2007-03-15 / News

Jamestown's credit rating up

By Dotti Farrington

Moody's, a leading international provider of independent credit ratings and financial information, has increased its rating of Jamestown for town bonds to Aa3, Town Administrator Bruce Keiser announced at Monday's Town Council meeting. He said Jamestown is now one of nine communities in the state with such a high (Aa or better) rating.

The adjustment in the rating comes just in time for the sale of the $3 million bond for the new town hall, with an add-on of $300,000 for the architectural fee for the town hall design,

Taxpayers approved the town hall bond at the annual town meeting in 2006 and the architectural fees in 2005. Keiser said the $300,000 had not been used, but retained as part of the town's $3.2 million in undesignated fund balances. He said having the architectural fee in the package added to the factors Moody's reviewed that were "signs of financial strength."

The $3.3 million bond issue, listed as general obligation, is set for sale April 4. Bids were to be opened today. Keiser said he was expecting the interest rate to borrow the money to be about 4.5 percent.

Moody's previously rated the town as A1 when bonds for $5.87 million were sold in 2004 for general obligation. The new rating now applies to that account, as well as the new one and two others: general obligation bonds in 1987 and 1991.

In its report about the upgrade, Moody's Investors Service cited the town's solid financial position, continued growth in residential property values and below average debt burden.

Jamestown Finance Director Christina Collins explained that this rating upgrade reflects the town's commitment to maintaining healthy reserves, conservative budgeting practices, and prudent debt management. "Moody's believes the town will continue to enjoy a solid financial position given rising reserve levels primarily due to prudent fiscal management and conservative budgeting practices. The town has a history of stable financial performance, marked by more than four years of consecutive operating surpluses," she said.

The Aa3 rating represents an extraordinary achievement according to Keiser, "because it moves Jamestown into the desirable double A rating category. This in turn should result in lower interest rates when the town sells its town hall bonds," he said.

Moody's municipal ratings are opinions of the investment quality of issuers and issues in the US municipal and tax-exempt markets, according to Moody's. The ratings are based on analysis of factors relating to municipal finance: economy, debt, finances, and administration / management strategies. Each factor is evaluated individually and for its effect on other factors in the context of the municipality's ability to repay its debt, according to Moody's.

An Aa rating represents "very strong creditworthiness" and "judged to be of high quality and subject to very low credit risk." Moody's numerical modifier 3 to the alphabetic rating is the lowest of Aa category, and the modifier 1 was the highest in the A category. The top Moody's rating would be Aaa1.

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