Maryland Agency Pipe Investment Averts Water Rescues

In 2008, a water main break caused River Road in Montgomery County, Maryland, to live up to its name. Now the district that runs the system is asking investors to help prevent future disasters.

The Washington Suburban Sanitation Commission, which serves Montgomery and Price George’s counties, is selling about $200 million in bonds tomorrow, mostly for projects such as monitoring water pipes and building sewerage facilities, said Chris Cullinan, acting chief financial officer.

Trapped motorists had to be rescued by boat in the 2008 incident, he said. Main breaks and environmental regulations to improve water quality in the Chesapeake Bay have compelled officials to invest in the facilities, he said by telephone from Laurel.

“The commission has been making some significant investments in its infrastructure, which it hadn’t for a number of years,” Cullinan said. “We’re beginning to proactively address these issues and get the systems to a more steady, solid footing.”

A portion of the proceeds would refund 2004 bonds to save $3.9 million in interest costs, he said. The commission had about $1.8 billion in bonds outstanding as of Dec. 31, according to deal documents. It expects to sell $3.2 billion in debt over the next six years for new water and sewer facilities, the documents show.

The district serves about 1.8 million people in the Washington-Baltimore metropolitan area, the fourth-largest in the U.S., Standard & Poor’s said. It gives the new securities a top AAA rating, saying the counties have a “very strong, broad and diverse economy.” The median household income in Montgomery County is 169 percent of the national average, the New York-based rating company said.

Water and sewer bonds are earning 4.8 percent this year, beating the $3.7 trillion municipal market’s 4.2 percent return, according to Standard & Poor’s Indexes.

To contact the reporter on this story: Romy Varghese in Philadelphia at rvarghese8@bloomberg.net

To contact the editors responsible for this story: Stephen Merelman at smerelman@bloomberg.net Mark Schoifet, Alan Goldstein

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