Standard and Poor’s Financial Services, an independent rating agency that consists of financial and business experts, advises investors on how safe an investment in an organization will be. They gave investors a green light for investment in Asheville by assigning the city a AAA rating, the highest possible. Upgrading the rating from AA+ to AAA is meant to indicate that the city government is a trustworthy and safe public borrower of the highest standard. The City of Asheville can now expect lower interest rates when seeking loans for public projects and other investments.
Announcement from the City of Asheville office of Communications and Public Engagement:
The City of Asheville will be able to borrow money at a better rate than most other cities, due largely to a stable financial outlook and a growing, well-diversified economy coupled with strong financial management and reserves.
Standard & Poor’s, which provides credit ratings and other financial analysis, recently upgraded the City’s general obligation bonds from AA+ to AAA, and Certificates of Participation from AA- to AA+. The upgrade reflects Standard & Poor’s opinion of the City’s strong budgetary performance supported by very strong management through the recent recession.
“The increase to a triple-A bond rating is confirmation of the city’s sound fiscal policies and professional management. And for our community, this will result in the ability to more cost effectively provide improvements that add to our quality of life,” said Mayor Esther Manheimer.
“This upgrade to triple-A demonstrates the rating agency’s confidence in the City of Asheville’s financial management and long-term sustainability, and reflects Council’s commitment to a fiscally prudent and sound budget process,” said City Manager Gary Jackson. “Staff’s commitment to maximizing the impact of every taxpayer dollar plays a critical role in the stability that allowed Asheville to achieve this rating upgrade.”
The Standard & Poor summary said it considered “Asheville’s economy strong,” based on its standing as a regional center for trade, manufacturing and health care-related services for WNC. The report also cited the multiple projects in development in the City, including hotels, an office and retail complex as well as the redevelopment of the River Arts District.
“By earning a triple-A rating the City of Asheville has accomplished many things, most notably ‘very strong’ rating characteristics assigned, by S&P, on every criteria controlled by the City. We know of no other City with all ‘very strong’ characteristics,” said Douglas Carter, president and managing director of DEC Associates Inc., the Charlotte firm that serves as financial advisor to the City of Asheville. “This rating will move Asheville into a very select group of borrowers offering many benefits, including maximum access to financial markets, increased investor interest and lower interest cost.”
The S&P report said the City was in a very strong debt position, including contingent liability. It cited a City debt policy that requires debt service not to exceed 15% of total government operating revenue. In addition, the City is poised to retire at least 50% of its existing debt within 10 years, allowing the City the capacity to implement a long-term Capital Improvement Program funded primarily with new debt.
“The foresight to provide a significant new capital program by City Council points specifically to the confidence of both Council and the City Manager Gary Jackson in meeting growth needs,” said Carter. “Financial management has been especially noteworthy and the efforts of the City’s CFO Barbara Whitehorn and Finance Department staff has provided broad and expanding financial planning, strong financial policies and ongoing communication with rating analysts.”