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Farmingtonís bond rating improvedPosted: 5/23/03 by Aaron Tinklenberg Reconstructing Main Street in downtown Farmington just got about $400,000 cheaper. Citing the cityís ìconservative fiscal management,î Moodyís Investors Service upgraded Farmingtonís bond rating from Baa1 to A3. The upgrade came just in time to affect a $3.74 million bond issue for the Main Street reconstruction project. Moodyís provides independent assessments of the creditworthiness public institutions. The rating system ranges from Aaa as the highest or safest investment rating, to C as the lowest. Originally, the city projected an interest rate of 4.32 percent on the bond sale based on its Baa1 rating. However, the city received a low bid of 3.32 percent, in large part due to the Moodyís upgrade, according to Financial Director Robin Roland. With interest rates a full percentage point lower than expected, Roland said the city will pay $406,000 less over the life of the 15-year bonds. That translates into an annual savings of about $38,000 which the city will not need to levy from residents. The improved rating should also affect future bond issues for projects including Ash Street reconstruction and a possible new City Hall. Farmingtonís bond rating had been Baa1 since the late 1980s. Though Roland had said she didnít expect it to change, a long and detailed discussion with a Moodyís representative convinced the company to raise the rating. A statement released by Moodyís gave particular praise to Farmingtonís growing reserve fund, which is at $2.4 million or about 42 percent of the cityís total general fund revenues. The statement also complimented Farmingtonís efforts to levy less the maximum amount allowed by the state, and its decision to prepare for local government aid cuts by budgeting for a $300,000 surplus. Aaron Tinklenberg is at farmington.thisweek@ecm-inc.com. -- Check out this week's newspaper for more details. © Thisweek Newspapers |
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