Wednesday, October 27th, 2010
Celina's new credit rating to save city $40,000
By William Kincaid
CELINA - The city has acquired a better than expected credit rating, safety service director Rick Bachelor announced Monday night.
Earlier this month council members agreed to roll several debt issues into one long-term bond of $3.33 million, which recently sold. City auditor Emily Stewart said she thought the city would receive an interest rate of 3.45 percent.
However, the A-1 rating - equal to Mercer County and Lima - resulted in a lower than expected interest rate of 3.359 percent, Stewart reported. The city anticipated an A-2 rating.
Moody's Investors Service assigned an A-1 rating to the city's recent debt of $3.33 million in addition to the outstanding maturities of two series of the city's previously-issued general obligation debt worth $2.9 million.
The better rating means the city will spend $40,000 less than expected on the recent bond transaction.
Because the city is being proactive with its finances and has a reduction plan in place if the forthcoming income tax levy fails, it was awarded the rating, Stewart said.
"If the request is not approved, expenditure reductions will be implemented to prevent further deterioration in the city's finances," the Moody's report states. "The detailed list of expenditure reductions includes reducing up to 20 public safety positions, as well as reducing street maintenance and snow removal services."
Moody's believes the city's financial position will improve in the long term, but reliance on volatile income tax collections will remain a source of fiscal pressure for the city, the report said.
"The city of Celina's debt levels should remain affordable due to a rapid amortization rate and a lack of future borrowing plans," the report states.
Celina resident Don Kohnen asked Monday night about the city's total debt. Stewart said it is between $16 and $17 million.