City moving forward with bond projects
Agencies affirm City’s excellent bond ratings
The City of Round Rock is starting to work on $71 million in bond projects, the first round of the $123.6 million approved by voters in a November bond election.
Rating agencies Moody’s and Standard and Poor’s both affirmed last month the City’s excellent debt ratings. Moody’s rates the City at Aa1 (PDF) and S&P rates it AA+ (PDF). Both ratings are the second highest possible from each agency.
Bond proceeds will be used for park and trail improvements, library facilities, new fire stations and a public safety training facility. The Round Rock City Council has already approved design contracts for three parks projects – design of the Heritage Trail West, Multipurpose Complex and Soccer Complex improvements at Old Settlers Park, and the expansion of the Rock ’N River Family Aquatic Center.
The interest rate on this first issuance of bonds will be 3.97 percent – which is below the 4.35 percent projected by the City prior to the election. The $71 million in first issuance proceeds were received earlier this month. Second and third bond issuances are planned for 2016 and 2018.
Moody’s stated its rating “reflects stable growth in the city's large tax base, as well as solid financial operations and cash reserve levels, prudent management practices, and a manageable debt burden.” It also noted “adherence to formal management and debt policy” and “growth in sales tax collections.”
Among the factors noted by S&P in affirming its rating:
- Strong economy
- Very strong budgetary flexibility
- Very strong liquidity providing very strong cash levels to cover both debt service and expenditures
- Strong management with strong financial policies
Said Round Rock Mayor Alan McGraw: “These stellar ratings are important for two reasons. First and foremost, they translate into lower interest rates and that means less burden on our property taxpayers. Second, they tell the world that Round Rock is a well-managed city that has taken great care of our finances.”
Moody’s noted “the city's prudent management practices have positively impacted historically solid financial operations. We anticipate stable financial performance and the maintenance of healthy cash reserves moving forward.”
S&P cited the City’s decreased reliance on one major business.
“While Dell Inc. has historically been an anchor for the local economy, in recent years the city's economy has continued to diversify through extensive expansion of its medical facilities and higher-education campuses,” the S&P report stated.
It continued, “Recent development includes a new Bass Pro Shop (set to open in 2015, if not sooner), ClearCorrect LLC (a leading manufacturer of clear aligners) relocating its corporate headquarters and manufacturing facilities to the city, and Round Rock Sports Center (recently opened).”
Posted: Monday, March 17, 2014