April 7, 2008
Contact: Pat Dodds, Public Affairs Officer, (480) 312-2336
Scottsdale bonds again achieve highest possible ratings
Three major bond rating agencies have reaffirmed the highest possible ratings for Scottsdale’s general obligation bonds, and one of the agencies has upgraded ratings for another variety of bonds used for land purchases in the McDowell Sonoran Preserve.
Scottsdale had requested the ratings reviews from the agencies -- Moody’s, Standard and Poor’s and Fitch -- in preparation for bond sales to be finalized in May. The city is planning to sell $120 million in voter-approved general obligation bonds, mainly for capital projects such as public facilities and roads. About $20 million will fund land acquisitions in the McDowell Sonoran Preserve.
Scottsdale also is planning to sell about $110 million worth of Municipal Property Corporation bonds to pay for water and sewer projects.
The agencies said their high ratings reflect the overall credit strengths of the city. These include a substantial and growing economic base, a long trend of strong financial performance, exemplary fiscal management, favorable debt profile, the city's well-established record of carefully monitoring revenues and expenditures, implementing timely budget adjustments and reducing pay-as-you-go capital spending as necessary.
The agencies acknowledged that the city’s debt levels are above average, but noted a number of favorable trends, including the city’s high wealth levels, rapid debt amortization and narrowing timeframe until the city is built out and shifts from a period of expansion to ongoing maintenance.
Moody’s decided to review the city’s Preserve Revenue Bonds in conjunction with Scottsdale’s plans to issue new bonds for preservation. The agency upgraded the revenue bonds from Aa2 to Aa3 based on improved preserve debt ratios and the city’s strong credit characteristics.
General obligation bonds will be paid through property taxes, the preserve portion will be funded by a dedicated preserve sales tax, and the MPC bonds will be paid through water and sewer development fees and user fees. Even with the expected sale of the general obligation bonds in May, the city is predicting that its combined property tax rate – 79 cents per $100 of assessed valuation – will remain at the same level for the next budget year.