Merriam leaders are celebrating today after receiving word from ratings agency S&P Global that the city has been upgraded to “AAA” status ahead of the issuance of more than $20 million in general obligation bonds to finance its new community and aquatic center.
S&P’s issuance of a “AAA” rating, its highest, for the city means Merriam will face lower interest rate costs for the upcoming bond issue, which should translate into thousands of dollars in reduced costs to the city and its taxpayers.
“We are extremely pleased to receive the ‘AAA’ bond rating,” said Mayor Ken Sissom. “It’s an accreditation of what we do on a daily basis. It confirms we are financially healthy, able to pay back debts, and have great financial management.”
Merriam last issued bonds in 2012, at which time a different ratings agency, Moody’s Investor Service, gave the city an “Aa2” rating. In its ratings report this month, S&P credited Merriam with strong management and budgetary flexibility. From the report:
The rating reflects our opinion of the city’s:
- Strong economy, with access to a broad and diverse metropolitan statistical area (MSA);
- Very strong management, with “strong” financial policies and practices under our Financial Management Assessment methodology;
- Strong budgetary performance, with a slight operating surplus in the general fund and an operating surplus at the total governmental fund level in fiscal 2016;
- Very strong budgetary flexibility, with an available fund balance in fiscal 2016 of 44% of operating expenditures;
- Very strong liquidity, with total government available cash at 136.6% of total governmental fund expenditures and 24.2x governmental debt service, and access to external liquidity we consider strong;
- Strong debt and contingent liability position, with debt service carrying charges at 5.6% of expenditures and net direct debt that is 101.6% of total governmental fund revenue, as well as rapid amortization, with all debt scheduled to be retired in 10 years; and
- Strong institutional framework score.
The 1/4-percent sales tax approved by Merriam voters last fall to finance the $30 million community and aquatic center project went into effect Jan. 1. Staff anticipate the city will issue the bonds in the coming months, with an anticipated groundbreaking late this summer.