Huntsville Earns “Straight A” Financial Report Card
Published on January 26, 2018
Standard & Poor’s Rating Services awarded Huntsville a rating of “AAA” and Moody’s Investors Service awarded a rating of “Aaa,” each company reaffirming their prior ratings for the 10 years since Mayor Tommy Battle has been in office.
Triple-A is the highest mark a city can achieve and are awarded to a minority of government entities in the nation. Less than one percent of 22,250 cities and counties receive the top ratings.
“I am proud of the work by our City employees and Council to maintain this distinction for a decade,” said Mayor Battle. “We have a plan to grow jobs, build schools, build roads, and manage our finances. Our report card – straight A’s – is a better report card than the State of Alabama and the United States government.”
The credit rating agencies cited Huntsville’s strengths to include stable finances with satisfactory reserve levels, above average wealth and low unemployment, a strong regional tax base and its position as an economic engine for northern Alabama.
“The City of Huntsville is among elite company when it comes to financial performance,” said Chip Cherry, CEO and president of the Huntsville Madison Chamber. “Securing a AAA credit rating is testimony to the strong underpinning of the economy of the Huntsville market. This financial strength positions us well for future economic growth.”
The credit ratings come in advance of the City’s plans to issue debt in early February valued at about $135 million. Of this amount, about $39 million will go toward capital projects (parks, greenways, roadways), $72 million for land purchases and construction of a railroad spur for the Toyota-Mazda project, $10 million for the Greenbrier Parkway, $7 million for a downtown parking garage, and $7 million for phase one improvements to the Von Braun Center.
“Investors are attracted to our municipal bonds because of our strong performance and credit worthiness,” said Peggy Sargent, Director of Finance for the City of Huntsville. “People want to be a part of Huntsville.”
Huntsville’s top credit score allows the municipality to take advantage of the lowest possible interest rates. The savings are significant. On the upcoming sale, Huntsville will save more than $2.7 million in interest versus a AA rating and more than $6.8 million in interest over an A rating.
Credit Rating Fast Facts*
I. There are more than 22,500 cities and counties in the United States
A. 3,500 carry Issuer Credit Ratings (ICRs) (15.5%).
B. 113 carry ratings of Aaa/AAA from both Moody’s and S&P.
II. The Ratings of the largest cities in Alabama are as follows (Moody’s/S&P)
A. Huntsville Aaa/AAA
B. Madison Aa2/AA+
C. Madison County Aa2/AA+
D. Birmingham Aa2/AA
E. Montgomery A1/AA
F. Mobile Aa2/AA-
G. Tuscaloosa Aa1/AA+
H. Dothan Aa2/AA
I. Hoover Aa1/AAA
III. State of Alabama
AA+/AA1
III. Series 2018 Warrants analysis (+/- $110 million)
Credit ratings assigned to debt help lenders evaluate the financial strength and creditworthiness of a borrower. Higher ratings result in lower interest costs.
Approximately $2.7M in interest savings vs a AA rating1
Approximately $6.8M in interest savings vs A rating1
*data courtesy of PFM Financial Advisors, LLC