Jeff Branscome writes about Spotsylvania County.
More on bond rating
Here is word for word a press release from the county government about the bond rating:
Following presentations to the three major credit rating agencies, Spotsylvania County has received an upgrade to its bond rating from Standard & Poor’s while maintaining its high bond ratings from Fitch and Moody’s:
- AA from Fitch – Very high credit quality; expectations of very low credit risk;
- Aa2 from Moody’s – High credit quality; very low credit risk; and
- AA+ from Standard & Poor’s – Differs from the highest-level obligations only in small degree; capacity to meet financial commitment on the obligation is very strong.
The agencies regarded the actions taken during FY 2008, FY 2009, and FY 2010 to mitigate falling revenues and maintain the fund balance reserve as significant strengths. Highlights from the rating agencies’ comments follow:
- “Spotsylvania County’s financial position is strong, characterized by solid reserve levels and flexible budgeting practices.”
- “Management has managed recent revenue shortfalls well, using both mid-year spending adjustments and relatively small fund balance draw-downs to maintain fiscal stability while also fulfilling commitments to capital and infrastructure investments.”
- “Long-term prospects for local economic expansion appear favorable, as management seeks to attract small and mid-size concerns, specifically targeting healthcare, technology and defense contracting.”
- Drivers for future ratings include:
– “The county’s continued compliance with sound reserve policy levels, despite potential operating pressures from the weakened economy and potential further AV declines;
– Continued recent expansion of the local economy and employment base;
– Stabilization of the county’s housing market.”
- “Spotsylvania’s financial position is expected to remain strong given sound reserve levels and timely tax rate increases.”
- “A commitment to maintain reserves at policy determined levels as demonstrated through mid-year budgetary adjustments also contributes to the county’s overall fiscal stability.”
- Regarding the FY 2011 budget: “Indicative of management’s prudent practices, the budget includes several million dollars in contingencies to protect against further revenue declines.”
- ”In 2007 the county set a goal of incrementally increasing pay-go capital to eventually appropriate between 3% and 5% of annual revenues. While achieving this level will likely take longer than originally planned, management remains committed to the goal and has budgeted 2011 pay-go at 1.7%.”
- “Moving forward, the county’s ability to maintain structural balance while keeping reserves above its policy thresholds will remain an important credit factor.”
Standard & Poor’s
- “The upgrade [from AA to AA+] is based on Standard & Poor’s view of the county’s consistently strong financial performance including the maintenance of strong unreserved balances despite some declines in economically sensitive revenue streams.”
- The rating reflects:
– “Expanding local economy, with access to additional employment centers throughout northern Virginia and Washington, D.C.;
– Historically below-average unemployment, which at 6.3% in 2010 remains favorable compared with state and national averages;
– Very strong resident income and per capita retail sales;
– Very diverse tax based, coupled with extremely strong property wealth indicators; and
– Strong and well-embedded financial management practices, contributing to the maintenance of healthy fund balance reserves.”
- “The stable outlook reflects our assessment of the county’s ongoing economic growth and development as well as access to the diverse economies of northern Virginia and Washington D.C. Furthermore, the county has successfully maintained a strong financial position while addressing its various capital needs. Despite its sizable capital improvement plan, we expect the county to maintain a manageable debt burden.”
On July 14, 2010, the County sold $17.1 million in General Obligation bonds to fund the remaining portions of the new Circuit Court and Public Safety buildings. Based on the County’s bond ratings and the current bond market, Spotsylvania secured an “all in” interest rate of 3.16% on the bonds.
The bond rating agencies’ reports and excerpts from the information presented to the rating agencies will be posted soon on the County’s website.