Scottsdale credit rating continues at the highest level

The city of Scottsdale’s General Obligation debt is rated AAA according to three separate agencies, making the city one of just 30 in the United States to earn the distinction.

A recently-completed credit analysis by Moody’s Investor Service affirmed the rating. With that result in hand, the city of Scottsdale has maintained the highest possible score from all three rating agencies (Moody’s, Standard & Poor’s, and Fitch Ratings) since 2001.

Having the highest rated General Obligation debt means Scottsdale can borrow money at very low interest rates, saving taxpayers millions over the life of loans.

"Scottsdale has a history of sound financial management, as our 17-year run atop the credit ratings attests,” said Mayor W.J. “Jim” Lane. “We are a community with high standards, and we manage our financial resources wisely to achieve the best outcomes for our residents. I believe we are on very solid financial footing and it is encouraging to know that the rating agencies agree."

What the rating agencies say

Moody’s credited Scottsdale’s strong financial position to prudent financial management, an affluent tax base, and manageable debt, bolstered by the overall strength of the Valley’s economy.

Their report stated that Scottsdale’s finances are “healthy, characterized by trends of structural balance and healthy reserves despite dependence on economically-sensitive revenues.”

“Prudent financial management began decades ago in Scottsdale. Following up best management practices with sound financial policies adopted by City Council has allowed Scottsdale to attain the highest debt rating on its general obligation debt and maintain it,” said Chief Financial Officer Jeff Nichols.

The city’s finances are regularly evaluated by these outside experts; the results of those evaluations are published and used by mutual funds and other investors.

Understanding city debt

The city borrows money for a variety of long-term needs, a common practice that balances the annual financial impact on residents with building and maintaining the infrastructure required to provide city services and a high quality of life.

In the current fiscal year, the city will make debt payments of about $85.5 million. About 23 percent of that ($20 million) is payment for land purchases and improvements in Scottsdale’s McDowell Sonoran Preserve using voter-approved sales taxes dedicated to the preserve. 

Another 23 percent ($20.7 million) comes from rates and fees paid by users of the city’s enterprise operations (water and sewer customers and airport users). 

The city’s General Obligation debt comprises 31 percent ($25.8 million) of the total and goes to repay bonds approved by voters and issued to finance capital projects and improvements like parks, streets and fire stations.

The balance of the debt payment is repaid with a variety of revenue sources depending on the types of bonds issued; the most common sources are sales tax, hotel bed tax and self-assessments from Community Facilities Districts.

 

Learn more about the city’s finances and budget here.

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