GARNER — Standard & Poor’s Rating Services bumped up Garner’s credit score, and that could produce savings quickly with the town set to accept bids on a bond sale within a week.
The credit ratings agency bumped the town’s overall credit rating from ‘AA’ to ‘AA+’ and also gave the town’s first round of borrowing a ‘AA+’ rating. The report on the agency’s rationale said S&P did not expect to change the rating within the next two years.
Next week, the town will accept interest-rate bids from lenders on $10 million in bonds, part of $35.7 million bond package approved by taxpayers in March.
“It’s difficult to quantify anything right now. It could give us a better rate when the bidders do place their bids on Dec. 10. It could potentially even increase the number of people who bid,” Garner Finance Director Emily Lucas said.
A mere 0.1 percent difference in rates can mean a six-figure difference in interest paid in the life of a 20-year loan. Rates have risen slightly over the past several months, but remain historically low.
The rating increase, according to an S&P report, stems from a stable-to-strong local and regional economy, the town’s liquidity and budget management, limited debt liabilities and strong institutional framework.
“The stable outlook reflects our expectation that the town will maintain its very strong operating flexibility. We believe the town’s conservative budgeting practices aided by strong management conditions will help to maintain strong budgetary performance,” the report said.
Accessibility to the Raleigh-area economy adds to the town’s financial stability, the report said.
The lone implicitly negative element of the rationale included mention that the town didn’t have a formal long-term financial plan. It described town income levels as “adequate” with per capita buying income at 89 percent of the U.S. average. Unemployment remains close to overall county rates, which is below state and national levels.
Specific praises included liquidity (Garner finished fiscal year 2013 with $21.3 million in reserves, or 86 percent of what it would take to operate the town for a year), and strong budgetary performance (surpluses over the last three years).
Planned development of a new Cabela’s and Drury Inn and a diversified tax base where top 10 taxpayers accounting for 12.2 percent of the assessed property value also received compliments.
The town expects a report from the other major credit rating agency, Moody’s, as early as this week.
Jahner: 919-829-4822; Twitter: @garnercleveland