Purchase of Municipal Notes by Cuyahoga County allows Three Local Cities to Fund Infrastructure Improvements
Media contact: Miranda Kortan: (216) 698-2546; firstname.lastname@example.org
CUYAHOGA COUNTY, OH – With the COVID-19 outbreak and the loss of tax revenue, some municipalities are finding it difficult to pay for important city services like police, fire, and trash collection. Cuyahoga County continues to look for ways to help our communities, especially now during the COVID-19 crisis.
“There is a little-known tool we have that can lower costs for communities, by the County purchasing debt of the city,” said County Executive Armond Budish. “It is easier to understand with an example. Let’s say a city issued notes for a project in the past, like roads or streetscapes. Typically, when they come due, the city would reissue a note on the market and pay off the old note. But this year, with the COVID crisis, the big institutions that buy these notes were not buying – no one was buying. That means, without the County, a city would either have to go into their reserves to pay off the debt, or default. Either situation would be a disaster.”
“But using this investment tool, the County was able to buy the new note from the city. It’s a win-win—the city avoids default, and the County makes a market interest rate. Recently we used this tool to help the cities of Euclid, Seven Hills, and Broadview Heights. And we can use this to help other cities as well,” Budish added.
Cuyahoga County recently purchased four municipal notes from the following communities:
- City of Euclid - $1,000,000 Note for Roads, Street-Scaping, and Equipment; backed by the Ohio State Treasurer; rated by Standard & Poor’s
- City of Seven Hills - $7,810,000 Notes for Refunding of Road and Street Improvements; backed by Seven Hill’s GO rating of Aa3
- City of Broadview Heights - $750,000 Note for Refunding for cash flow management and public improvements; backed by Broadview Height’s GO rating of Aa2.
The County was able to utilize its existing portfolio to step into a situation where market conditions limited the funding options that these communities could utilize due to the COVID-19 outbreak.
Statehouse Representative Dave Greenspan has been instrumental to the success of this program. One of the first pieces of legislation he introduced in the General Assembly was House Bill 251 to increase the maturity of bonds eligible for investing interim money.
“Based on my experience as a City Councilmember and a County Councilmember, I understand the challenges and opportunities our local partners face in meeting the needs of their constituents,” Greenspan said. “Two years ago, during my first term as a Member of the Ohio House of Representatives, I was successful in authoring legislation, that became law, that supported my belief that the strength of our state is based on the strength of our local partners – this bill does just that.”
As Chair of the Development Committee for Cuyahoga County Council, and as a member of the County’s Investment Committee, County Councilman Jack Schron provided crucial support for the successful launch of this program.