WarrenJune 15, 2012
Warren keeps ‘excellent’ bond rating
By Brian Louwers
C & G Staff Writer
WARREN — Officials tasked with running the city’s finances said they were pleased to learn that Standard & Poor’s has re-affirmed the city’s existing “excellent” bond rating following a meeting with representatives of the financial services company.
In a report assessing Warren’s recent capital-improvement bonds, and long-term and underlying ratings on the city’s existing debt, Standard & Poor’s assigned a continued rating of AA for the city.
The company described the city’s outlook as “stable,” listed a “moderate overall debt burden,” and cited “maintenance of very strong (fund) reserves despite recent and projected drawdowns,” in its report dated May 24.
“What that translates to, because of our rating, we went out for a $15.6 million water project. We were able to secure a rate lower than 3.9 percent over a 25-year period,” Warren City Controller Rob Maleszyk said. “Without that excellent bond rating, our interest costs would have been much higher.”
Maleszyk said officials with Mayor Jim Fouts’ administration met with representatives of Standard & Poor’s on May 24 and took them on a tour of various facilities in the city.
Standard & Poor’s also reviewed the city’s finances, and Maleszyk said they were impressed with how the city has managed its reserve fund balance.
The city has used cash from its rainy day fund to balance the books in recent years, as revenue from property taxes dropped sharply, leaving administrators struggling to make ends meet.
Both Fouts and Maleszyk said policies enacted over the last four years helped the city retain its current bond rating.
But Maleszyk added that administration officials realize maintaining a healthy fund balance of approximately 10-15 percent of expenditures is key to keeping the city in good financial standing.
“We have committed to them that by 2014 we will need to balance the budget without financial reserves,” Maleszyk said.
To that end, city administrators pushing for a 4.9-mill public safety millage in August said it would enable the city to maintain its current level of police and fire protection, while preserving other jobs and services across the city.
If the millage fails, Fouts said, deep cuts would need to be made to keep the city on track financially.
The mayor was obviously pleased with the decision to re-affirm the city’s bond rating.
Warren shares that rating with such cities as Lansing and Livonia, while Sterling Heights was rated AA+.
The city of Troy was given a rating of AAA, among the highest in the state, a rating shared with Oakland and Macomb counties.
“I’m extremely excited about the bond rating,” Fouts said. “The bond rating means that Warren will be able to get low interest rates on our bonds. That will save the taxpayers a large amount of money. We’re going to be able to do more with less, and that’s the bottom line.”
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