City again receives high credit ratings, helping save more than $4.5 million in the coming years
The City has again been assigned some of the highest credit ratings of cities in the country from all three major rating agencies. As a result of the high ratings, the City was able to sell bonds totaling $119.4 million at an interest rate of 1.45 percent. Some of these bonds ($33.29 million) refunded previously issued bonds, leading to future interest savings of $4.55 million. High bond ratings and positive comments from the ratings agencies enable the City to save taxpayer dollars by issuing bonds and borrowing funds at the lowest possible interest rates.
The City sells bonds periodically to finance capital projects, including sewer and water system improvements, street paving, lighting and traffic signal improvements, public facilities, etc. Refunding bonds work similarly to the way a person might refinance a home, meaning the City refunds bonds it sold years ago by selling new bonds at lower interest rates.
Fitch Ratings and Standard and Poor’s ratings services have again assigned the City of Minneapolis AAA ratings, the highest ratings possible. Moody’s affirmed the City’s Aa1 rating, which is its second-highest rating, placing Minneapolis among the top-rated cities and local districts in the country. Less than 10 percent of jurisdictions and just a handful of major cities have an Aa1 rating or higher from Moody’s.
In giving Minneapolis a top rating, Fitch Ratings noted the City of Minneapolis’ “favorable growth prospects, broad revenue-raising powers and solid budgetary flexibility.” Moody’s recognized Minneapolis for having “well-managed financial operations with healthy reserve levels.” Standard and Poor’s notes its view of the City's very strong economy, management and budgetary flexibility. All three rating agencies had many positive comments about Minneapolis’ diverse tax base and financial practices.
In the last several years, City leaders have taken significant steps to streamline City services, find efficiencies and address financial challenges. Long-term financial planning has allowed the City to maintain strong financial reserves and assures that ongoing expenses are supported by ongoing revenue. City leaders have also reduced outstanding debt significantly in the last several years.
Published Oct 18, 2016