October 20th, 2011 Moody’s and Standard and Poor’s announced last month that the City of Omaha will keep its AAA bond rating, which is expected to save millions in interest on Omaha’s General Obligation Bonds. Mayor Jim Suttle and City Finance Director, Pam Spaccarotella met with both bond rating agencies in Chicago, hoping to reaffirm the City’s bond rating amidst federal government downgrades and an unresolved fire contract. Mayor Suttle has now received official reports from both Moody’s and Standard and Poor’s and is posting them on his website today.
Moody’s Report for City of Omaha
Standard and Poors Report for City of Omaha
“The decision by the bond rating agencies means we are among only a handful of comparable cities retaining their AAA rating with both bond rating companies,” said Mayor Suttle. “Companies such as Moody’s and Standard and Poors look at several aspects of how a city manages its finances in determining a city’s credit rating and our budget decisions over the last two years reflect solid financial stability.”
The City is currently forecasting a surplus of approximately $2.95 million for the 2011 budget year. This surplus is largely a result of increased revenues and decreased expenditures, both of which affirm the city’s commitment to fiscal responsibility. In the past few years, the city has faced a significant budgetary shortfall immediately following first quarter operations that have required spending reductions and employment layoffs and/or hiring freezes. Both Moody’s and S&P recognized the improved fiscal operations of the city’s budget.
Over the past two years the City has had the political will to increase property taxes only when absolutely necessary in order to ensure funds are available to make principal and interest payments. In Cities across the country, property valuations have seen double digit declines, while Omaha’s valuations reflect a strong economic base according to agency ratings.
The City’s willingness to annex was received favorably by both bond agencies. The City of Omaha is not land locked, and continues to grow through annexation. “In 2010, the City increased property valuations by $43 million, and in 2011, our property valuations continued to increase by $477 million,” said City Finance Director Pam Spaccarotella. “The City of Omaha is a growing, vibrant community and our ability and willingness to annex shows that. We have also demonstrated that we can look ahead, set priorities and rise above the dependence of outside assistance to keep our community solvent.”
The AAA ratings received by the City will enable the City to issue general obligation bonds at record low interest rates. Initial indications show that interest rate to be less than 3%.
