Grand Forks won a favorable bond rating from a New York-based financial firm this week, in a move touted as a likely means to cheaper credit for roughly $27 million in funding for local projects.
Moody’s Investors Service announced that Grand Forks received a “Aa2” rating on two sets of bonds that are expected to be authorized Monday by the City Council, including about $23 million worth for local special assessment projects — like street development and repair, and underground utilities — and another $3.8 million for operations and upgrades at the Grand Forks landfill.
Moody’s considers the rating “excellent,” according to company documents, on a scale that ranges from “Aaa”, which is “exceptional,” to “Ca” or lower, which is “extremely poor.” The rating is thus touted by city leaders as a highly favorable advertisement of the city’s financial position.
“(It’s) is important to us because it means our bonds are looked favorably on — we would expect to be attractive to bidders on those bonds and draw the most favorable rates,” city Finance Director Maureen Storstad said.
Storstad said that, with these new bonds, the city’s “general obligation” debt comes to about $112.9 million. That doesn’t count other types of bond debt that total about $144 million.
“The city’s sizeable $4.8 billion tax base is likely to continue upon its growth trajectory given strong valuation trends, ongoing development, and a growing population,” an extended report provided by Moody’s states. “The city’s tax base is heavily characterized by agriculture and agri-business, which can be sensitive to the effects of economic fluctuations. However, its tax base and economy has remained exceptionally robust.”
A separate, corporate release points out that the rating could be improved by lowering “debt and pension burdens” or growing the local tax base and economy. It also warns that a credit downgrade could come for the opposite reasons — or for “declines in fund balance or liquidity.”
“It would seem to be very good news,” said City Council Vice President Ken Vein. “It usually (indicates) how well the finance department and the city works.”
The news comes on the heels of revenue bond rating downgrade for Altru Health System, which received a Baa2 from Moody’s earlier this year, which indicates “good” trending toward “fair.”