News Column

Iowa City keeps top bond rating

April 30, 2014

By Gregg Hennigan, The Gazette, Cedar Rapids, Iowa

April 30--IOWA CITY -- The city of Iowa City has once again maintained its top bond rating.

Moody's Investors Service on Tuesday assigned a Aaa rating, the highest it gives, to $12 million in general obligation bonds Iowa City plans to sale next week.

City officials said it's the 38th straight year Iowa City has had the top rating.

The rating is considered a sign of financial health, like a credit score for a person. The Aaa rating will save Iowa City and its taxpayers money by getting the city better interest rates on its loans.

"I am extremely proud that Moody's has reaffirmed Iowa City's Aaa bond rating," City Manager Tom Markus said in a news release. "The City Council has demonstrated great leadership in setting policies, adopting budgets and making infrastructure and service-related decisions that both meet community needs and exhibit a commitment to the highest level of financial stewardship."

The news comes at a time some local municipalities have seen their bond ratings decrease. That includes the city of Cedar Rapids, which Moody's last week dropped one notch after being at the Aaa level for more than four decades.

Iowa City, in its release, said it and West Des Moines are the only Aaa-rated communities in Iowa. Moody's could not immediately confirm that but did say that out of about 8,300 cities, counties and school districts it rates in the United States, between 350 and 400 have Aaa ratings.

Moody's in January changed its methodology to place greater weight on local governments' debt and pension obligations and less on economic factors.

Moody's said Iowa City's strengths include a stable economy bolstered by the presence of the University of Iowa and healthy financial operations with substantial additional liquidity.

The agency said challenges for the city include a moderately sized tax base and slightly above average debt and pension liabilities.

Markus, in the news release, warned that pension obligations and the property tax reform approved by state lawmakers last year will "increase the financial pressures on our community."

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Source: Gazette (Cedar Rapids, IA)

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