Fairfax County Bonds

Like most municipalities in the United States, Fairfax County occasionally issues bonds to pay for certain improvements in the county, such as the construction of schools, libraries, parks, and public safety facilities.

A bond is an instrument of indebtedess. That is, the county borrows money by selling a series of bonds and promises to pay back the money it gets from the sale plus interest. It can then use the money it gets from the sale for various projects. The payments for the bonds Fairfax County issues come mostly from local tax revenues.

Bond Types
Fairfax County generally offers two types of bonds for sale: cash bonds and refunding bonds. Cash bonds are bonds which are sold for cash, which is then immediately used. Refunding bonds are bonds which are sold to pay off existing bonds. Cash bonds in Fairfax County are usually the "A" series of bonds, while refunding bonds are typically the "B" series.

In addition, the county sometimes sells bond anticipation notes (BANs). These are short-term interest-bearing securities which are sold in anticipation of a future bond sale. When the bond sale is completed, the proceeds are used to pay off the BANs.

Bond Referendums
The issuance of bonds must be approved by the voters of Fairfax County, since it is the money from their taxes will be used to repay the bonds. This is done by a bond referendum, which is an election where the voters are asked if the Fairfax County Board of Supervisors may take on the debt of a bond issue for a specific set of projects.

Simply because a bond issue has been authorized by voters does not mean that it will take place immediately. The county may wait until the money is actually needed for a given project or series of projects, or they may wait until they can get a lower, more favorable interest rate.

However, the permission to borrow money granted by the voters is time-limited by a "sunset rule" to eight years from the date of voter approval. If the county does not issue bonds by that time, a new referendum must be approved by the voters.

Bond Ratings
How much interest the county has to pay is partially influenced by the county's bond ratings, which are issued by Standard and Poor's Corporation, Moody's Investors Service and Fitch Ratings. Since 1975, Fairfax County's rating from Moody's has been Aaa. In 1978, Standard and Poor's rated the county AAA, and Fitch rated the county as AAA in 1997. These ratings are the highest that each company offers, so the county is able to pay less interest on the money it borrows in a bond sale.