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City bond rating improves, net value $1.3M in savings




With the city in the midst of acquiring new municipal bonds to fund infrastructure needs, Fairview City Manager Scott Collins shared some good news with the City Commission during last Thursday’s work session as it relates to the city’s financial health.

Collins confirmed he received news from the bond rating agency that the City of Fairview received a one-step jump from a AA- to a AA bond rating. The bond rating is used to determine investment risk and interest rates for financing government projects.

With the 2015 bond issue, the city had a bond rating of A which Collins said was obtained through a purchase of a favorable rating by prepaying the risk of default. In 2017, the city implemented a new financial plan that including rebuilding city reserves and making necessary budget cuts.

In 2019, the bond rating agency Standard & Poor responded without prompting from the city to bump the city’s bond rating from insured A to AA-. “We knew we were on the right track,” said Collins.

The new AA bond rating means a huge savings to the city. The big difference for the city was a half percent in interest rate.

“We dropped from 2.75 percent interest to 2.2 percent interest. The net value in that to the city is $38,000 a year in cash flow and $1.3 million in total interest savings over the life of the bond,” stated Collins.

“We’re spending today’s dollars tomorrow, not tomorrow’s dollars tomorrow.

Collins said to get that bond rating is “pretty incredible” in four years. However, he noted, “We’re not done.” Collins said he is striving to achieve a AAA bond rating for the city in the coming years.

The city commission approved the bond issue on October 21.

According to Collins, it is a 30-year bond that will to finance $9,750,000 in capital projects across the city.

Those projects include:

  • Road projects: Improvements to Horn Tavern Road, Northwest Highway, Chester Road, and other smaller road improvements.
  • $600,000 for the Treehouse Playground at Bowie Nature Park rebuild.
  • $400,000 for a police firearms training facility and public safety training facility.
  • $325,000 refinance of existing debt.

The city also recently refinanced the city’s 2015 bond issue. Collins advised, “These issuances will result in interest rate and cash savings to the city from the 2015 bond and much needed infrastructure investments within the City of Fairview.”

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