Johnson County has again received a Triple-A credit rating from all three bond rating agencies – Fitch Ratings, Standard & Poor’s, and Moody’s Investor Services. Of the more than 3,000 counties in the nation, fewer than 30 receive Triple-A rating from all three agencies. The agencies examined Johnson County’s diverse tax base, financial policies, debt burden and long-range plans for continued fiscal health, economic strengths, and overall quality of life in establishing their ratings regarding the issuance and sale of $81 million in bonds in three transactions by Johnson County Government.
The bond ratings help determine the ease with which the county can borrow money and the interest rates it pays. The better the rating, the better terms it gets on its money.
“While Johnson County has had a Triple-A rating for several years, we never take it for granted,” Ed Eilert, chairman of the Johnson County Board of Commissioners, said. “It’s great to be in the top one percent of counties nationwide who are judged to be doing the right thing when it comes to developing sound fiscal policies, budgeting conservatively, and finding ways to do more with less.”
County Manager Hannes Zacharias agreed.
“We are always pleased to receive this highest designation, Triple-A, from all three of the national rating agencies. It affirms, through independent evaluation and judgment, that Johnson County Government is meeting and exceeding the highest standards established on behalf of our citizens,” he said. All three agencies viewed the county’s outlook as “stable” with a moderate debt burden that remains “manageable.”
Moody’s reported that the county’s tax base has resumed “modest growth” in the past two years after declines in full valuation in 2009 and 2010 and expects the trend to continue given the county’s significant role in the (Kansas City) regional economy.
“Despite recent reductions in reserves as well as further expected draw-downs over the next two years, historically prudent and forward-looking financial management point to the continuation of solid financial operations.”
Fitch Ratings commented that county officials have demonstrated “judicious financial management” driven by conservative budgeting and prudent formal financial policies.
“The county’s financial flexibility should remain strong even after planned operating deficits for the next several years and the county’s low tax rate provides additional flexibility.”
Standard & Poor’s indicated its top rating reflects a view on the county’s:
• Strong local economy, as demonstrated by a low unemployment rate;
• Extremely strong wealth levels and very strong income levels;
• Conservative and sophisticated financial management policies, supported by conservative management and established fiscal policies; and,
• Historically strong financial position, coupled with the maintenance of very strong reserve levels.
In its rating review, Standard & Poor’s also noted the county has “no funding interdependence with the federal government.”
On Thursday, the Board of County Commissioners approved the issuance of $37,350,000 in internal improvement bonds for 17 wastewater capital projects, including $25 million for construction of the Mill Creek Effluent Tunnel project in Shawnee, with a true interest rate of 2.36 percent. The winning bidder was Wells Fargo Bank, N.A.
The Board also authorized the issue and sale of $27,005,000 in internal improvement refunding bonds for refinancing bonds issued in 2005 for wastewater and county projects, resulting in net present cash flow savings of approximately $2,670,000. The bonds were sold to BMO Capital Markets with a true interest rate of 1.75 percent.
The same day, the Board, in its role as the Public Building Commission, approved the issuance of $16,635,000 in lease purchase revenue refunding bonds for 2005 wastewater capital projects with a true interest rate of 1.92 percent. The low bidder was Robert W. Baird & Co, Inc. Interest savings in the refunding transaction are estimated in excess of $1.4 million.
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