City's Bond Rating Gets Upgraded By Moody's
First time in nearly a decade
The city has received an upgrade to its bond rating from Moody’s Ratings, one of the world’s largest credit-rating agencies. Moody’s recently raised the city’s rating from Aa2 to Aa1, citing Corvallis’ “robust financial position and growing local economy.”
The upgrade marks the first increase in our bond rating in nearly a decade. Look we have a “moody” photo of the courthouse:
The higher rating reflects relatively low debt levels, diversified revenue sources, and a history of keeping fees and revenues aligned with costs. It’s kind of like your credit score. The agency noted that property tax revenue has continued to grow as both Oregon State University and the local economy attract students, residents, and businesses.
This improved rating could have a meaningful impact on future projects. Higher-rated bonds generally qualify for lower interest rates, reducing borrowing costs when cities finance major infrastructure and capital improvements (think the new civic campus).
City officials say the upgrade could save taxpayers hundreds of thousands of dollars over the life of future bond issuances while also attracting a larger pool of investors.
“This bond ratings increase is a huge vote of confidence in the direction that Corvallis is headed as a government organization,” said Finance Director James Inglis.
“Moody’s has recognized our thoughtful, future-focused financial decisions and policies, and the result is a rating improvement that will save Corvallis taxpayers money for years to come.”
The City Council continues discussions about funding new municipal facilities and prepares for budget challenges anticipated in the coming biennium. The upgraded rating applies to bonds expected to be issued for the new Park Maintenance Facility, which is scheduled to break ground in Avery Park this month.
No… the upgrade does not immediately change taxes or utility bills, like your water bill. It can reduce the cost of borrowing for major public projects like the newly proposed civic campus, lowering long-term expenses that would be passed on to taxpayers.
City officials say the new Aa1 rating is an acknowledgment of years of financial planning and prudent budget management.
It should be noted that while Moody's upgrade is a positive change… credit ratings are not infallible. Remember the movie “The Big Short,” when Moody's assigned AAA ratings to Mortgage-Backed Securities. Those investments collapsed when homeowners defaulted on their loans, contributing to a global financial crisis.
Ratings agencies face conflicts of interest because the organizations issuing bonds often pay for the ratings themselves. Corvallis Aa1 rating means a strong financial position today, but ratings should be viewed as only one indicator of financial health… not a guarantee of future performance.
That will be more up to the city and future financial planning.
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