2019.01.22 WS Packet - Laserfiche WebLink

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5 KPI: Bond Rating AA Bond Rating or Better RESULTS The City currently has a AA Bond Rating INTERPRETATION Additional savings could be obtained if the City were awarded a AAA bond rating. The graph above illustrates an additional interest savings of .13% had the City refunded the $20,450,000 2006A G.O. TIF Bonds with a A AA rating. This would have yielded a savings of $230,000 in today’s dollars over the payment life of the refunded bond. RESPONSE Striving to obtain a AAA bond rating will require a City-wide effort. The City must continue with efforts to communicate and update its financial condition to Council, maintain an annual capital plan with actual and projected costs and most importantly keep a strong fund balance reserve of all governmental funds. The City will need to create and adhere to a debt policy, show a budget surplus every year for all governmental funds, create a multi-year financial plan to be monitored and identify future issues and solutions where possible. City staff will contact S&P and/or Moody’s to determine actionable steps to increasing the City’s bond rating to AA+ or AAA. The City issued advanced refunding bonds of $8,705,000 in January of 2016, at which time S&P continued to hold the City’s rating at AA. No external debt issuance is needed until early 2019 to help finance $3,070,000 of the 2018 & 2019 street reconstruction projects. Interest rate savings between a AA to AAA rating is projected at $6,757. The spreads between the highest quality bonds in the AA+ and AAA categories is narrow, generally ranging from about .03% to ./05%. Interest cost savings are more significant for larger borrowing amount and/or bonds with longer terms as shown above. $5,550,000.00 $5,600,000.00 $5,650,000.00 $5,700,000.00 $5,750,000.00 $5,800,000.00 $5,850,000.00 $5,900,000.00 $5,950,000.00 $6,000,000.00 $6,050,000.00 Interest Cost $6,023,019.58 $5,736,531.25 Total Interest Payments for 2006A G.O. TIF Bonds AA AAA