Rochester retains AAA bond rating from Standard & Poor’s

By: Mary Beth Almond | Rochester Post | Published August 25, 2020

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ROCHESTER — Standard & Poor’s Global Ratings has reaffirmed the city of Rochester’s AAA long-term rating amidst the coronavirus pandemic.

S&P Global Ratings credit analyst Bobby Otter said the rating reflects S&P’s view that the city will maintain its “very strong economic, budgetary flexibility and liquidity profile.”

“Our expectation is that the city’s good, proactive management will make the necessary adjustments to maintain balanced general fund operations, despite probable revenue decreases resulting from the COVID-19 pandemic,” Otter said in a statement.

Rochester City Manager Blaine Wing said the rating really underlines the city as having “a very strong financial stature.”

“The city again received a AAA bond rating; this is very exciting news, especially during a pandemic,” he said.

Wing said the city expects to issue up to a $9 million pension obligation bond in the fall of 2020, which will reduce Rochester’s net pension liability as the city expects the bond will result in savings resulting from the debt payment being less than the current pension contribution schedule. He said bonding the pension liability will allow the city to take advantage of its AAA bond rating and the historically low interest rates, giving the city stability and a set payment schedule for the next 14 years.

Officials said Rochester is well positioned for its pension obligation with it currently being 62.4% funded. The bond amount will bring the city up to 95% funded, which is the legal cap allowed for bonding.

City Finance Director/Treasurer Anthony Moggio said that during this time of economic uncertainty, the city of Rochester should take great pride in being reaffirmed by S&P with the highest rating of AAA. He explained that the independent rating looks at Rochester holistically, taking into account what is happening locally, regionally and nationally. For context, in 2019, he said, only 6% of municipalities in Michigan achieved the coveted AAA rating.

“Rochester is known as an innovative best-in-class municipality that utilizes strong financial practices with multiyear budgeting to align itself to the community’s vision. This rating will allow the city of Rochester to get the lowest possible interest rate, which then results in significant savings to the taxpayers,” Moggio said in a statement.

Rochester Mayor Stuart Bikson said it’s a great honor for Rochester to receive the AAA rating from S&P.  

“The City Council, working with city administration, has demonstrated strong fiscal management in these difficult economic times. The city has delivered to the residents of Rochester balanced budgets, low taxes and excellent city services. Rochester will continue to provide strong fiscal management that will provide for the future of our great city,” he said in a statement.

For more information, call the city of Rochester at (248) 733-3700 or visit www.ci.rochester.mi.us.

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