The City of Heath received a very positive review and rating upgrade from Standard and Poor’s, one of the nation’s leading bond rating agencies.
Standard & Poor’s raised its long-term and underlying ratings on the City’s existing General Obligation (GO) debt to “AA+” from “AA”. At the same time, Standard & Poor’s assigned its “AA+” long-term rating to the district’s series 2014 combination tax and limited surplus revenue Certificates of Obligation (CO). GO and CO bonds are tools that cities generally employ to obtain funding for capital projects.
“This is the highest rating the City has ever held and a tremendous accomplishment for a community of your size,” Jim Sabonis of First Southwest, the City’s financial advisor, told the Heath City Council during its March 25 meeting. “You will achieve the most efficient and lowest cost possible when issuing bonds to fund projects included in the City’s Capital Improvement Plan.”
According to Sabonis, Standard & Poor’s cited many positive factors as being exceptionally strong in its assessment of the City including:
- The economy
- Community demographics
- Budgetary flexibility, with a healthy general fund reserve for 2014
- Budgetary performance expected in fiscal 2014
- Liquidity, providing very strong cash levels to cover both debt service and expenditures
- Management, with good financial policies
- Institutional framework
First Southwest will proceed with issuing $14.4 million in CO bonds as planned to fund projects in the Capital Improvement Plan adopted by City Council this year. However, with the upgraded credit rating, the anticipated interest rate improved from 4.04% to 3.3% and will result in approximately $100,000 in interest savings the first year.
“We are very pleased that Heath is recognized by national credit rating agencies as a financially well-managed community,” said Mayor Liechty. “The high quality of our community, our detailed capital planning program and an aggressive approach to addressing growth clearly strengthened our ability to obtain excellent financing terms.”
Mayor Liechty thanked his colleagues on the City Council for their commitment to moving the Capital Improvement Plan forward and the City staff for their exceptional financial management of the City.
Visit the City’s Capital Improvement Plan page for more information.