Evening star. [volume] (Washington, D.C.) 1854-1972, 1957-01-18
Broker Tells Fairfax
To Double Tax Base
Plan Offered
To Reduce Bond
Interest Rate

GAL AdA OOuLlty ldSL nlgnC was
told of a possible way to improve
its credit rating and save hun
dredS of thousands of dollars
interest on bond issues.
The county recently attracted
only one bid on a SO million
school bond issue that sold at
the high interest rate of 4.74 per
cent. There was speculation at
the time that the States segre-
cation laws that could cut of
State funds to integrated
schools were keeping bidders
away and increasing the inter-
est.
Mark A. Smith, a member Of
the Richmond bond brokerage
firm of F. w. Craigie & Co., said
at meeting of the Federation
of Citizens Associations that by
increasing assessed property
values the county could put it.
self in a better financial posi-
ton.
! Fairfax County now assesses
real estate for tax purposes at
approximately SO per cent Of
market value. Mr.. Smith said
that by doubling the percentage
it would mean that the county
could show prospective bond
buyers a tax base double the
present figure Of some $500
million.
This could be done without
any increased burden on tax
payers by cutting the tax rate to
half the present $500 figure, he
said.
Has SAG Million Debt
Fairfax County's bonded in
debtedness of S46 million now is
around IL per cent of its tax.
able property values. BY doubl.
ing the assessment it would auto.
matically reduce the bonded in
debtedness to 6 per cent and
present better financial picture
to bond buyers and those who
establish credit ratings, Mr..
Smith said.
The county's credit rating
BAA- is the lowest acceptable
to commercial banks which are
large buyers of municipal bonds,
said another member of the
panel, Frank E. Morris. research
director Of the Investment
Bankers Association of America.
The two speakers laid part of
Fairfax County's low rating to
the county's phenomenal growth.
The speakers differed on how
much effect the new State laws
to preserve segregation had on
the situation.
Mr.. Smith said the State law
which permits the Governor to
withhold funds from an inte-
grated school system cost the
county S375,000 in interest pay
mentS over the life of the issue.
He said at least per cent Of
the interest could be attributed
to the State law.
Bad Conditions Widespread
Mr.. Morris said the bulk of the
high rate was due to general bad
market conditions over the coun-
try.
I He said less than one-half Of
one per cent could be attributed
to other factors, primarily the
|integration issue.
Mr.. Smiths firm has asked
Gov. Stanley to call a special
session of the General Assem4
bly, to clarity" the financial
situation in Virginia.
Hills Lory, chairman of the
county school board, and a
member of the panel, said the
School Board is considering hir-
ing a financial expert to advise
it on bond issues. He said the
matter would be taken up at a
meeting tonight.
Mr.. Lory also said that bond
buyers are confused about what
is going on in Virginia. He
quoted q New York bank Official
as saying that Fairfax County
would not have gotten even the
one bid on its last bond sale
If a Fairfax delegation had not
talked to prospective buyers.
Bankers Suggestions
The chairman also said New
York bank officials with whom
he conferred Wednesday indi-
Gated the county could do better
in the bond market If it DIVERSE
fed its tax base by attracting in
Idustry, if it better co-ordinates
the sale of school bonds with
other bonds, and if it sells small
issues rather than large ones.
The latter point indicates that
the board may reconsider its plan
to sell an $8-million issue in the
spring and instead break the
issue into two offerings.
DR.. Gerard Brannan. fedora
ton fiscal affairs committee
chairman, said the county can
expect to spend S35 million in
the next five years for new
school construction. He said OPP
Grating costs could double the
present tax rate unless another
financial solution is. found.
He questioned whether Fair
fax could continue to borrow
money at high interest rates.
He said the county may have to
consider financing some new
schools from current revenues.
In other business. the fedora
ton asked for a Joint meeting Of
Northern Virginia governing
bodies, highway officials and
Federal roads officials to con-
slider steps to relieve the conges-
ton on the Virginia highway APP
lDroaches To WASHINGTON II