, 2016
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, 2016
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 capitalized in the appropriate fund.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2016
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, 2016
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, 2016
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, 2016
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, 2016
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 (2015 and 2016 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, 2016
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 GASB has issued Statement No. 72, entitled Fair Value Measurement and
Application; Statement No. 76; entitled, The Hierarchy of Generally Accepted Accounting
Principles for State and Local Government; These statements did not have a material effect
on the County’s financial statements.
The GASB has also issued 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; 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, 2016
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, 2016
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, 2016
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, 2016
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, repurchase
agreements and the Maryland Local Government Investment Pool.
Deposits
As of June 30, 2016, the carrying amount of the County’s deposits was $48,504,246 and
the bank balances were $50,310,418. All deposits are carried at cost plus accrued interest.
There were no significant violations of the collateralization requirements during the year
ended June 30, 2016. 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 market
changes 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 for
custodial credit risk. As of June 30, 2016, the County’s bank balance of $50,310,418 was
exposed to custodial credit risk as $250,000 of interest bearing accounts and $250,000 of
noninterest bearing accounts are insured by FDIC, $15,000,000 is covered by a short term
line of credit, and the remainder is collateralized through the Bank of New York Mellon.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2016
41
3. CASH AND SHORT-TERM INVESTMENTS (continued)
County (continued)
Investments
As of June 30, 2016, the County had the following investments and maturities.
Investment Type Fair Value Less than 1 1-5 6-10 More than 10
Investments held in County’s name:
91,230,984$ 82,795,579$ 8,435,405$ -$ -$
Certificates of Deposit 457,725 - 457,725 - -
Total investments held in County’s name 91,688,709 82,795,579 8,893,130 - -
Investments held by trustee of
Pension plan:
19,686,363 19,686,363 - - -
Fixed income securities 5,841,710 5,841,710 - - -
Corporate stocks 26,523,984 26,523,984 - - -
Equity funds 34,385,579 34,385,579 - - -
Money market funds 6,768,327 6,768,327 - - -
Interest and dividends receivable 141,346 141,346 - - -
Investments held by trustee of
LOSAP plan:
1,620,675 1,620,675 - - -
Corporate stocks 2,018,841 2,018,841 - - -
Fixed income funds 593,088 593,088 - - -
Equity funds 3,136,137 3,136,137 - - -
Money market funds 126,849 126,849 - - -
Interest and dividends receivable 11,452 11,452 - - -
Investments held by trustee of
OPEB plan:
3,167,843 3,167,843 - - -
Corporate stocks 4,078,272 4,078,272 - - -
Fixed income funds 1,508,719 1,508,719 - - -
Equity funds 6,424,415 6,424,415 - - -
Money market funds 1,878,714 1,878,714 - - -
Interest and dividends receivable 23,142 23,142 - - -
Total investments 209,624,165$ 200,731,035$ 8,893,130$ -$ -$
17,081,105 17,081,105 - - -
7,507,042 7,507,042 - - -
93,347,309 93,347,309 - - -
Investment Maturities (in Years)
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
The County categorizes its fair value measurements within the fair value hierarchy
established by generally accepted accounting principles. The hierarchy is based on the
valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices
in active markets for identical assets; Level 2 inputs are significant other observable inputs;
Level 3 inputs are significant unobservable inputs. All of the County’s investments are
valued using quoted market prices (level 1 inputs).
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2016
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, 2016
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, 2016, 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, 2016, 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, 2016
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 $250,000 at
June 30, 2016.
Compliance is summarized as follows:
June 30, 2016
Carrying amount of cash deposits 22,462,617$ 5,113$ 3,369,699$ 25,837,429$
Bank balance of cash deposits 24,782,823 4,194 3,468,983 28,256,000
Amount covered by FDIC 499,605 2,028 878,067 1,379,700
Amount collateralized with securities
24,283,218 2,166 2,590,916 26,876,300
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, 2016
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, 2016, the School System had the following investments and maturities:
June 30, 2016
Federal Farm Credit Bank – 1.100%
matures October 15, 2018 5,500,110$ -$ -$ 5,500,110$
Federal Home Loan Mortgage Corp. - 1.250%
matures October 29, 2018 5,002,150 - - 5,002,150
Federal National Mortgage Association - 1.250%
matures January 30, 2019 4,000,600 - - 4,000,600
Federal National Mortgage Association - 1.125%
matures June 28, 2019 3,503,990 - - 3,503,990
Federal Home Loan Bank - 1.370%
matures October 24, 2019 3,000,090 - - 3,000,090
Federal Home Loan Bank - 1.390%
matures December 26, 2019 1,000,010 - - 1,000,010
Income Fund of America - - 62,992 62,992
22,006,950$ -$ 62,992$ 22,069,942$
Governmental
Activities
Business-Type
Activities
Fiduciary
Responsibilities Total
Fair Value
Investment Type June 30, 2016 Less than 1 1-5 6-10 More than 10
U.S. Agencies $ 22,006,950 $ - $ 22,006,950 $ - $ -
Income Fund 62,992 62,992 - - -
$ 22,069,942 $ 62,992 $ 22,006,950 $ - $ -
Investment Maturities (in Years)
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2016
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 $ 480,714 $ - $ - $ 480,714
Accounts receivable 554,043 387,033 314,729 1,255,805
Gross receivables 1,034,757 387,033 314,729 1,736,519
Less: allowance for uncollectibles (173,742) - - (173,742)
Net Total Receivables $ 861,015 $ 387,033 $ 314,729 $ 1,562,777
Accounts receivable $ 1,362,652 $ 260,613 $ 49,813 $ 17,483 $ 1,690,561
Less: allowance for uncollectibles (15,273) (67,078) (10,800) (500) (93,651)
Net Total Receivables $ 1,347,379 $ 193,535 $ 39,013 $ 16,983 $ 1,596,910
Business-type Activities
Governmental Activities
General Non-Major
Capital
Projects Total
Water Quality Solid Waste Airport Non-major 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 $277,005.
Receivables do not include various taxes collected by the State of Maryland on behalf of
the County, including income taxes. These amounts are included in Due From Other
Governmental Agencies.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2016
47
5. CAPITAL ASSETS
Capital asset activity for the year ended June 30, 2016, was as follows:
Primary Government
Balance Balance
June 30, 2015 Additions Retirements June 30, 2016
Governmental activities:
Capital assets, not being depreciated:
Land 83,080,346$ 2,408,065$ (330,834)$ 85,157,577$
Capital assets, being depreciated:
Land improvements 13,145,015 908,697 -14,053,712
Building and improvements 90,855,192 7,171,106 - 98,026,298
Vehicles 14,127,073 1,942,579 (685,984) 15,383,668
Infrastructure 1,144,423,015 15,729,722 - 1,160,152,737
Machinery and equipment 9,365,501 108,619 (112,143) 9,361,977
Office furniture and equipment 5,606,200 - (42,941) 5,563,259
Computer equipment 32,573,381 2,794,419 - 35,367,800
Total capital assets, being depreciated 1,310,095,377 28,655,142 (841,068) 1,337,909,451
Total capital assets 1,393,175,723 31,063,207 (1,171,902) 1,423,067,028
Accumulated depreciation for:
Land improvements (5,464,348) (408,950) -(5,873,298)
Building and improvements (29,259,848) (2,414,364) - (31,674,212)
Vehicles (10,940,217) (884,804) 673,363 (11,151,658)
Infrastructure (911,576,387) (9,618,312) - (921,194,699)
Machinery and equipment (6,517,448) (478,930) 112,143 (6,884,235)
Office furniture and equipment (5,437,988) (18,124) 42,479 (5,413,633)
Computer equipment (19,574,675) (2,846,372) - (22,421,047)
Total accumulated depreciation (988,770,911) (16,669,856) 827,985 (1,004,612,782)
Governmental activities capital assets, net 404,404,812$ 14,393,351$ (343,917)$ 418,454,246$
Projects Under Construction 26,649,023$ 23,747,740$ (33,367,002)$ 17,029,761$
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2016
48
5. CAPITAL ASSETS (continued)
Business-type Activities
Balance Balance
June 30, 2015 Additions Retirements June 30, 2016
Capital assets, not being depreciated:
Land 12,052,287$ -$ -$ 12,052,287$
Capital assets, being depreciated:
Land improvements 137,399,526 5,672,806 -143,072,332
Building and improvements 63,261,108 116,856 - 63,377,964
Facilities 117,310,657 750,378 - 118,061,035
Vehicles 8,257,096 213,608 (291,285) 8,179,419
Machinery and equipment 12,262,985 610,584 (343,228) 12,530,341
Office furniture and equipment 323,205 - - 323,205
Computer equipment 2,529,187 - - 2,529,187
Treatment plants 54,673,121 12,634,170 (43,682) 67,263,609
Total capital assets, being depreciated 396,016,885 19,998,402 (678,195) 415,337,092
Total capital assets 408,069,172 19,998,402 (678,195) 427,389,379
Accumulated depreciation for:
Land improvements (78,628,047) (7,700,894) -(86,328,941)
Building and improvements (17,445,764) (1,565,459) - (19,011,223)
Facilities (31,268,067) (1,537,368) - (32,805,435)
Vehicles (6,146,271) (712,787) 283,271 (6,575,787)
Machinery and equipment (9,125,076) (566,265) 317,022 (9,374,319)
Office furniture and equipment (323,206) - - (323,206)
Computer equipment (2,135,920) (219,794) - (2,355,714)
Treatment plants (22,533,419) (970,521) 35,659 (23,468,281)
Total accumulated depreciation (167,605,770) (13,273,088) 635,952 (180,242,906)
Business-type activities capital assets, net 240,463,402$ 6,725,314$ (42,243)$ 247,146,473$
Projects Under Construction 7,996,470$ 15,377,202$ (19,938,504)$ 3,435,168$
Business-type activities:
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2016
49
5. CAPITAL ASSETS (continued)
Depreciation expense was charged to functions/programs of the primary government as
follows:
Governmental Activities:
General Government 11,840,331$
Public Safety 3,986,202
Recreation 305,149
Conservation of Natural Resources 5,662
Highway 493,981
Total Depreciation Expense - Governmental Activities 16,631,325$
Business-Type Activities:
Transit Fund 538,533$
Airport Fund 6,511,913
Golf Course Fund 103,559
W ater Quality Fund 2,990,424
Solid Waste Fund 3,033,149
Total Depreciation Expense – Business-Type Activities 13,177,578$
Board of Education (Discretely presented component unit)
Balance Balance
June 30, 2015 Additions Deletions June 30, 2016
Government activities
Capital assets, not being depreciated:
Land 8,692,987$ -$ $ - 8,692,987$
Facilities under construction 8,277,129 10,373,517 (260,455)18,390,191
16,970,116 10,373,517 (260,455)27,083,178
Capital assets, being depreciated:
Building and improvements 319,487,836 1,292,991 - 320,780,827
Furniture and equipment 45,780,323 3,429,462 (2,040,936)47,168,849
Equipment under capital leases 9,426,852 4,440,983 - 13,867,835
374,695,011 9,163,436 (2,040,936) 381,817,511
Accumulated depreciation:
Building and improvements (130,184,262) (7,086,404) - (137,270,666)
Furniture and equipment (29,002,794) (3,291,504) 2,006,188 (30,288,110)
Buildings and equipment under capital lease (1,305,820) (451,322) - (1,757,142)
(160,492,876) (10,829,230) 2,006,188 (169,315,918)
Governmental activities capital assets, net 231,172,251$ 8,707,723$ (295,203)$ 239,584,771$
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2016
50
5. CAPITAL ASSETS (continued)
Board of Education (continued)
Balance Balance
June 30, 2015 Additions Retirements June 30, 2016
Business-type activities
Capital assets, being depreciated:
Furniture and equipment 4,797,296$ 270,008$ (3,044)$ 5,064,260$
Accumulated depreciation
Furniture and equipment (3,338,777) (199,379) 3,044 (3,535,112)
Business-type activities capital assets, net 1,458,519$ 70,629$ -$ 1,529,148$
Depreciation expense was charged to the functions/programs of the Board as follows:
Governmental activities:
Other instructional costs 1,787,560$
Student transportation services 1,287,305
Operation of plant 176,080
Depreciation - unallocated 7,578,285
10,829,230$
Business-type activities:
Food services 199,379$
Total governmental activities depreciation expense
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2016
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
Capital Projects General Fund 55,483,022$
Community Grant
Management 63,507
Hotel Rental Tax
Fund 62,840
HEPMPO 219,272
Airport 504,588
Total 56,333,229$
Due to/from primary government and component unit:
Receivable Entity Payable Entity Amount
Component unit - Board of Education Primary government - capital projects $ 623,800
All interfund payables are without interest.
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:
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2016
52
7. INTERFUND TRANSACTIONS (continued)
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 Capital
Fund Transfers In Transfers Out Transfers In Transfers Out
General Fund:
Capital Projects -$ -$ -$ 7,130,000$
Solid Waste - 491,400 - -
Public Transit - 472,300 - -
Water Quality - 167,695 - -
Community Grants Management - 286,820 - -
Agricultural Education Center - 140,050 - -
Golf Course - 296,950 - -
HEPMPO - 7,990 - -
Land Preservation - 130,814 - -
Airport - 14,500 - -
Capital Projects Fund:
General Fund - - 7,130,000 -
Airport Fund - - - 112,000
Hotel Rental Fund - - 250,000 -
Golf Course - - - 52,000
Land Preservation - - - 400,000
Solid Waste:
General Fund 491,400 - - -
Public Transit:
General Fund 472,300 - - -
HEPMPO - 16,180 - -
Water Quality:
General Fund 167,695 - - -
Airport:
General Fund 14,500 - - -
Hotel Rental 50,000 - - -
Capital Project Fund - - 112,000 -
Golf Course:
General Fund 296,950 - - -
Capital Projects Fund - - 52,000 -
Community Grant Management Fund:
General Fund 286,820 - - -
Agricultural Education Center:
General Fund 140,050 - - -
HEPMPO:
General Fund 7,990 - - -
Public Transit Fund 16,180 - - -
Hotel Rental:
Capital Project Fund - - - 250,000
Airport - 50,000 - -
Land Preservation:
General Fund 130,814 - - -
Capital Projects Fund - - 400,000 -
Total 2,074,699$ 2,074,699$ 7,944,000$ 7,944,000$
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2016
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% $132,436,537 18,396,940$ 15,935,702$ 134,897,775$ 9,875,929$
6,700,103 1,639,934 801,203 7,538,834 -
139,136,640 20,036,874 16,736,905 142,436,609 9,875,929
Other loans payable
Maryland Water Quality loans 1.0% 4,888,398 - 290,895 4,597,503 294,805
Total bonds and loans payable 144,025,038 20,036,874 17,027,800 147,034,112 10,170,734
Agricultural Land Preservation 3.0%497,800 - 351,794 146,006 146,006
Capital lease obligations 2.1%199,540 - 167,077 32,463 12,356
Net pension liability 55,203,520 10,978,716 - 66,182,236 -
199,925,898 31,015,590 17,546,671 213,394,817 10,329,096
Business-type Activities
Bonds payable:
General obligation bonds 2.0-5.9% 31,890,951$ 11,693,060$ 5,766,908$ 37,817,103$ 2,610,866$
905,439 1,015,527 130,559 1,790,407 -
(10,084) - (3,505) (6,579) -
32,786,306 12,708,587 5,893,962 39,600,931 2,610,866
Other loans payable:
Maryland Water Quality loans 0.40-1.7% 13,404,936 - 870,424 12,534,512 997,326
Amount to be drawn (1,163,659) - (1,163,659) - -
Total other loans payable 12,241,277 - (293,235) 12,534,512 997,326
Total bonds and loans payable 45,027,583 12,708,587 5,600,727 52,135,443 3,608,192
Capital lease obligations 4.90%50,568 - 11,738 38,830 12,321
45,078,151 12,708,587 5,612,465 52,174,273 3,620,513
Total Combined Activities
Long-term Liabilities 245,004,049$ 43,724,177$ 23,159,136$ 265,569,090$ 13,949,609$
1.95-11.64% 7,003,515$ 4,440,983$ 817,453$ 10,627,045$ 7,756,121$ 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, 2016
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
2017 10,170,734$ 4,474,924$ 3,608,192$ 2,715,934$ 13,778,926$ 7,190,858$
2018 10,033,914 4,408,533 4,393,451 2,841,221 14,427,365 7,249,754
2019 8,932,960 4,063,504 4,916,903 2,782,180 13,849,863 6,845,684
2020 9,201,097 3,718,214 4,308,425 2,717,151 13,509,522 6,435,365
2021 9,643,509 3,369,467 3,193,843 940,863 12,837,352 4,310,330
2022-2026 43,312,467 11,899,571 13,571,018 3,431,647 56,883,485 15,331,218
2027-2031 31,383,749 5,333,743 10,354,746 1,651,040 41,738,495 6,984,783
2032-2036 16,011,422 1,286,951 5,425,462 451,567 21,436,884 1,738,518
2037 805,426 12,080 579,575 8,695 1,385,001 20,775
Total 139,495,278$ 38,566,987$ 50,351,615$ 17,540,298$ 189,846,893$ 56,107,285$
Less:
Unamortized discount - (6,579) (6,579)
Unamortized premium 7,538,834 1,790,407 9,329,241
147,034,112$ 52,135,443$ 199,169,555$ 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, 2016, the unused authorization was $37,734,722.
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, 2016, there were
Industrial Revenue Bonds outstanding with an aggregate principal amount payable of
$50,969,311.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2016
55
8. LONG-TERM AND CAPITAL LEASE OBLIGATIONS (continued)
Agricultural Land Preservation Installments
The County has entered into installment contracts to purchase easements for agricultural
land preservation purposes. Under the terms of the installment contracts, the County pays
the property owner annual interest and principal payments over the ten year term of the
contract. The primary source of revenue for repayment of the indebtedness is a portion of
the transfer tax on all transfers of real property in the County. The annual requirements to
amortize agricultural preservation installments outstanding as of June 30, 2016, are as
follows:
As of Total
June 30,Principal Interest Requirement
2017 146,006$ 4,380$ 150,386$
For the year ended June 30, 2016, total principal and interest incurred related to agricultural
land preservation installments was $351,794 and $14,934, respectively.
Capital Leases
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 $1,077 from February 19, 2015 through January 19, 2019.
The future minimum lease payments under this agreement are as follows:
Year ending June 30,Amount
2017 12,925$
2018 12,925
2019 7,539
Total minimum payments 33,389
Less: amounts representing interest 926
Present value of net minimum lease payments 32,463$
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2016
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 $14,250 and expires January 14,
2019. The future minimum payments under this agreement are as follows:
Year ending June 30,Amount
2017 14,250$
2018 14,250
2019 14,250
Total minimum payments 42,750
Less: amounts representing interest 3,920
Present value of net minimum lease payments 38,830$
The following is an analysis of the capital assets acquired under capital leases as of
June 30, 2016.
Net Book Value
June 30, 2016
General Fund $ 56,548 $ 27,332 $ 29,216
Water Quality 76,000 36,733 39,267
Total 132,548$ 64,065$ 68,483$
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
2017 $ 7,756,121 $ 232,201 $ 7,988,322
2018 710,845 85,936 796,781
2019 1,062,366 56,708 1,119,074
2020 1,097,713 20,853 1,118,566
10,627,045$ 395,698$ 11,022,743$
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2016
57
8. LONG-TERM AND CAPITAL LEASE OBLIGATIONS (continued)
Advance Refunding
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, 2016,
$31,100,000 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, 2016
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, 2016
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, 2016
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, 2016, rental income for the above leases of $881,889 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, 2016, 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, 2016, were $64,616.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2016
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
2016, 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, 2016, was $2,562,388
and $526,196, 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, 2016, was $7,347,323. Total employee related costs
associated and accrued with these compensated absences amounted to $522,127 as of
June 30, 2016. For governmental funds, $375,260, as of June 30, 2016, 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, 2016
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 65,694,940$
LOSAP Plan
Net Pension Liability 487,296
66,182,236$
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2016
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 June 30, 2016, which is the
latest actuarial report available.
Membership of the Plan
The membership consisted of the following as of June 30, 2016, the date of the latest
actuarial valuation:
Retirees and beneficiaries receiving benefits 334
Terminated Plan members entitled to but not
yet receiving benefits 15
Active Plan members 771
Total 1,120
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2016
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, 2016 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 June 30, 2016,
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 3.0% per year. The actuary was using the RP-2014 adjusted to 2006 Total
Dataset with Generational projection using scale MP2015 to 2015. 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, 2016 is as follows:
Total pension liability 159,042,249$
Net position (93,347,309)
Net pension liability 65,694,940$
Net position as a percentage of total pension liability is 58.7%.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2016
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 82,802,269$ 65,694,940$ 51,208,247$
Deferred Outflows of Resources and Deferred Inflows of Resources
For the year ended June 30, 2016, the County recognized pension expense of $2,931,673
for the Plan. As of June 30, 2016, the County reported deferred outflows of resources and
deferred inflows of resources related to the Plan from the following sources:
Deferred
Outflows of
Resources
Deferred Inflows
of Resources
Difference between expected and actual experience 5,443,333$ -$
Change in assumptions 2,110,133 -
Net difference between projected and actual investment
earnings 6,563,556 -
Total 14,117,022$ -$
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2016
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
2017 3,262,983$
2018 3,262,983
2019 3,262,982
2020 2,817,384
2021 1,510,690
Total 14,117,022$
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, 2016
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
69.66%, 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 2016 and 2015, respectively; and contributions by the
State of Maryland on behalf of the School System totaling $17,316,621 and
$17,080,357 for fiscal years 2016 and 2015, respectively. All contributions were
made in accordance with actuarially determined contribution requirements based on
an actuarial valuation performed annually.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2016
68
11. RETIREMENT PLANS (continued)
Board of Education (continued)
At June 30, 2016, the School System reported a liability for its proportionate share of net
pension liability that reflected a reduction for State pension support provided to the School
System. The amount recognized by the School System as its proportionate share of the net
pension liability, the related State support and the total portion of the net pension liability
that was associated with the School System were as follows:
School System's proportionate share of net pension liability -$ 18,386,392$
State's proportionate share of net position liability associated
with the School System 164,126,551 -
Total 164,126,551$ 18,386,392$
Teacher's
Retirement and
Pension System
Employees'
Retirement and
Pension System
For the year ended June 30, 2016, the School System recognized pension expense of
$23,915,666 related to governmental activities and $265,603 related to business-type
activities. As of June 30, 2016, the School System reported deferred outflows of resources
and deferred inflows of resources related to the pensions from the following sources:
Change in assumptions 1,086,981$ -$
Net difference between projected and actual investment
earnings 1,619,458 -
Difference between actual and expected experience - 1,637,107
School System contributions subsequent to the
measurement date 1,651,954 -
Total 4,358,393$ 1,637,107$
Deferred
Outflows of
Resources
Deferred Inflows
of Resources
The $1,651,954 reported as deferred outflows of resources related to pensions resulting
from the School System contributions subsequent to the measurement ate will be
recognized as a reduction of the net pension liability in the year ended June 30, 2017. Other
amounts reported as deferred outflows of resources and deferred inflows of resources
related to pensions will be recognized in pension expense as follows:
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2016
69
11. RETIREMENT PLANS (continued)
Board of Education (continued)
Years Ended June 30, Amount
2017 159,167$
2018 159,167
2019 159,167
2020 159,167
2021 432,664
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 7.55% 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 (6.55%) or 1-percentage point higher
(8.55%) than the current rate:
1.0% decrease
(6.55%)
Current rate
7.55%
1.0%
increase
(8.55%)
Net pension liability 25,986,344$ 18,386,392$ 12,054,516$
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, 2016
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 $1,150,931 which is reflected in the
accompanying financial statements as of June 30, 2016. Changes in the claims liability
were as follows:
2016 2015
Liability, beginning of year 1,056,288$ 1,060,759$
14,527,289 13,919,883
Claims and administrative costs paid (14,432,646) (13,924,354)
Liability, end of year 1,150,931$ 1,056,288$
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, 2016
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 $741,292, which is
reflected in the accompanying financial statements as of June 30, 2016. Changes in the
claims liability were as follows:
2016 2015
Liability, beginning of year 777,183$ 1,054,492$
815,104 1,255,713
Claims and administrative costs paid (850,995) (1,533,022)
Liability, end of year 741,292$ 777,183$
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, 2016
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 $31,077,727
and $29,960,584 for the years ended June 30, 2016 and 2015, respectively.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2016
73
12. RISK MANAGEMENT (continued)
Board of Education (continued)
The Self-Insurance Fund’s accrued liabilities include an estimate of the amount to be paid
for self-insured claims incurred prior to June 30, 2016 and 2015. This estimate is prepared
based upon the School System’s experience and other relevant facts. Changes in the Fund’s
claims liability amount were as follows:
2016 2015
Liability, beginning of year 2,625,050$ 2,165,352$
Claims and changes in estimates during the year 44,668,598 39,184,521
Claims paid and accrued (44,169,731) (38,724,823)
Liability, end of year 3,123,917$ 2,625,050$
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 the
sewer user charges and pretreatment facility user charges. The user charges are accounted
for in the Water Quality Fund.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2016
74
14. SEGMENT INFORMATION (continued)
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, 2016
75
CONDENSED STATEMENT OF NET POSITION
ASSETS
Current assets 22,199,284$ 1,852,529$
Noncurrent assets 116,957,135 5,156,440
Total Assets 139,156,419 7,008,969
DEFERRED OUTFLOW OF RESOURCES 209,410 221,675
LIABILITIES
Other current liabilities 7,991,245 1,585,078
Noncurrent liabilities 27,701,002 2,969,722
Total Liabilities 35,692,247 4,554,800
Net Position
Net investment in capital assets 100,033,320 1,635,091
Unrestricted (7,883,332) 1,040,753
Restricted - capital projects 11,523,594 -
Total Net Position 103,673,582$ 2,675,844$
CONDENSED STATEMENT OF REVENUE, EXPENSES
AND CHANGES IN NET POSITION
Operating revenue 9,427,238$ -$
Lease income - 345,600
Depreciation expense (2,145,058) (187,409)
Other operating expenses (7,835,633) (21,019)
Operating income (553,453) 137,172
Non-operating revenue (expenses):
Interest expense (761,179) (165,229)
Interest income 156,526 -
Capital contributions 4,048,461 -
Change in Net Position 2,890,355 (28,057)
Net Position, beginning of year 100,783,227 2,703,901
Net Position, End of Year 103,673,582$ 2,675,844$
CONDENSED STATEMENT OF CASH FLOWS
Net cash provided (used) by
Operating activities 11,052,590$ 482,690$
Capital and related financing activities 14,489,521 (1,014,938)
Investing activities (14,960,637) -
Net increase 10,581,474 (532,248)
Cash and cash equivalents, beginning of year 8,474,525 2,384,777
Cash and Cash Equivalents, End of Year 19,055,999$ 1,852,529$
Sewer
Department
Pretreatment
Department
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2016
76
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 $159,492 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, 2016.
The Resh Landfill has reported a landfill post-closure care liability of $4,998,053 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, 2016.
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, 2016. The Rubble Landfill was closed in December 2000. No current expense was
recognized in the Solid Waste Fund for the year ended June 30, 2016.
The 40 West Landfill began operation in fiscal year 2001. The estimated life of this landfill
is approximately 120 years as of June 30, 2016, it is estimated that approximately 17.2% of
the capacity has been used. The estimated costs associated with closure and post-closure
care of $8,105,075 was reported as a liability in the Solid Waste Fund at June 30, 2016.
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 CFO that they meet the Local Government Financial Test as of June 30,
2016, as specified in 40CFR258.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2016
77
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, fift y-one retirees are receiving benefits and twenty 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, 2016
78
16. OTHER POSTRETIREMENT EMPLOYEE BENEFITS (continued)
County (continued)
Components of Net OPEB Obligation
Annual Required Contribution $ 1,203,000
Interest on Net OPEB Obligation 133,000
Adjustment to Annual Required Contribution (130,000)
Annual OPEB Cost (Expense) 1,206,000
Contributions Made or Accrued 1,485,600
Increase(decrease) in Net Assets (279,600)
Net OPEB Asset - Beginning of Year (1,767,775)
Net OPEB Asset - End of Year $ (2,047,375)
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:
2016 $ 1,203,000 123.80%(2,047,375)$
2015 1,169,915 147.41%(1,767,775)
2014 1,291,864 130.97%(1,213,123)
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, 2016
79
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, 2016, the projected unit credit
actuarial cost method was used. The actuarial assumptions included a 7.50% 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 June 30, 2016, was 22 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, 2016
80
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, 2016,
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
$27,266,000, including current claims, was $3,000 more 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, 2016 of $16,730,000, resulting in a
decrease of the net OPEB receivable of $411,890 and creation of a payable. The balance of
the net OPEB receivable at June 30, 2016 is $13,444,644. The School System’s annual
OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB
obligation for the past three years is as follows:
2016 $ 27,266,000 49.18%13,444,644$
2015 16,986,000 74.64%(411,890)
2014 16,324,000 75.95%(4,718,849)
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, 2016
81
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, 2016, was as follows:
Actuarial accrued liability (AAL) 317,648,000$
Actuarial value of plan assets 40,897,700
Unfunded actuarial accrued liability (UAAL) 276,750,300$
Funded ratio (actuarial value of plan assets/AAL) 12.88%
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, 2016, actuarial valuation, the entry age actuarial cost method was used. The
actuarial assumptions included a 6.9% investment rate of return (net of administrative
expenses) and an annual healthcare cost trend rate of 8.0% initially decreasing gradually to
5.3%. Both rates include a 2.3% 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, 2016, was twenty-one years.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2016
82
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, 2016. 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, 2016, 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.
On July 12, 2016, the Board of County Commissioners entered into a Memorandum of
Understanding with the Pen Mar Development Corporation. The purpose of this MOU was
to set forth the agreement between parties concerning the transfer and development of real
property located at the former Ft. Ritchie in Cascade, Maryland. On September 15, 2016,
Pen Mar Development Corporation conveyed, for no monetary consideration, all real
property, contracts, leases, liabilities, and personal property no specifically excluded held
by Pen Mar to the Board.
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.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2016
83
17. CONTINGENCIES AND COMMITMENTS (continued)
Board of Education (continued)
As of June 30, 2016, 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 $2,826,754 as of
June 30, 2016, and are included in encumbrances.
The School System leases classroom space, cafeteria space, storage, and parking deck
passes for the Barbara Ingram School for the Arts. These leases amre 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, 2016 were approximately
$95,264. Rent expense for these leases amounted to $127,267 for the year ended June 30,
2016.
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.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2016
84
18. COMMITTED AND ASSIGNED FUND BALANCES
Fund balances reflected in the governmental funds balance sheet as of June 30, 2016 are
categorized as follows:
General Fund Total
Non-Spendable
Inventory $ 790,714 $ - $ - $ 790,714
Long-term receivable 300,000 - - 300,000
Restricted
Programs and activities 350,764 - 349,888 700,652
Workers compensation 178,214 - - 178,214
Capital projects - 18,522,403 - 18,522,403
Committed
Contingencies 37,700,514 - - 37,700,514
Programs and activities 404,317 - - 404,317
Capital projects - 39,835,484 - 39,835,484
Assigned
Programs and activities 17,625 - 50,089 67,714
Unassigned - - (215,131) (215,131)
Totals $ 39,742,148 $ 58,357,887 $ 184,846 $ 98,284,881
Non-major
Governmental
Funds
Capital
Projects Fund
19. RETIREMENT PLAN - FIRE AND RESCUE VOLUNTEERS
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 $350. No LOSAP benefits were paid before
January 1, 2007. Generally, a volunteer must be an active volunteer on or after January 1,
2007, to be eligible for any benefit under LOSAP. LOSAP also provides for death and
disability benefits.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2016
85
19. RETIREMENT PLAN - FIRE AND RESCUE VOLUNTEERS (continued)
The 2015 calendar year census shows 752 volunteers receiving at least 50 points, which
qualifies them for LOSAP credit. 168 retired volunteers and 29 spouses are participating in
LOSAP. The County funds LOSAP in annual amounts determined by an actuary.
Investments
The table below summarizes the target asset class weighting, along with the allowable
ranges for each class.
Investment Type Range Target
Equities:
Large-Cap U.S. Stocks 25-45% 35%
Small-Cap U.S. Stocks 0-15% 10%
International Stocks 5-20% 15%
REITS 0-10% 5%
Fixed Income:
High Yield Bonds 0-15% 10%
Investment Grade Bonds 5-30% 23%
Money Market 0-10% 2%
The long-term expected rate of return on pension plan investments was determined using a
standard building block approach. These ranges are combined to produce the long-term
expected rate of return by weighting the expected future real rates of return by the target asset
allocation percentage and adding expected inflation. Best estimates of arithmetic assumed rates
of return for each class included in the pension plans’ general target asset allocation as of June
30, 2016 is as follows:
Investment Type
% of
Portfolio
Assumed
Rate of
Return
Equities:60%-70% 9%-11%
Fixed Income:30%-40% 3%-5%
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2016
86
19. RETIREMENT PLAN - FIRE AND RESCUE VOLUNTEERS (continued)
Net pension liability
The net pension liability is equal to the total pension liability minus the net position of the
plan. The result as of June 30, 2016 is as follows:
Total pension liability 7,994,338$
Net position (7,507,042)
Net pension liability 487,296$
Net position as a percentage of total pension liability is 93.9%.
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 1,410,024$ 487,286$ (287,326)$
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Notes to the Financial Statements
June 30, 2016
87
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, 2016, the County recognized pension expense of ($70,278). As
of June 30, 2016, the County reported deferred outflows of resources and deferred inflows
of resources related to the length of service award program from the following sources:
Difference between expected and actual experience -$ 5,387,342$
Change in assumptions 776,656 -
Net difference between projected and actual investment
earnings 554,587 -
Total 1,331,243$ 5,387,342$
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
2017 (619,724)$
2018 (619,724)
2019 (619,725)
2020 (660,028)
2021 (768,447)
Thereafter (768,451)
Total (4,056,099)$
REQUIRED SUPPLEMENTARY INFORMATION
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COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Schedule of Funding Progress
June 30, 2016
90
Other Postemployment Benefit (OPEB) Trust
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%
7/1/2015 15,964,542 19,343,000 3,378,458 82.53%N/A N/A
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, 2016
91
2016 2015 2014
Service Cost: Retirement benefits Administration 3,124,202$ 3,508,850$ 6,922,217$
Interest 10,745,024 10,252,003 7,708,164
Benefit payments, including refunds of member contributions, death, & terminations (7,789,289) (6,880,888) (6,004,033)
Changes of benefit terms 1,358,032 - -
Differences between expected and actual experiences 6,532,000 - -
Changes of assumptions 2,532,160 - -
Net changes in total pension liability 16,502,129 6,879,965 8,626,348
Total pension liability - beginning 142,540,120 135,660,155 127,033,807
Total pension liability - ending (a)159,042,249$ 142,540,120$ 135,660,155$
Plan fiduciary net position
Contributions - employer 6,621,156$ 6,786,549$ 6,017,521$
Contributions - member 1,873,710 1,871,200 1,876,133
Net investment income 628,709 4,747,193 12,817,264
Receipts of In-kind - 220,613 -
Benefit payments, including refunds of member contributions (7,789,289) (6,880,887) (6,004,103)
Administrative expense (98,464) (604,197) (238,016)
Net changes in plan fiduciary net position 1,235,822 6,140,471 14,468,799
Plan fiduciary net positions - beginning 92,111,487 85,971,016 71,502,217
Plan fiduciary net positions - ending (b)93,347,309$ 92,111,487$ 85,971,016$
County's net pension - liability - ending (a) - (b)65,694,940$ 50,428,633$ 49,689,139$
Plan fiduciary net position as a percentage of total pension liability 58.69%64.62% 63.37%
Covered employee payroll 31,662,000$ 33,098,009$ 35,288,757$
Net liability as a percentage of covered payroll 207.49%152.36% 140.81%
Annual money-weighted rate of return, net of investment expense 0.68%5.52% 17.59%
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Schedule of General Employees’ Pension Fund Employer Contributions
June 30, 2016
92
2016 2015 2014
Actuarially determined contribution 6,621,000$ 6,786,549$ 6,442,087$
Contributions in relation to the actuarially determined contributions 6,621,000 6,786,549 6,017,521
Contributions deficiency (excess)-$ -$ 424,566$
Covered employee payroll 31,662,000$ 33,098,009$ 35,288,757$
Contributions as a percentage of covered employee payroll 20.91% 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 Projected Unit Credit
Investment return 7.75%
Mortality RP. 2014 adjusted to 2006 Total Dataset with Generational projection using Scale MP2015 to 2015
Turnover T4
Salary Scale 3.0% increases per year
Retirement age of DROP Electio
Valuation of Assets
Notes to schedule:
This information is not available for FY13 and prior.
Rates vary by paticipant age and services.
3 year smoothed market.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Schedule of Changes in Pension Fund Net Pension Liability and Related Ratios - Length of
Service Award Fund
June 30, 2016
93
2016 2015 2014
Service Cost: Retirement benefits Administration 157,984$ 143,037$ 147,049$
Interest 968,187 922,814 872,518
Changes of benefit terms - - -
Differences between expected and actual experiences (6,285,232) - -
Changes of assumptions 906,099 - -
Benefit payments, including refunds of member contributions, death, & terminations (490,872) (461,316) (431,634)
Net changes in total pension liability (4,743,834) 604,535 587,933
Total pension liability - beginning 12,738,172 12,133,637 11,545,704
Total pension liability - ending (a)7,994,338$ 12,738,172$ 12,133,637$
Plan fiduciary net position
Contributions - employer -$ 600,000$ 600,000$
Net investment income 55,233 381,511 1,074,025
Receipts of In-kind - - 15,232
Benefit payments, including refunds of member contributions (490,872) (461,316) (431,634)
Administrative expense (20,610) (23,215) (27,429)
Net changes in plan fiduciary net position (456,249) 496,980 1,230,194
Plan fiduciary net positions - beginning 7,963,285 7,466,305 6,236,111
Plan fiduciary net positions - ending (b)7,507,036$ 7,963,285$ 7,466,305$
County's net pension - liability - ending (a) - (b)487,302$ 4,774,887$ 4,667,332$
Plan fiduciary net position as a percentage of total pension liability 93.90% 62.52% 61.53%
Covered employee payroll NA NA NA
Net liability as a percentage of covered payroll NA NA NA
Annual money-weighted rate of return, net of investment expense 0.69% 5.11% 16.78%
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Schedule of Volunteer Length of Service Award Fund Employer Contributions
June 30, 2016
94
2016 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 NA
Contributions as a percentage of covered employee payroll NA 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 Projected Unit Credit
Investment return 7.75%
Mortality RP. 2014 adjusted to 2006 Total Dataset with Generational projection using Scale MP2015 to 2015
Retirement age Normal retirement age
Valuation of Assets Market value
Notes to schedule:
This information is not available for FY13 and prior
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Combining Statements of Financial Schedules
June 30, 2016
95
Non-Major Governmental Funds
The Community Grant Management Fund is a special revenue fund used to account for all
activities conducted by this department of the County. The Community Grant Management 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, 2016
96
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, 2016
97
Agricultural Hotel Total
Community Grant Inmate Education Rental Land Non-major
Management Welfare Contraband Center Tax Gaming Preservation HEPMPO Funds
Cash -$ 132,941$ 103,700$ 19,841$ -$ 1,518,590$ 462,707$ -$ 2,237,779$
Accounts receivable - - - - 210,243 100,005 307 4,174 314,729
Due from other governmental agencies 358,613 - - 3,816 - - - 226,795 589,224
TOTAL ASSETS 358,613$ 132,941$ 103,700$ 23,657$ 210,243$ 1,618,595$ 463,014$ 230,969$ 3,141,732$
LIABILITIES AND FUND BALANCES
Accounts payable 281,727$ 20,670$ -$ 7,438$ 290,722$ 1,549,524$ 12,688$ 34,596$ 2,197,365$
Due to other funds 63,507 - - - 62,840 - - 219,272 345,619
Accrued expenses 7,603 1,229 - 1,247 - 3,629 4,783 16 18,507
Other liabilities - - 90,220 - - - 274,850 - 365,070
Unearned revenue - - - - - 30,325 - - 30,325
TOTAL LIABILITIES 352,837 21,899 90,220 8,685 353,562 1,583,478 292,321 253,884 2,956,886
Restricted 2 111,042 13,480 - - - 225,364 - 349,888
Committed - - - - - - - - -
Assigned - - - 14,972 - 35,117 - - 50,089
Unassigned 5,774 - - - (143,319) - (54,671) (22,915) (215,131)
TOTAL FUND BALANCES 5,776 111,042 13,480 14,972 (143,319) 35,117 170,693 (22,915) 184,846
TOTAL LIABILITIES AND FUND BALANCES 358,613$ 132,941$ 103,700$ 23,657$ 210,243$ 1,618,595$ 463,014$ 230,969$ 3,141,732$
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, 2016
98
Community
Grant
Management
Inmate
Welfare Contraband
Agricultural
Education
Center
Hotel Rental
Tax Gaming
Land
Preservation HEPMPO
Total Non-
major Funds
Other local taxes -$ -$ -$ -$ 2,050,800$ -$ 204,873$ -$ 2,255,673$
Licenses and permits - - - - - 2,158,533 - - 2,158,533
Charges for services - 325,629 - - - - - - 325,629
Revenue from uses of property - - - 40,881 - - - - 40,881
Reimbursed expenses - - - 4,639 - - - - 4,639
Miscellaneous revenues - 90,058 11,435 10,605 - - - 32,586 144,684
Shared taxes and grants 1,663,167 - - 3,816 - - 2,338,224 465,859 4,471,066
TOTAL REVENUE 1,663,167 415,687 11,435 59,941 2,050,800 2,158,533 2,543,097 498,445 9,401,105
Public safety - 402,508 55,665 - - 992,459 - - 1,450,632
Parks, recreation and culture - - - 226,038 - - - - 226,038
Land preservation - - - - - - 2,873,263 - 2,873,263
General operations - - - - - 170,691 - - 170,691
Community promotion 1,962,036 - - - 2,217,724 992,459 - 513,756 5,685,975
TOTAL EXPENDITURES 1,962,036 402,508 55,665 226,038 2,217,724 2,155,609 2,873,263 513,756 10,406,599
EXCESS (DEFICIENCY) OF REVENUE
OVER EXPENDITURES (298,869) 13,179 (44,230) (166,097) (166,924) 2,924 (330,166) (15,311) (1,005,494)
OTHER FINANCING SOURCES
Transfers in 286,820 - - 140,050 - - 530,814 24,170 981,854
Transfers out - - - - (300,000) - - - (300,000)
TOTAL OTHER FINANCING SOURCES (USES)286,820 - - 140,050 (300,000) - 530,814 24,170 681,854
NET CHANGES IN FUND BALANCES (12,049) 13,179 (44,230) (26,047) (466,924) 2,924 200,648 8,859 (323,640)
FUND BALANCES - BEGINNING OF YEAR 17,825 97,863 57,710 41,019 323,605 32,193 (29,955) (31,774) 508,486
FUND BALANCES - END OF YEAR 5,776$ 111,042$ 13,480$ 14,972$ (143,319)$ 35,117$ 170,693$ (22,915)$ 184,846$
REVENUE
EXPENDITURES
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Combining Statement of Net Position – Non-Major Proprietary Funds
As of June 30, 2016
99
Public Golf Total
Transit Course Non-Major
Fund Fund Funds
ASSETS
Current Assets:
Cash and short-term investments 469,940$ 6,566$ 476,506$
Accounts receivable 1,658 15,325 16,983
Unbilled receivables 925 - 925
Due from other governmental agencies 390,295 192,600 582,895
Inventories 71,292 49,527 120,819
Total current assets 934,110 264,018 1,198,128
Noncurrent Assets:
Property plant and equipment 7,384,338 4,866,805 12,251,143
Accumulated depreciation (4,505,599) (2,513,329) (7,018,928)
Total noncurrent assets 2,878,739 2,353,476 5,232,215
TOTAL ASSETS 3,812,849 2,617,494 6,430,343
LIABILITIES
Current Liabilities:
Accounts payable 71,166 53,465 124,631
Accrued expenses 47,328 26,521 73,849
Unearned revenue - 250 250
Compensated absences 48,913 19,956 68,869
Other liabilities - 27,798 27,798
Total current liabilities 167,407 127,990 295,397
Noncurrent Liabilities:
Compensated absences 21,130 16,487 37,617
TOTAL LIABILTIES 188,537 144,477 333,014
NET POSITION
Net invested in capital assets 2,878,739 2,353,476 5,232,215
Unrestricted 745,573 119,541 865,114
TOTAL NET POSITION 3,624,312$ 2,473,017$ 6,097,329$
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, 2016
100
Public Golf Total
Transit Course Non-Major
Fund Fund Funds
OPERATING REVENUE
Charges for services 424,397$ 822,512$ 1,246,909$
Miscellaneous 15,848 5,412 21,260
TOTAL OPERATING REVENUE 440,245 827,924 1,268,169
OPERATING EXPENSES
Salaries and wages 1,251,072 451,179 1,702,251
Fringe benefits 528,188 227,462 755,650
Utilities 23,837 57,942 81,779
Insurance 37,240 9,624 46,864
Repairs and maintenance 121,314 75,949 197,263
Supplies 38,020 2,779 40,799
Cost of goods sold - 97,963 97,963
Contracted services 452,605 3,152 455,757
Rentals and leases 56,106 66,104 122,210
Other operating 162,396 111,939 274,335
Uncollectible accounts - - -
Controllable assets 371 1,674 2,045
Depreciation 538,533 103,559 642,092
TOTAL OPERATING EXPENSES 3,209,682 1,209,326 4,419,008
OPERATING LOSS (2,769,437) (381,402) (3,150,839)
OTHER INCOME
Interest expense (25) - (25)
Gain on disposal of assets (1,821) - (1,821)
TOTAL OTHER INCOME (1,846) - (1,846)
LOSS BEFORE OPERATING TRANSFERS AND GRANTS (2,771,283) (381,402) (3,152,685)
OPERATING TRANSFERS 456,120 296,950 753,070
GRANTS FOR OPERATIONS 1,453,389 - 1,453,389
LOSS BEFORE CAPITAL TRANSFERS AND GRANTS (861,774) (84,452) (946,226)
CAPITAL TRANSFERS - 52,000 52,000
GRANTS FOR CAPITAL PROJECTS 429,697 192,600 622,297
CHANGES IN NET POSITION (432,077) 160,148 (271,929)
NET POSITION - BEGINNING OF YEAR 4,056,389 2,312,869 6,369,258
NET POSITION - END OF YEAR 3,624,312$ 2,473,017$ 6,097,329$
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Combining Statement of Cash Flows – Non-Major Proprietary Funds
For Year Ended June 30, 2016
101
Public Golf Total
Transit Course Non-Major
Fund Fund Funds
Cash Flows from Operating Activities
Receipts from customers 903,369$ 820,045$ 1,723,414$
Payments to suppliers (1,611,790) (390,123) (2,001,913)
Payments to employees (1,570,734) (694,769) (2,265,503)
Net Cash from Operating Activities (2,279,155) (264,847) (2,544,002)
Cash Flows from Noncapital Financing Activities
Operating contributions 1,909,509 296,950 2,206,459
Net Cash from Noncapital Financing Activities 1,909,509 296,950 2,206,459
Cash Flows from Capital and Related Financing Activities
Interest paid on notes and bond payable (25) - (25)
Acquisition and construction of capital assets (101,654) (421,329) (522,983)
Gain (loss) on the sale of assets (1,821) - (1,821)
Contribution for capital acquisitions 429,697 244,600 674,297
Net Cash from Capital and Related Financing Activities 326,197 (176,729) 149,468
Net change in cash (43,449) (144,626) (188,075)
Cash, beginning of year 513,389 151,192 664,581
Cash, End of Year 469,940$ 6,566$ 476,506$
Reconciliation of Operating Loss to Net Cash from Operating Activities
Operating loss (2,769,437)$ (381,402)$ (3,150,839)$
Adjustments to reconcile operating income to net cash
from operating activities:
Depreciation 538,533 103,559 642,092
Changes in assets and liabilities:
Accounts receivable 5,626 (7,579) (1,953)
Unbilled receivables (364) - (364)
Due to/from other government entities (54,336) - (54,336)
Inventories (1,818) 2,450 632
Accounts payable and other liabilities 13,835 30,991 44,826
Accrued expenses 11,599 1,574 13,173
Unearned revenue (30,000) (300) (30,300)
Compensated absences 7,207 (14,140) (6,933)
Net Cash from Operating Activities (2,279,155)$ $ (264,847) $ (2,544,002)
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, 2016
103
Variance with
Budgeted Amounts Final Budget -
Original Final Actual Amounts Positive (Negative)
REVENUE
Property Taxes
Real property tax 106,977,350$ 106,977,350$ 108,378,572$ 1,401,222$
Personal property tax 12,497,840 12,497,840 14,449,229 1,951,389
Property tax interest income 480,000 480,000 409,974 (70,026)
Other property tax 714,020 714,020 666,620 (47,400)
State administrative fees (525,000) (525,000) (578,891) (53,891)
Property tax discounts and credits (1,469,020) (1,469,020) (1,323,558) 145,462
Total Property Taxes 118,675,190 118,675,190 122,001,946 3,326,756
Other Local Taxes
Income tax 74,910,000 74,910,000 75,208,180 298,180
Admissions and amusement tax 300,000 300,000 274,939 (25,061)
Recordation tax 5,800,000 5,800,000 6,539,448 739,448
Trailer tax 470,000 470,000 544,979 74,979
Total Other Local Taxes 81,480,000 81,480,000 82,567,546 1,087,546
Other Revenues
Licenses and permits 1,260,200 1,260,200 1,316,242 56,042
Court costs and fines 330,300 330,300 252,384 (77,916)
Charges for services 388,850 388,850 477,971 89,121
Revenues from use of property 976,550 976,550 1,074,126 97,576
Reimbursed expenses 1,145,170 1,145,170 1,011,679 (133,491)
Miscellaneous revenues 406,200 426,310 493,792 67,482
Grant and shared revenues 1,929,990 7,162,210 6,349,348 (812,862)
Highway revenues 1,660,250 1,688,310 1,720,771 32,461
Total Other Revenues 8,097,510 13,377,900 12,696,313 (681,587)
TOTAL REVENUE 208,252,700 213,533,090 217,265,805 3,732,715
EXPENDITURES
General Government
Legislative
County Commissioners 249,000 249,000 223,005 25,995
County Clerk 97,630 97,630 95,594 2,036
County Administrator 419,470 419,470 454,932 (35,462)
Public Relations 385,850 385,850 390,997 (5,147)
Purchasing 504,390 504,390 502,158 2,232
Total Legislative 1,656,340 1,656,340 1,666,686 (10,346)
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Schedule of Revenue, Expenditures, and Changes in Fund Balance-Budget and Actual
General Fund (continued)
For the Year Ended June 30, 2016
104
Variance with
Budgeted Amounts Final Budget -
Original Final Actual Amounts Positive (Negative)
Judicial
Circuit Court 1,483,590$ 1,483,590$ 1,349,455$ 134,135$
Orphan's Court 30,920 30,920 29,828 1,092
State's Attorney 3,262,860 3,262,860 3,096,994 165,866
Sheriff - Judicial 2,418,650 2,418,650 2,336,733 81,917
Sheriff - Process Servers 131,670 131,670 117,050 14,620
Grants - 279,120 275,090 4,030
Total Judicial 7,327,690 7,606,810 7,205,150 401,660
Election Board 1,116,420 1,116,420 956,606 159,814
Financial Administration
Budget and Finance 1,345,240 1,345,240 1,352,369 (7,129)
Independent Auditing 70,000 70,000 61,460 8,540
Treasurer 420,690 420,690 425,766 (5,076)
Information Technologies 2,075,900 2,075,900 2,091,722 (15,822)
Total Financial Administration 3,911,830 3,911,830 3,931,317 (19,487)
County Attorney 662,450 662,450 631,440 31,010
Human Resources 696,210 696,210 708,260 (12,050)
Planning and Zoning
Planning and Zoning 669,510 669,510 601,509 68,001
Board of Zoning Appeals 53,440 53,440 49,315 4,125
Grants - 25,000 25,000 -
Total Planning and Zoning 722,950 747,950 675,824 72,126
Public Works
Department of Public Works 224,120 224,120 234,720 (10,600)
Public Works - Plan Review 1,850,590 898,900 919,189 (20,289)
Public Works - Permitting - 961,690 839,056 122,634
Public Works - Engineering 1,549,270 1,549,270 1,554,675 (5,405)
Public Works - Construction 1,692,180 1,682,180 1,655,567 26,613
Grant - 1,300,000 683,282 616,718
Total Public Works 5,316,160 6,616,160 5,886,489 729,671
County Owned Buildings
Martin Luther King Center 105,200 105,200 73,194 32,006
Administrative Building 197,900 197,900 172,738 25,162
Administrative Building II 91,850 91,850 94,648 (2,798)
Court House 583,770 590,720 580,819 9,901
County Office Building 205,110 205,110 192,873 12,237
Administration Annex 56,900 56,900 48,266 8,634
Central Services 203,100 203,100 197,458 5,642
Rental Properties 2,000 2,000 1,291 709
Library Maintenance 34,500 34,500 24,171 10,329
Dwyer Center 29,000 29,000 23,639 5,361
Public Facilities Annex 78,560 78,560 66,764 11,796
Total County Owned Buildings 1,587,890 1,594,840 1,475,861 118,979
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Schedule of Revenue, Expenditures, and Changes in Fund Balance-Budget and Actual
General Fund (continued)
For the Year Ended June 30, 2016
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$ 1,699,892$ (14,472)$
Business Development 559,030 559,030 555,275 3,755
Total Community Promotion 2,244,450 2,244,450 2,255,167 (10,717)
Total General Government 25,242,390 26,853,460 25,392,800 1,460,660
Public Safety
Sheriff Departments
Patrol 9,597,500 9,608,670 9,345,169 263,501
Sheriff Auxiliary - - 27,391 (27,391)
Narcotics Task Force 680,680 682,110 699,919 (17,809)
Grants - 493,080 399,410 93,670
Total Sheriff Departments 10,278,180 10,783,860 10,471,889 311,971
Fire and Rescue Services
Volunteer Fire and Rescue - County Grants 7,188,370 7,188,370 6,504,960 683,410
Air Unit 31,060 31,060 28,789 2,271
Special Operations 368,620 368,620 363,318 5,302
Total Fire and Rescue Services 7,588,050 7,588,050 6,897,067 690,983
Corrections
Detention Center 13,415,240 13,385,240 12,872,066 513,174
Central Booking 854,080 854,080 851,140 2,940
Total Corrections 14,269,320 14,239,320 13,723,206 516,114
Other Public Safety
911 - Communications 4,230,110 4,230,110 4,188,201 41,909
Wireless Communications 1,310,850 1,310,850 1,276,535 34,315
Emergency Management 133,700 145,040 145,981 (941)
Fire and Rescue Operations 1,208,510 1,208,510 1,127,839 80,671
Medical Examiner 15,000 15,000 19,840 (4,840)
Civil Air Patrol 3,600 3,600 3,600 -
Animal Control 1,247,290 1,247,290 1,247,290 -
Grants - 3,006,070 2,796,834 209,236
Other Public Safety 8,149,060 11,166,470 10,806,120 360,350
Total Public Safety 40,284,610 43,777,700 41,898,282 1,879,418
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Schedule of Revenue, Expenditures, and Changes in Fund Balance-Budget and Actual
General Fund (continued)
For the Year Ended June 30, 2016
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 338,070 338,070 338,070 -
Grants - 107,950 116,095 (8,145)
Total Social Services 338,070 446,020 454,165 (8,145)
Education 104,109,040 104,109,040 104,109,040 -
Parks, Recreation, and Culture
Total Contributions to Other Agencies 2,967,330 2,967,330 2,967,330 -
Parks Department 1,657,820 1,686,380 1,609,697 76,683
Martin L. Snook Park Pool 120,160 120,160 119,727 433
Fitness and Recreation 845,630 845,630 869,049 (23,419)
Grants - 21,000 20,714 286
Total Parks, Recreation, and Culture 5,590,940 5,640,500 5,586,517 53,983
Conservation of Natural Resources
Weed Control 203,200 175,200 196,391 (21,191)
Agricultural Extension Service 232,400 232,400 232,400 -
Cooperative Extension 38,730 38,730 38,730 -
Soil Conservation Service 195,400 195,400 195,400 -
Gypsy Moth Program 10,000 10,000 6,120 3,880
Total Conservation of Natural Resources 679,730 651,730 669,041 (17,311)
Highway 9,591,340 9,619,400 9,821,132 (201,732)
General Operations 622,300 610,960 598,985 11,975
Unallocated Employee Insurance and Benefits 699,330 699,330 1,738,720 (1,039,390)
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Schedule of Revenue, Expenditures, and Changes in Fund Balance-Budget and Actual
General Fund (continued)
For the Year Ended June 30, 2016
107
Variance with
Budgeted Amounts Final Budget -
Original Final Actual Amounts Positive (Negative)
Intergovernmental
Golf Course operating transfer 246,950$ 246,950$ 296,950$ (50,000)$
HEPMPO operating transfer 7,990 7,990 7,990 -
Land Preservation operating transfer 106,060 106,060 130,814 (24,754)
Water Quality operating transfer 174,070 174,070 167,695 6,375
Public Transit operating transfer 472,300 472,300 472,300 -
Airport operating transfer 14,500 14,500 14,500 -
Capital Projects operating transfer 1,800,000 1,830,000 7,380,000 (5,550,000)
Solid Waste operating transfer 491,400 491,400 491,400 -
Grants Management operating transfer 286,820 286,820 286,820 -
Agricultural Education Center operating
transfer 181,550 181,550 140,050 41,500
Municipality in lieu of bank shares 38,550 38,550 38,543 7
Total Intergovernmental 3,820,190 3,850,190 9,427,062 (5,576,872)
Debt Service 14,935,490 14,935,490 13,818,901 1,116,589
TOTAL EXPENDITURES 208,252,700 213,533,090 215,853,915 (2,320,825)
EXCESS (DEFICIENCY) OF REVENUES OVER
EXPENDITURES -$ -$ 1,411,890$ 1,411,890$
OTHER FINANCING SOURCES (USES)
Principal amount of new debt for advance refunding 7,078,184 7,078,184
Deposit to escrow fund for advance refunding and
repayment of loans (7,075,279) (7,075,279)
TOTAL OTHER FINANCING SOURCES (USES)2,905$ 2,905$
NET CHANGES IN FUND BALANCE 1,414,795
FUND BALANCE - BEGINNING 38,327,353
FUND BALANCE - ENDING 39,742,148$
OTHER SCHEDULES
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Local Management Board - Schedule of Revenue and Expenditures - Regulatory Basis
For the Year Ended June 30, 2016
109
REVENUE
Community Partnership Agreement (CPA)
Governor's Office for Children 709,200$
Non- Community Partnership Agreement (Non-CPA)
General Fund 286,820
Other Revenue -
Md State Department of Education 468,268
Dept. of Housing and Community Development 485,699
Total Non-Community Partnership Agreement Revenue 1,240,787
TOTAL REVENUE 1,949,987
EXPENDITURES
Community Partnership Agreement (CPA)
Administrative :
Salaries 43,063
Benefit costs 21,937
Total CPA administrative expenditures 65,000
Programs:
GOCCP Planning Grant 25,000
Statewide School Climate 9,782
Rural Out of School Time Initiative 122,500
GOC-School Based Mental Health 211,558
GOC Clinical Services and Outreach 139,058
Family Centered Support Services 69,058
School readiness Program 64,173
Rachels Challenge Chain Reacction 3,072
Total CPA program expenditures 644,201
Non-Community Partnership Agreement (CPA)
Administrative:
Salaries 101,856
Benefit costs 64,548
Advertising 263
Community service awards 700
Small office equipment 51
Office supplies 878
Other Miscellaneous 22
Personal mileage 1,024
Postage 155
Travel Expenses 1,552
Entertainment/business expense 169
Contracted/purchased services 1,584
Training 1,768
Copy machine rental 1,291
Telephone expenses 485
Water 9
Controllable Assets 1,085
Total non-CPA administrative expenditures 177,440
Programs:
School Based Mental Health 120,000
MSDE - Healthy Families 468,268
Dept. of Housing and Community Development 485,699
Total non-CPA program expenditures 1,073,967
TOTAL EXPENDITURES 1,960,608
EXCESS (DEFICIENCY) OF REVENUE OVER EXPENDITURES (10,621)$
COUNTY COMMISSIONERS OF WASHINGTON COUNTY
Local Management Board - Schedule of Earned Reinvestment
For the Year Ended June 30, 2016
110
BALANCE AS OF JULY 1, 2015 1,430$
EXPENDITURE (1,428)
BALANCE AS OF JUNE 30, 2016 2$
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SINGLE AUDIT REPORTING
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200 International Circle • Suite 5500 • Hunt Valley • Maryland 21030 • P 410.584.0060 • F 410.584.0061
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON
COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL
STATEMENTS PERFORMED IN ACCORDANCE
WITH GOVERNMENT AUDITING STANDARDS
County Commissioners of Washington County
Hagerstown, Maryland
We have audited, in accordance with the auditing standards generally accepted in the United
States of America and the standards applicable to financial audits contained in Government
Auditing Standards issued by the Comptroller General of the United States, the financial
statements of the County Commissioners of Washington County, Maryland (the County), as of
and for the year ended June 30, 2016, and the related notes to the financial statements, which
collectively comprise the County’s basic financial statements, and have issued our report thereon
dated October 28, 2016. Our report includes a reference to other auditors who audited the
financial statements of the Board of Education of Washington County, as described in our report
on the County’s financial statements. This report does not include the results of the other
auditor’s testing of internal control over financial reporting or compliance and other matters that
are reported on separately by those auditors.
Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the County’s
internal control over financial reporting (internal control) to determine the audit procedures that
are appropriate in the circumstances for the purpose of expressing our opinions on the financial
statements, but not for the purpose of expressing an opinion on the effectiveness of the County’s
internal control. Accordingly, we do not express an opinion on the effectiveness of the County’s
internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to
prevent, or detect and correct, misstatements on a timely basis. A material weakness is a
deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable
possibility that a material misstatement of the entity’s financial statements will not be prevented,
or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a
combination of deficiencies, in internal control that is less severe than a material weakness, yet
important enough to merit attention by those charged with governance.
115
Our consideration of internal control was for the limited purpose described in the first paragraph
of this section and was not designed to identify all deficiencies in internal control that might be
material weaknesses or significant deficiencies. Given these limitations, during our audit we did
not identify any deficiencies in internal control that we consider to be material weaknesses.
However, material weaknesses may exist that have not been identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the County’s financial statements are
free from material misstatement, we performed tests of its compliance with certain provisions of
laws, regulations, contracts, and grant agreements, noncompliance with which could have a
direct and material effect on the determination of financial statement amounts. However,
providing an opinion on compliance with those provisions was not an objective of our audit, and
accordingly, we do not express such an opinion. The results of our tests disclosed no instances of
noncompliance or other matters that are required to be reported under Government Auditing
Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance and the results of that testing, and not to provide an opinion on the effectiveness of
the entity’s internal control or on compliance. This report is an integral part of an audit
performed in accordance with Government Auditing Standards in considering the entity’s
internal control and compliance. Accordingly, this communication is not suitable for any other
purpose.
Hunt Valley, Maryland
October 28, 2016
200 International Circle • Suite 5500 • Hunt Valley • Maryland 21030 • P 410.584.0060 • F 410.584.0061
REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM
AND REPORT ON INTERNAL CONTROL OVER COMPLIANCE IN
ACCORDANCE WITH THE UNIFORM GUIDANCE
County Commissioners of Washington County
Hagerstown, Maryland
Report on Compliance for Each Major Federal Program
We have audited the County Commissioners of Washington County, Maryland’s (the County)
compliance with the types of compliance requirements described in the U.S. Office of
Management and Budget (OMB) Compliance Supplement that could have a direct and material
effect on each of the County’s major Federal programs for the year ended June 30, 2016. The
County’s major Federal programs are identified in the summary of auditor’s results section of the
accompanying schedule of findings and questioned costs.
Management’s Responsibility
Management is responsible for compliance with the requirements of laws, regulations, contracts,
and grants applicable to its federal programs.
Auditor’s Responsibility
Our responsibility is to express an opinion on compliance for each of the County’s major Federal
programs based on our audit of the types of compliance requirements referred to above. We
conducted our audit of compliance in accordance with auditing standards generally accepted in
the United States of America; the standards applicable to financial audits contained in
Government Auditing Standards, issued by the Comptroller General of the United States; and the
audit requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform
Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards
(Uniform Guidance). Those standards and the Uniform Guidance require that we plan and
perform the audit to obtain reasonable assurance about whether noncompliance with the types of
compliance requirements referred to above that could have a direct and material effect on a
major Federal program occurred. An audit includes examining, on a test basis, evidence about
the County’s compliance with those requirements and performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis
for our opinion on compliance for each major federal program. However, our audit does not
provide a legal determination of the County’s compliance.
117
We believe that our audit provides a reasonable basis for our opinion on compliance for each
major Federal program. However, our audit does not provide a legal determination of the
County’s compliance.
Opinion on Each Major Federal Program
In our opinion, the County complied, in all material respects, with the types of compliance
requirements referred to above that could have a direct and material effect on each of its major
federal programs for the year ended June 30, 2016.
Report on Internal Control over Compliance
Management of the County is responsible for establishing and maintaining effective internal
control over compliance with the types of compliance requirements referred to above. In
planning and performing our audit of compliance, we considered the County’s internal control
over compliance with the types of requirements that could have a direct and material effect on
each major Federal program as a basis for designing auditing procedures that are appropriate in
the circumstances for the purpose of expressing an opinion on compliance for each major Federal
program and to test and report on internal control over compliance in accordance with Uniform
Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal
control over compliance. Accordingly, we do not express an opinion on the effectiveness of the
Town’s internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control
over compliance does not allow management or employees, in the normal course of performing
their assigned functions, to prevent, or detect and correct, noncompliance with a type of
compliance requirement of a federal program on a timely basis. A material weakness in internal
control over compliance is a deficiency, or combination of deficiencies, in internal control over
compliance, such that there is a reasonable possibility that material noncompliance with a type of
compliance requirement of a federal program will not be prevented, or detected and corrected, on
a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a
combination of deficiencies, in internal control over compliance with a type of compliance
requirement of a federal program that is less severe than a material weakness in internal control
over compliance, yet important enough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in
the first paragraph of this section and was not designed to identify all deficiencies in internal
control over compliance that might be material weaknesses or significant deficiencies. We did
not identify any deficiencies in internal control over compliance that we consider to be material
weaknesses. However, material weaknesses may exist that have not been identified.
118
The purpose of this report on internal control over compliance is solely to describe the scope of our
testing of internal control over compliance and the results of that testing based on the requirements of
the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.
Hunt Valley, Maryland
October 28, 2016
COUNTY COMMISSIONERS OF WASHINGTON COUNTY, MARYLAND
Schedule of Expenditures of Federal Awards
For the Year Ended June 30, 2016
The accompanying notes are an integral part of this schedule.
119
Federal
CFDA
Number
Grantor or Pass-Through
Entity Identifying Number
Federal
Expenditures
Federal Grantor/Pass-through Grantor/Program Title
DIRECT EXPENDITURES OF FEDERAL AWARDS:
Department of Transportation
Airport Taxiway Rehabilitation Design 20.106 AIP-3-24-0019-051 2,096,274$
Airport Taxiway Rehabilitation Design 20.106 AIP-3-24-0019-051 81,309
Total Department of Transportation 2,177,583
Department of Justice
State Criminal Alien Assistance Program WC Detention Center Award "One Time Pymt"16.606 2015-AP-BX-1405 45,109
Byrne Memorial Justice Assistance Grant Program (closed)16.738 BJAG-2012-0084 2,021
Byrne Memorial Dept Of Justice Awd (closed)16.738 BJAG-2012-0062 11,584
Byrne Memorial Justice Assistance Grant Program (closed) 16.738 2014-DJ-BX-0633 5,962
Byrne Memorial Justice Assistance Grant Program (closed) 16.738 BJAG-2012-0071 21,567
Medication Assisted Treatment Program 16.593 RSAT-2013-0003 1,950
Total Department of Justice 88,193
Appalachian Regional Commission
Appalachian Regional Commission-Manufacturing Suppply Chain Study (closed)23.001 MD-17733-14 25,000
Total Appalachian Regional Commission 25,000
TO TAL DIREC T FEDERAL EXPENDITURES 2,290,776
INDIRECT EXPENDITURES OF FEDERAL AWARDS:
Department of Health and Human Services
Passed through Maryland Department of Human Resources
Child Support Enforcement Administration (closed)93.563 CSEA-CRA-15-041 86,990
Child Support Enforcement Administration 93.563 CSEA-CRA-16-041 148,114
Total Department of Health and Human Services 235,104
Department of Housing and Urban Development
DHCD-CDBG MD Neighborhood Conservation Initiative Prg 14.228 MD-NCI-4A 335,508
Emergency Solutions Grants Program FFY2014 ** CAC, CASA, Reach, St Johns Shelter. Valor Ministries 14.231 15ESG22-2014 13,474
Emergency Solutions Grants Program FFY2015 ** CAC, CASA, Reach, St Johns Shelter. Valor Ministries 14.231 15ESG22-2015 33,503
DHCD-CDBG MD Comm Dev Block Grt ADA County Building (closed)14.228 MD-14-CD-31 401,591
Total Department of Housing & Urban Development 784,076
Department of Transportation
Passed through Maryland Department of Transportation
Safe Routes To School - Grant Year E, Gye-033 "Lincolnshire Elementary School"20.205 MS-LS-148-28 315,492
Federal Transit Metropolitan Planning Grant HEPMPO Resolution 2015-12 20.505 FY2016 UPWP 415,155
Federal Transit Formula Grant "Jobs"20.507 WA125307O2016 81,623
Federal Transit Formula Grant "ADA-para-transit"20.507 WA125307O2016 106,298
Federal Transit Formula Grant "Small Urban Public Transportation" 20.507 WA125307O2015 695,750
Federal Transit Formula Grant Fy15 "WCTC Capital Maintenance" (closed)20.507 WA125307C2015 84,121
Federal Transit Formula Grant Fy16 "WCTC Capital Maintenance" 20.507 WA125307C2016 210,097
Federal Transit Formula Grant Fy16 "Vehicle Lift System" 20.507 WA125307C2016 31,666
Federal Transit Formula Grant Fy15 "WCTC Small Bus Replacement" 20.507 WA125339C2015 56,068
1,996,270
Passed through Maryland Department of Housing and Community Development
COUNTY COMMISSIONERS OF WASHINGTON COUNTY, MARYLAND
Schedule of Expenditures of Federal Awards
For the Year Ended June 30, 2016
The accompanying notes are an integral part of this schedule.
120
Federal
CFDA
Number
Grantor or Pass-Through
Entity Identifying Number
Federal
Expenditures
Passed through Maryland Emergency Management Agency
LEPC Interagency Hazardous Materials Public Sector Ffy15 Planning Grant (closed)20.703 HMEP FFY15 PLANNING 26,588
LEPC Interagency Hazardous Materials Public Sector Ffy15 Training Grant (closed)20.703 HMEP FFY15 TRAINING 974
LEPC Interagency Hazardous Materials Public Sector Ffy16 Training Grant 20.703 HMEP FFY16 TRAINING 2,279
29,841
Passed Through the Maryland State Highway Administration
Eastern Blvd Widening Phase II & Grade Separation 20.205 WA374ZM1 40,784
Economic Development Grants For Public Works - "Old Roxbury Road Bridge" W5372 20.205 W-5372 22,610
Economic Development Grants For Public Works - "Marble Quarry Road Bridge "2" 20.205 WA213ZM2 1,565
Economic Development Grants For Public Works - "Crystal Falls Over Beaver Creek" 20.205 WA394ZM1 27,273
Economic Development Grants For Public Works - Coffman Farms/Old Forge Rd 20.205 WA417ZM2 76,222
Economic Development Grants For Public Works - Old Forge Rd 20.205 WA397ZM1 343,146
Economic Development Grants For Public Works - Leiters Mill Rd Over Antietam 20.205 WA385ZM1 336,948
Economic Development Grants For Public Works - Garis Shop Over Antietam 20.205 WA384ZM1 17,398
Economic Development Grants For Public Works - Poffenberger Rd Bridge 20.205 WA384ZM1 820
Economic Development Grants For Public Works - Leiters Mill Rd Over Antietam 20.205 WA396ZM1 1,161
SHA Mou Bocc/City Of Hgr: Burhans Boulevard Bridges 20.205 WA427ZM2 683,282
Economic Development Grants For Public Works - "Roxbury Road Bridge" AU 20.205 1,340
Economic Development Grants For Public Works - "Crystal Falls Over Beaver Creek" AU 20.205 WA394ZM1 670
Economic Development Grants For Public Works - Leiters Mill Rd Over Antietam AU 20.205 WA385ZM1 1,320
Economic Development Grants For Public Works - Garis Shop Over Antietam AU 20.205 WA384ZM1 1,970
Economic Development Grants For Public Works - Poffenberger Rd Bridge AU 20.205 WA395ZM1 798
Economic Development Grants For Public Works - Poffenberger Rd Bridge AU 20.205 WA396ZM1 522
Economic Development Grants For Public Works - Leiters Mill Rd Over Antietam AU 20.205 WA395ZM1 827
1,558,656
Total Department of Transportation 3,584,767
Department of Homeland Security
Passed Through Maryland Emergency Management Agency
Law Enforcement Officer Reimbursment (TSA-airport)97.090 HSTS0213HSLR805 10,240
Emergency Management Performance Grant-Ffy15 "EMPG" (closed)97.042 EWM-2014-EP-00011-S01 100,716
Homeland Security Grant Program- Ffy2015 Planner Position "SHSGP" AU 97.042 EWM-2015-SS-00077 79,773
Homeland Security Grant Program- Ffy2014 Planner Position "SHSGP" AU (closed)97.067 EWM-2014-SS-00007-S01 89,751
Homeland Security Grant Program- Ffy2015 MOA MEMA/MIEMSS (closed)97.067 2012-SS-TO-00044-S01-SHS 52,635
Homeland Security Grant Program - Disaster Reimbursement 97.036 FEMA 4261 DR-MD 350,179
Total Department of Homeland Security 683,294
Department of Justice
PASSED THROUGH GOVERNOR'S OFFICE OF CRIME CONTROL & PREVENTION:
Technology Improvement Equipment Award (closed)16.738 BJAG-2013-0036 24,835
Total Department of Justice 24,835
Department of Enviromental Protection
Antietam Creek Stream Bank Restoration 66.460 FFY-2014 GRTS#8 217,088
Total Department of Enviromental Protection 217,088
TOTAL INDIRECT EXPENDITURES OF FEDERAL AWARDS 5,529,164
TOTAL EXPENDITURES OF FEDERAL AWARDS 7,819,940$
Federal Grantor/Pass-through Grantor/Program Title
COUNTY COMMISSIONERS OF WASHINGTON COUNTY, MARYLAND
Notes to the Schedule of Expenditures of Federal Awards
June 30, 2016
121
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
All Federal grant operations of the County Commissioners of Washington County,
Maryland’s (the County) are included in the scope of U.S. Office of Management and Budget
(OMB) Compliance Supplement audit (the Single Audit). The Single Audit was performed
in accordance with the provisions of the Title 2 U.S. Code of Federal Regulations (CFR) Part
200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for
Federal Awards (Uniform Guidance). Compliance testing of all requirements, as described in
the Uniform Guidance, was performed for the grant programs noted below. The programs
included on the Schedule of Expenditures of Federal Awards represent all Federal award
programs with fiscal year 2016, cash or non-cash expenditures activities. We have evaluated
the Federal financial assistance programs of the County for the year ended June 30, 2016,
and have selected the major program listed below for testing. Our coverage for testing was
28% of all Federal expenditures.
Major Programs
Airport Taxiway Rehabilitation Design 20.106 2,096,274$
Airport Taxiway Rehabilitation Design 20.106 81,309
2,177,583$
Federal
CFDA
Federal
Expenditures
2. BASIS OF PRESENTATION
The Schedule of Expenditures of Federal Awards has been accounted for on the accrual basis
of accounting.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY, MARYLAND
Schedule of Findings and Questioned Costs
June 30, 2016
122
Section I - Summary of Independent Public Accountants’ Results
Financial Statements
Type of Independent Public Accountants’ report issued Unmodified
Internal control over financial reporting:
Material weakness(es) identified? No
Significant deficiency(ies) identified? None Reported
Noncompliance material to the financial statements
noted?
No
Federal Awards
Type of Independent Public Accountants report
issued on compliance for major programs Unmodified
Internal control over major programs:
Material weakness(es) identified? No
Significant deficiency(ies) identified? None Reported
Any audit findings disclosed that are required to be No
reported in accordance with 2 CFR 200.516(a)?
Identification of Major Programs:
Major Programs
Airport Taxiway Rehabilitation Design 20.106 2,096,274$
Airport Taxiway Rehabilitation Design 20.106 81,309
2,177,583$
Threshold for distinguishing between Type A and B programs 750,000$
Did the County qualify as a low risk auditee?Yes
Federal
CFDA
Federal
Expenditures
COUNTY COMMISSIONERS OF WASHINGTON COUNTY, MARYLAND
Schedule of Findings and Questioned Costs
June 30, 2016
123
Section II - Financial Statement Findings
None Noted.
Section III - Federal Award Findings
None Noted.
COUNTY COMMISSIONERS OF WASHINGTON COUNTY, MARYLAND
Schedule of Prior Year Findings
June 30, 2016
124
There are no prior year findings to disclose.
WASHINGTON COUNTY, MARYLAND B-1
APPENDIX B
PROPOSED FORM OF OPINION OF BOND COUNSEL
[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 2017 (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, 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 C-1
APPENDIX C
NOTICE OF SALE
WASHINGTON COUNTY, MARYLAND
(County Commissioners of Washington County)
$13,780,000* PUBLIC IMPROVEMENT BONDS OF 2017
(Full Faith and Credit Obligations of the
County Commissioners of Washington County)
Dated Date of Delivery
DTC Book-Entry
Overview and Amortization
Electronic proposals will be received via Parity® on behalf of County Commissioners of Washington County
(the “County”) by the Chief Financial Officer of Washington County, Maryland (the “CFO”), at Room 3100, 100 West
Washington Street, Hagerstown, Maryland 21740 until 11:00 a.m. Prevailing Eastern Time on Tuesday, May 9, 2017
(the “Bid Date”, unless postponed as described in this Notice of Sale) for the purchase of all (but not less than all) of
the County’s Public Improvement Bonds of 2017 (the “Bonds”). The Bonds will be dated their date of delivery.
Interest on the Bonds will be payable on January 1, 2018 and semiannually thereafter on July 1 and January 1 until
maturity or earlier redemption. The Bonds are issued under the provisions of Chapter 60 of the Laws of Maryland of
2013 (“Chapter 60”) and Title 6 of the Code of Public Local Laws of Washington County, Maryland (2007), as
amended (the “Water and Sewer Act”), as applicable. The Bonds are issued in accordance with a Resolution adopted
by the Board of County Commissioners of Washington County (the “Board”) on April 25, 2017.
Manufacturers and Traders Trust Company, Baltimore, Maryland and Buffalo, New York, will act as the
Bond Registrar and Paying Agent for the Bonds.
The Bonds will be subject to principal amortization either through serial maturities or mandatory sinking
fund redemptions or a combination thereof (see “Serial and/or Term Bonds” below) on July 1 in the years and
principal amounts set forth below (the “Preliminary Amounts”), subject to the provisions of “Adjustments to
Principal Amounts” herein:
Maturing
July 1*
Principal
Amount*
Maturing
July 1*
Principal
Amount*
2018 440,000$ 2028 705,000$
2019 465,000 2029 730,000
2020 490,000 2030 750,000
2021 515,000 2031 775,000
2022 540,000 2032 800,000
2023 570,000 2033 825,000
2024 595,000 2034 855,000
2025 630,000 2035 885,000
2026 660,000 2036 915,000
2027 685,000 2037 950,000
Public Improvement Bonds
*Preliminary; subject to change
WASHINGTON COUNTY, MARYLAND C-2
Adjustments to Principal Amounts
Pre-sale, the County reserves the right to change the 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 Bonds and/or the
principal amount of one or more of the maturities of the Bonds. Should a revision to the aggregate principal amount of
the Bonds and/or the principal amortization schedule for the Bonds be made (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
Preliminary Amounts will constitute the Revised Amounts. Bidders shall submit bids based on the Revised Amounts,
and the Revised Amounts will be used to compare bids for the Bonds and to select a winning bidder.
After selecting the winning bid for the Bonds, the maturity schedule 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 Bonds from the corresponding Revised Amounts by more than
10%. The dollar amount bid for the principal of the Bonds by the successful bidder will be adjusted proportionately to
reflect any reduction or increase in the aggregate principal amount of the Bonds, but the coupon rates specified by the
successful bidder for all maturities of the Bonds will not change. Any such maturity schedule adjustments will be
communicated to the successful bidder for 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 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 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 the Bonds as 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 the Bonds within these limits.
Serial Bonds and/or Term Bonds
A bidder may designate in its proposal two or more consecutive principal amounts shown in the amortization
schedule above 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.
Purpose of Issue
The 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.
Bid Specifications
Each proposal must be submitted electronically as described below. No bid of less than 100% of par, no bid
greater than 120% of par, no bid for less than all of the Bonds, and no oral or written bid except as described in this
Notice of Sale will be considered by the CFO.
Each bidder shall submit one proposal on an “all or none” basis for the Bonds. Each proposal must specify
the amount bid for the Bonds, which amount (i) may not be less than 100% of par, and (ii) may not be more than 120%
of par. 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 the Bonds are to bear but shall not specify (a) more than one interest rate for any
Bonds 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 by more than three percent (3%), or (d) for maturities 2028
through 2037, inclusive, of the 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 2027).
WASHINGTON COUNTY, MARYLAND C-3
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 11:00 a.m. Prevailing Eastern Time. No bid will be accepted after the 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 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 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 the Bonds via Parity®. Bids will be communicated
electronically to the County on May 9, 2017 (or such later Bid Date as announced in accordance with this Notice of
Sale) at 11:00 a.m. Prevailing Eastern Time. Prior to that time, 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 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 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.
Basis of Award
Proposals will be communicated electronically on the Bid Date at 11:00 a.m. Prevailing Eastern Time.
Proposals will be awarded on behalf of the County by the CFO. The successful bidder will be determined based on the
lowest interest cost to the County. 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 and to the price bid. If two or more bidders offer to
purchase 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 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 to one bidder. The CFO will execute and
deliver an order or orders of award promptly after the apparent successful bidder for the Bonds pays the 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 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 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 the Bonds.
WASHINGTON COUNTY, MARYLAND C-4
Good Faith Deposit and Award
The successful bidder for the Bonds shall submit a good faith deposit in the amount of $137,800 (the
“Good Faith Deposit”) as provided below. A Good Faith Deposit will secure the County from any loss resulting
from the failure of the successful bidder to comply with the terms of its bid. The successful bidder shall transfer the
Good Faith Deposit by wire transfer directly to the County upon notification of the preliminary award 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 by the County’s financial advisor upon notification of the
preliminary award.
The successful bidder 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 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 the successful bidder fails to so deliver
the Good Faith Deposit by the Deposit Deadline, the County will have the option to withdraw the preliminary award
without any liability to the successful bidder and the successful bidder shall be responsible to the County for all
consequential damages arising from such withdrawal.
At the time of the delivery of the Bonds, the Good Faith Deposit will be applied against the purchase price
for the Bonds or will be retained as liquidated damages upon the failure of the successful bidder to take and pay for
the Bonds in accordance with the terms of its proposal. The successful bidder shall have no right in or to the Good
Faith Deposit if it fails to complete the purchase of, and payment in full 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 the Good Faith Deposit to the successful bidder. Notwithstanding the foregoing, should the successful bidder
fail to pay for 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 the Bonds is adjusted as described above under “Adjustments to
Principal Amounts”, no adjustment will be made to the Good Faith Deposit.
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
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 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 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, as a condition to delivery 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.
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 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.
WASHINGTON COUNTY, MARYLAND C-5
DTC may determine not to continue to act as securities depository for the Bonds at any time by giving notice
to the County. The County may determine to select a different securities depository or the County may determine not to
continue the book-entry system. If the County does not identify another qualified securities depository to replace DTC,
the County will deliver replacement bonds in the form of fully-registered certificates.
Optional Redemption
The Bonds that mature on or before July 1, 2027, are not subject to redemption at the option of the County
prior to their maturities. The Bonds that mature on or after July 1, 2028, are subject to redemption at the option of the
County in whole or in part on any date on or after July 1, 2027, 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.
Legal Opinion
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. will be delivered, upon request, to the
successful bidder for the Bonds, without charge, and the text of the approving opinion will also be printed on, or
attached to, each Bond.
Undertakings of the Successful Bidder
Upon the preliminary award of the Bonds, the successful bidder shall promptly advise the County of the initial
reoffering prices to the public of each maturity of the Bonds. Simultaneously with or before delivery of the Bonds, the
successful bidder shall furnish to the County a certificate in form and substance acceptable to bond counsel
(a) certifying that a bona fide offering 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 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 bidder as of the Bid Date. For purposes of the successful
bidder’s certificate, a substantial portion of the Bonds is at least 10% in par amount of each maturity.
If the 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 Bonds to confirm compliance with
statutory requirements of avoiding the establishment of an artificial price.
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 to accept delivery of and pay for 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 bidder 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 the 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 the Bonds,
if any, as may be so furnished. If the successful bidder furnishes no such information, the Official Statement will
include the interest rates on 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 bidder 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
WASHINGTON COUNTY, MARYLAND C-6
respect to the use or omission of such information in any reoffering 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 bidder will also be furnished, without cost, with a reasonable number of
copies of the Official Statement. The successful bidder 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 bidder 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 bidder through the facilities of DTC on or about May 23,
2017. 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 to accept delivery of and pay for the Bonds that, simultaneously
with or before delivery and payment for 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 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 of the Bonds being offered, and/or changing the bid
specifications for 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 the Bonds
and establish a subsequent date on which bids for the Bonds will again be received. If all bids for the Bonds are rejected
and a subsequent date for receipt of bids for 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 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.
WASHINGTON COUNTY, MARYLAND C-7
Additional Information
The Preliminary Official Statement dated May 2, 2017, 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 2017 (the “Bonds”). The Bonds are being issued pursuant to a
Resolution adopted on April 25, 2017. 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 _, 2017 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,
2017.
(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, 2017, 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, 2017), 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 3100, 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: ____________________, 2017
ATTEST: COUNTY COMMISSIONERS OF
WASHINGTON COUNTY
______________________________ By: _______________________________________
Vicki C. Lumm, County Clerk Terry L. Baker, President
Board of County Commissioners
of Washington County
Open Session Item
SUBJECT: Maryland Agricultural Land Preservation Program (MALPP) 60/40 Match for FY
2017/18
PRESENTATION DATE: April 25, 2017
PRESENTATION BY: Eric Seifarth, Rural Preservation Administrator, and Chris Boggs, Land
Preservation Planner, Dept. of Planning & Zoning
RECOMMENDED MOTION: Move to approve a $330,000 commitment from the local share
of the Agricultural Transfer Tax ($130,000) and Real Estate Transfer Tax ($200,000) to the
60/40 match component of the MALPP easement program for FY 2017/18 Cycle.
REPORT-IN-BRIEF: Each year MALPP asks counties if they want to obligate funds to the
60/40 match portion of the Land Preservation Easement Program. Land Preservation staff is
recommending that Washington County designate $330,000 as its 40% local match in order to
receive the 60% State match of $495,000. This is consistent with the Commissioners approval on
March 7, 2017 of a change in funding strategy to use a portion of the local Real Estate Transfer
Tax (RETT) for this program instead of exclusively for the local Installment Purchase Program
(IPP).
Traditionally the 40% commitment would have come only from the State Agricultural Transfer
Tax ($130,000) producing a 60% match of only $195,000. The commitment requested today,
which is consistent with Commissioner action on March 7, will result in total funding of
$1,625,000 for easement purchases in FY 17 and FY 18 (including $800,000 of general
allotment funds that all counties receive) compared to only $1,125,000 from the former funding
policy. Agricultural Transfer Taxes and the first $400,000 of the Real Estate Transfer Tax
collected each year are designated for use in preservation programs and are not General Fund
dollars.
DISCUSSION: For clarity sake, State funding contributions to the Ag Preservation Program
result from the following distributions. The entire MALPP fund is divided in half. One half is
divided equally among all Maryland counties which will result in a 2017/2018 “General
Allotment” of approximately $800,000 for each County. The remaining half goes to Counties
that make local commitments to the 60/40 matching program.
FISCAL IMPACT: This funds commitment results in $500,000 more for land preservation
easement purchases. The extra funds come from State sources or local Real Estate Transfer
Taxes designated for this purpose. There are no General Funds involved.
Board of County Commissioners of Washington County, Maryland
Agenda Report Form
CONCURRENCES: The Agricultural Advisory Board and Planning Commission have
endorsed the use of the above funding sources for the 60/40 match.
ALTERNATIVES: Approve the use of only the Agricultural Transfer Tax for the 60/40 match
or make no commitment to the matching program.
ATTACHMENTS: Excerpt from County Commissioners 3/7/2017 meeting minutes
AUDIO/VISUAL NEEDS: N/A
Excerpt from Board of County Commissioners of Washington County minutes, 3/7/2017:
“COUNTY INSTALLMENT PAYMENT PROGRAM AND MARYLAND
AGRICULTURAL LAND PRESERVATION PROGRAM PROPOSAL
Eric Seifarth, Rural Preservation Administrator, and Chris Boggs, Land Preservation Planner,
Planning and Zoning, presented the proposal to use a portion of the local Real Estate Transfer
Tax (RETT) for the combined Maryland Agricultural Land Preservation Program (MALPP)
Fiscal Year 2017 and 2018 funding cycles. The Washington County Agricultural Advisory
Board is recommending the use of RETT to supplement the County’s contribution to the 60/40
matching mechanism of the MALPP.”
“Commissioner Cline, seconded by Myers, moved to approve using a portion of the local Real
Estate Transfer Tax for the combined Maryland Agricultural land Preservation Program Fiscal
YEAR 2017 AND 2018 funding cycles as presented. The motion passed unanimously. (4-0,
Commissioner Barr was absent.)”
Open Session Item
SUBJECT: Bethel Gardens – Proposed Payment in Lieu of Taxes (PILOT) Agreement
PRESENTATION DATE: April 25, 2017
PRESENTATION BY: Andrew Wilkinson, Esquire; Counsel for Bethel Gardens
RECOMMENDED MOTION: I move to approve the proposed PILOT agreement.
REPORT-IN-BRIEF: Bethel Gardens is a 94-unit low-income apartment complex within
the City of Hagerstown that is to undergo major renovations if tax-preferred financing is
approved. The financing and the renovations are wholly contingent on the owner securing a
PILOT agreement with the City of Hagerstown and the County. The proposed PILOT agreement
provides for an increased amount of real property tax revenue to the County over the 42-year life
of the project than is currently being generated from the complex. Furthermore, the proposal
requires the complex’s exterior and common areas to be maintained in good repair and proper
working order.
DISCUSSION: Since 1981, Bethel Gardens has paid real property taxes to the City and
County pursuant to a Cooperation Agreement (the predecessor to a PILOT Agreement). By its
terms, the Cooperation Agreement cannot be assigned to any new owner without the consent of
the City.
By Congressional Act in 2012, the primary funding program for low income housing, known as
“RAS (rental assistance subsidy)”, began to be phased out and no longer funded by the federal
government. The replacement program, “RAD” (rental assistance demonstration), provides
similar funding for low income housing, but also allows private investment for capital
improvements. With private investment comes stabilized financial footing.
Bethel Gardens was built in 1976. There have been no major renovations since then. There is no
central air conditioning. It needs rehabilitation.
Bethel Gardens has found a private investment group to partner with, to rehabilitate the property,
and keep it accessible to members of our community that need it. As such, Bethel is authorized
to complete a RAD conversion by refinancing all existing debt and taking on additional debt to
pay for rehabilitation.
In total, all new and refinanced debt will be approximately $16 million with Raymond
James/Wells Fargo as the primary refinancing institution. Of that amount, rehabilitation will
include over $6.0 million in construction, or $65,000 per unit.
Board of County Commissioners of Washington County, Maryland
Agenda Report Form
We have agreed with the City to terminate the 1981 Cooperation Agreement and replace it with a
new PILOT Agreement. The terms remain generally the same as the 1981 Agreement, but the
new agreement creates increased revenue to the City and County, provides for more auditing by
the City and County, and provides greater certainty as to the consequences for non-compliance.
FISCAL IMPACT: The expected financial impact to the City and County will be
positive.
CONCURRENCES: The City of Hagerstown is expected to approve the PILOT
Agreement during its regular meeting on April 25, 2017.
ALTERNATIVES: In the event the PILOT is not approved, the RAD conversion will
not occur.
ATTACHMENTS: Draft PILOT Agreement
AUDIO/VISUAL NEEDS: N/A
PAYMENT IN LIEU OF TAX AGREEMENT
This Payment in Lieu of Tax Agreement (the “PILOT Agreement”), made and entered
into as of the _______ day of _______________, 2017, is by and between The Bethel
Corporation, a Maryland corporation (“Current Owner”), Bethel Gardens Development Partners,
LP, a limited partnership of the State of Maryland (the “New Entity”), the Board of County
Commissioners of Washington County, Maryland, a body corporate and politic of the State of
Maryland (the “County”), and the City of Hagerstown, a municipal corporation of the State of
Maryland (the “City”).
WITNESSETH
WHEREAS, Current Owner is the owner of land located at 356 Henry Avenue,
Hagerstown, Maryland, and further identified as tax parcel identification numbers 25-028120
and 25-028171, improved with a 94-unit low-income apartment complex built in 1975-1976 and
commonly known as Bethel Gardens (the “Property”); and
WHEREAS, the City entered into a Cooperation Agreement with Current Owner dated
March 27, 1981, a copy of which is attached hereto as Exhibit A; and
WHEREAS, the Cooperation Agreement constitutes an agreement between Current
Owner and the City for the payment of a fee in lieu of property taxes for the term of the
Agreement; and
WHEREAS, the Cooperation Agreement is non-assignable; and
WHEREAS, Current Owner intends to transfer ownership of the Property to New Entity.
Bethel Gardens Preservation HV, LLC and Bethel Gardens Group, LLC will each be general
partners of New Entity, and each will hold a 0.005% ownership interest in New Entity. Bethel
Gardens Group, LLC is wholly owned by The Bethel Corporation (a non-profit corporation).
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Raymond James Tax Credit Fund 42 L.L.C. will be the limited partner of New Entity and hold
an ownership interest of 99.99%; and
WHEREAS, New Entity intends to make significant renovations to the Property to
preserve the Property’s continued use serving low-income residents by constructing the
following non-exclusive list of improvements: new kitchens and baths; new painting and flooring
in all of the units; new energy start appliances; new lighting; digital and programmable
thermostats; GFCI outlets in the kitchens and bathrooms; new circuit breaker panel; repair and
replacement of corroded metal entry stairs and passage ways in the garden-style apartments;
power washing and repointing of brick; repair of exterior patios and decks; and the creation of
fully accessible apartment units that meet the current ADA standards (the “Project”); and
WHEREAS, Current Owner has informed the City that the Project qualifies for tax-
exempt private activity bond financing and Low Income Housing Tax Credits (“LIHTC”) and
that the transaction will be financed using: (a) credit-enhanced, tax-exempt bonds that will be
issued by Maryland’s Community Development Authority (“CDA”); and (b) a taxable 221(d)(4)
loan insured by the Federal Housing Authority (“FHA”). Current Owner has also informed the
City that the long-term taxable permanent loan for the Project has been underwritten at $6.25
Million and that Current Owner will hold a subordinated seller note in excess of $2 Million; and
WHEREAS, Current Owner has informed the City that hard costs for the Project are
budgeted at $65,000 per unit; and
WHEREAS, New Entity anticipates that the Project will be funded in the amounts
requested but not all of which will necessarily be closed, completed, or funded by the Effective
Date of this Agreement; and
3
WHEREAS, New Entity will continue to operate the Property as rental units exclusively
for low-income persons; and
WHEREAS, the Annotated Code of Maryland, Tax-Property Article, Section 7-506.1
provides that, in specific circumstances, real property may receive real property tax benefits if
New Entity, the County, and the City enter into a PILOT Agreement; and
WHEREAS, New Entity represents that the Project will qualify in all respects with the
requirements of Tax-Property Article, Section 7-506.1, and for an agreement for negotiated
payments in lieu of the otherwise full amount of County and City real property taxes that would
be imposed upon the Property and Project; and
WHEREAS, New Entity seeks to enter into this PILOT Agreement in order to establish
general stability and predictability for its real property tax exposure; and
WHEREAS, New Entity, the County, and the City collectively agreed to enter into a
single, comprehensive PILOT Agreement; and
WHEREAS, the County and the City shall only enter into this PILOT Agreement with
New Entity and accept payment of a reduced sum of money in lieu of Washington County and
The City of Hagerstown real property taxes, provided that New Entity at all times conducts its
operations in accordance with the requirements of this PILOT Agreement and the Tax-Property
Article, Section 7-506.1.
NOW, THEREFORE, in consideration of the above premises, which are incorporated as
part of the Agreement, and of the mutual covenants, terms and agreements hereof, and pursuant
to the authority granted by the Annotated Code of Maryland, Tax-Property Article, Section 7-
506.1, the parties agree as follows:
4
1. Recitals. The recitals set forth above shall be deemed to be a part of this PILOT
Agreement.
2. Termination of Cooperation Agreement. Current Owner and City agree that the
Cooperation Agreement shall be terminated as of the effective date of this Agreement and that
the Current Owner is solely a party to this Agreement to confirm the termination of the
Cooperation Agreement.
3. Term. This PILOT Agreement shall become effective as of the date of the closing
on the refinance for the Project, June 1, 2017 (the “Effective Date”), and shall remain effective
for forty-two (42) years from the Effective Date of this PILOT Agreement (the “Term”).
(a) In no event shall the Term extend beyond such time as the Property fails or ceases
(i) to be used for housing of low income persons; (ii) to be owned and used for provisions of
rental housing and related service facilities (including parking facilities); (iii) to comply in all
respects with Section 7-506.1 of the Tax-Property Article of the Annotated Code of Maryland
pursuant to which the County and the City are authorized to enter into an agreement for the
payment of a negotiated sum in lieu of taxes; or (iv) to comply with all obligations under this
PILOT Agreement. Additionally, the Term may not extend beyond the effective date of a repeal
or amendment of the applicable enabling tax and PILOT provisions of the Annotated Code of
Maryland unless such legislation provides a grandfather provision for those PILOT Agreements
already in existence prior to the effective date of the repeal or amendment.
4. Payment In Lieu of Taxes.
(a) Each fiscal year during the term of this PILOT Agreement, New Entity shall pay a
PILOT in lieu of the respective real property taxes due to the County and the City. New Entity’s
PILOT obligation for each fiscal year of this Agreement shall be calculated in the same manner
5
as in the example set forth in Exhibit B to this Agreement, entitled Computation of Annual
Payment Due the City of Hagerstown and Washington County from Bethel Gardens
Development Partners, LP (EXAMPLE). Annual Shelter Rent Income shall mean the gross
receipts of all charges paid directly by the tenants of Bethel Gardens (and not including subsidy
payments received from the government). There shall be no deductions to Annual Shelter Rent
Income for vacancies, model unit, bad debts, utility allowances, electricity, water, gas, or any
other deductions of any kind.
That computation notwithstanding, no payment for any fiscal year shall be made to the
County or to the City in excess of the amount of real property taxes that would have been paid to
the County and the City for such fiscal year if the Property was not exempt from taxation, and in
no event shall New Entity’s total PILOT payment obligation for any fiscal year (payable to the
City, the County and the State, collectively) be less than $24,000.00.
(b) New Entity shall make separate annual payments directly to the County and to the
City.
(c) The payment to be made by New Entity to the County and to the City provided
for herein with respect to the Property, shall be in lieu of the otherwise full amount of County or
City real property tax that would be due and is in addition to any other County and City taxes
and charges, including but not limited to applicable fire and rescue tax, sewer and water charges,
system benefit charges, charges relating to the enforcement of public safety, and building excise
tax that New Entity may be required to pay to the County or City that is not already included , or
may be included in the future, in the respective jurisdiction’s real property tax and fees bill. The
payment in lieu of real property taxes provided for herein is not in lieu of any other applicable
municipal or state taxes or charges of any kind unrelated to real property taxes for which New
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Entity shall also continue to be responsible, nor is the payment in lieu of taxes provided for
herein in lieu of any permitting costs associated with construction of the Project.
5. Taxes Upon Expiration or Termination. Upon expiration or termination otherwise
of this PILOT Agreement, full County and City real property taxes shall be paid from the point
of expiration or termination forward, based on the assessed value of the Property and the
applicable real property tax rate in effect at such time.
6. Requirements For Continued PILOT. The continued right of New Entity to enjoy
the benefits of this PILOT Agreement and to make the payments calculated in accordance with
Paragraph 4 above is expressly conditioned upon compliance at all times during the Term of this
PILOT Agreement with the following conditions, the failure to comply with any of which shall
effect an immediate termination of this PILOT Agreement without further notice being required
to be given to New Entity:
(a) The Project shall be substantially completed within two years after the date of
closing on the refinance for the Project, i.e., by June 1, 2019;
(b) New Entity shall participate in the City’s Crime Free Housing Program
throughout the term of this Agreement;
(c) New Entity shall comply in all respects with the provisions of the Tax-Property
Article and other provisions of the Annotated Code of Maryland, as they relate to the Property;
(d) Within one hundred and twenty (120) days after December 31 of the year in
which this Agreement is entered into, and within 120 days of each subsequent December 31
thereafter, or otherwise upon fifteen (15) days of request, New Entity shall provide to the
County’s and the City’s chief financial officers (the “CFOs”) an annual financial report audited
by an independent Certified Public Accountant in accordance with Generally Accepted
7
Accounting Principles. Furthermore, the CFOs shall have the ability upon reasonable notice to
New Entity, to examine New Entity’s books and records. Such books and records shall be
sufficient to verify that the housing units have been rented exclusively to low income persons
and to verify the amount of annual Shelter Rent Income;
(e) The PILOT payment for each fiscal year during the term of this Agreement shall
be due to the County and the City within thirty (30) after the annual deadline to submit the audit
to the County and the City (as required by subsection 6(d) above);
(f) New Entity shall certify in writing to the respective CFOs, on an annual basis or
otherwise upon request of the CFOs, the continued compliance with the terms and conditions of
this PILOT Agreement and the applicable provisions of the Tax-Property Article and other
sections of the Annotated Code of Maryland;
(g) “Payment in lieu of tax” payments shall be paid as required hereunder, and
payment of all other taxes and charges (including interest) applicable to the Property shall be
timely paid; such bills being delinquent thirty (30) days after being due. Interest on overdue
payments, in the same amount as charged to other delinquent County and City taxpayers, shall be
added to the amount due and collected by the County and/or the City in the same manner as real
property taxes are collected; and
(h) New Entity shall perform all work necessary during the term of this Agreement to
maintain the exterior of the buildings and the common areas of the Property in good repair and
proper working order. New entity shall maintain the Property as quality housing for low-income
persons during the term of this Agreement.
7. Tax Implications for Noncompliance. If the Property, or any portion of the
Property, is taken out of service as housing available for low income persons during the Term of
8
the PILOT Agreement, by virtue of sale, refinancing, or other action of New Entity such as, but
not limited to, renting a unit to someone who at the start of that resident’s occupancy is other
than a qualified low income person, then it shall be as though there never was a PILOT
Agreement on the unit(s) removed from low income housing. At such time as a unit is taken out
of service as described above, however, New Entity shall have 180 days from the date any
PILOT Agreement party identifies that the unit is not in compliance to remedy the
noncompliance and to return the unit to housing available for low income persons. If New Entity
fails to return the unit to compliance within the 180-day cure period, then all County and City
real property tax that would have been imposed from the initial Effective Date of the PILOT
Agreement for the unit, less any already paid PILOT for the out of service unit, will be
immediately due and payable to the County and the City. If, at any time an otherwise qualified
occupant’s income increases above the limits established to qualify as a low income person, the
PILOT Agreement terms remain in effect unless New Entity fails to comply with Internal
Revenue Code Section 42(g)(2)(D). An unoccupied or empty unit is deemed a unit that is in
compliance, and is therefore not subject to the tax implications of this paragraph, which apply
only to those units which are taken out of service as housing available for low income persons.
8. Residential Use. New Entity shall not in any manner or to any extent transfer or
exchange the Property in a way that would change its use as a residential rental project for low
income persons without risking immediate termination of this PILOT Agreement.
9. Limitation on Scope of Agreement. The terms of this Agreement will not apply
with respect to any additional units that may be constructed in the future above and beyond the
94 units that currently comprise Bethel Gardens as of the Effective Date of this Agreement.
Similarly, the terms of this Agreement will not apply to any real property other than the real
9
property that comprises Bethel Gardens (tax parcel identification numbers 25-028120 and 25-
028171) as of the Effective Date of this Agreement.
10. Referenced Documents. Any document, or amendments thereto, referenced in
this PILOT Agreement shall be provided, with appropriate recording references, by New Entity
when executed and shall be attached to this PILOT Agreement by an addendum identifying such
documents for the purpose of this PILOT Agreement.
11. Non-Assignability. This Agreement shall not be assignable by New Entity
without the prior written consent of both the County and the City. The granting or withholding of
consent to assign shall be absolutely within the discretion of the County and the City.
12. Amendment. This PILOT Agreement may not be amended, altered or modified
except by a written amendment executed by the parties.
13. Governing Law and Dispute Resolution. This PILOT Agreement and the rights
and obligations of the parties hereto and any claims or disputes thereto shall be governed by and
construed in accordance with the laws of the State of Maryland. The exclusive venue for
litigation shall be Washington County. If parties are not able to resolve disputes directly with
each other, the parties, prior to litigation, shall first attempt to resolve any disputes that arise out
of this Agreement through mediation before a mutually acceptable mediator.
14. Other Taxes and Fees. Nothing herein shall be deemed or construed to be a
reduction or waiver by the County or the City of any tax or fee of any kind whatsoever, including
but not limited to any development impact fee, building excise tax, recordation tax, fire or rescue
tax, or income tax except as provided for above in Paragraph 3.
15. Counterparts. This PILOT Agreement may be executed in multiple counterparts,
each of which shall be deemed to be an original, and all of which together shall constitute one
10
agreement binding on all parties hereto, notwithstanding that all the parties shall not have si gned
the same counterpart.
16. Notices. All notices shall be in writing and either hand delivered or sent by
United States certified or registered mail, postage prepaid, return receipt requested. Notices shall
be given to the parties as follows:
If to the County, then to: Board of County Commissioners
ATTN: Housing authority of Washington County,
Maryland
319 E. Antietam Street, #2
Hagerstown, Maryland 21740
Copy to: Washington County Attorney
100 W. Washington Street
Hagerstown, Maryland 21740
If to the City, then to: Hagerstown City Hall
Attn: Mayor & Council of Hagerstown
1 E. Franklin Street
Hagerstown, Maryland 21740
Copy to: City Hall
ATTN: Director of Planning and Code
Administration
1 E. Franklin Street, Suite 300
Hagerstown, Maryland 21740
Copy to: Thomas E. Lynch, III, Esq.
Paul D. Rose, Jr., Esq.
Miles & Stockbridge P.C.
30 West Patrick Street, Suite 600
Frederick, Maryland 21701
If to New Entity, then to: Bethel Gardens Development Partners, LP
356 Henry Avenue
Hagerstown, Maryland 21740
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Copy to: Andrew F. Wilkinson, Esq.
Divelbiss & Wilkinson
13424 Pennsylvania Avenue, Suite 302
Hagerstown, Maryland 21742
Counsel for New Entity
Any party may modify the address to which notice to it shall be sent, by delivery of
notice to the other parties in accordance with the foregoing. Each notice that is sent in
accordance with the foregoing shall be presumed to have been received on the business day it
is personally delivered or three (3) business days after the date of mailing, as applicable.
17. Entire Agreement; Headings. This PILOT Agreement contains the entire
agreement of the parties with respect to the matters herein set forth. All ot her agreements and
understandings of the parties relating to the subject matter of this PILOT Agreement, written or
oral, if any, are merged into this PILOT Agreement. The headings set forth at the beginning of
each section or subsection of this PILOT Agreement are for convenience of reference only and
do not have any independent legal significance.
IN WITNESS WHEREOF, The Bethel Corporation, a Maryland corporation, Bethel
Gardens Development Partners, LP, a limited partnership of the State of Maryland, the Board of
County Commissioners of Washington County, Maryland, a body corporate and politic of the
State of Maryland, and The City of Hagerstown, a municipal corporation of the State of
Maryland have caused this PILOT Agreement to be signed by duly authorized individuals, as
duly attested, as of the day and year first hereinabove written.
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WITNESS: THE BETHEL CORPORATION
____________________
By: ______________________
Name: _______________________
Title: _______________________
WITNESS: BETHEL GARDENS DEVELOPMENT PARTNERS, LP
____________________
By: ______________________
Bethel Gardens Group, LLC,
Managing General Partner
By: ______________________
The Bethel Corporation,
its sole member
By:__________________________
Name: _______________________
Title: _______________________
WITNESS: BOARD OF COUNTY COMMISSIONERS OF
WASHINGTON COUNTY, MARYLAND
___________________
County Clerk
By: ________________________________
Terry L. Baker
President
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WITNESS: THE CITY OF HAGERSTOWN, MARYLAND
___________________
Executive Assistant to
the Mayor
By: ________________________________
__________________
Mayor
Page 1 of 2
EXHIBIT B
Computation of Annual Payment Due to the City of Hagerstown and
Washington County from Bethel Gardens Development Partners, LP
(EXAMPLE)
Step 1: Determine Total PILOT Payment
Annual Shelter Rent Income (gross receipts from tenants) $370,613.00
Percentage (x) 10%
Total PILOT Payment Allocated to the City, the County, = $37,061.30
and the State
Step 2: Determine Percentage of Total PILOT Payment Allocated to the State
State of Maryland Real Property Tax Rate for Fiscal Year 0.112
Combined Real Property Tax Rate of the City, the County, (÷) 1.848
and the State for Fiscal year
Percentage of Total PILOT Payment Allocated to State = 0.0607
Step 3: Determine Portion of Total PILOT Payment Allocated to the State
Total PILOT Payment Allocated to the City, the County and the State $37,061.30
Percentage of Total PILOT Payment Allocated to the State (x) 0.0607
Amount of Total PILOT Payment Allocated to the State = $2,249.62
Page 2 of 2
Step 4: Determine Portion of Total PILOT Payment Allocated to the City and
the County
Total PILOT Payment Allocated to the City, the County and the State $37,061.30
Amount of Total PILOT Payment Allocated to the State (-) $2,249.62
Amount of Total PILOT Payment Allocated to the City and (=) $34,811.68
the County
Formula to Calculate Amount Allocated to the City:
$34,811.68
(x) 0.65
(=) $22,627.59
(x) .03
(=) $678.84
Total PILOT Payment to the City ($22,627.59 + $678.84) $23,306.43
Total PILOT Payment to the County $34,811.68
(x) 0.35
$12,184.09
Open Session Item
SUBJECT: Emergency Solutions Grant – Approval to Submit Application and Accept
Awarded Funds
PRESENTATION DATE: April 25, 2017
PRESENTATION BY: Stephanie Lapole, Grant Manager, Office of Community
Grant Management
RECOMMENDED MOTION: Move to approve the submission of the proposed FY17
Emergency Solutions Grant application to the Maryland Department of Housing and Community
Development in the amount of $145,000 and accept awarded funding.
REPORT-IN-BRIEF: Emergency Solutions Grant funding is vital to the financial
stability of shelters to assist the homeless in Washington County. Such assistance is designed to
assure that homeless persons and those at risk of homelessness have access to not only safe and
sanitary shelter but also supportive services needed to improve their housing situations. The
Department of Housing and Community Development requires that local governments be the
lead applicant on behalf of the agencies seeking ESG funding.
DISCUSSION: There are three (3) sub-applicants within the application which include
CASA, REACH and Washington County Community Action Council. The Washington County
Homeless Coalition reviewed and ranked the sub-applicants notice of intents to apply and as a
result the mentioned agencies were invited to complete a service provider application.
FFY2017 requests are as follows:
Agency Amount Requested Purpose
CASA $20,740 Shelter Maintenance & Operations
Rapid Rehousing
REACH $58,858 Shelter Maintenance & Operations
Raid Rehousing
Washington County Community
Action Council $61,052 Shelter Maintenance & Operations
Rapid Rehousing & HMIS
Wash. Co. OCGM $4,350 Administrative Funding
Total $145,000
The application includes $4,350 for County administrative expenses. The Office of Community
Grant Management is responsible for coordinating the application process along with managing
the grant including reporting, fiscal management, monitoring and ensuring compliance with all
regulations.
Board of County Commissioners of Washington County, Maryland
Agenda Report Form
FISCAL IMPACT: Provides $4,350 for County administrative expenses.
CONCURRENCES: Director, Office of Community Grant Management
ALTERNATIVES: Deny approval for submission of this request
ATTACHMENTS: N/A
AUDIO/VISUAL NEEDS: N/A