Posted Online: Dec. 11, 2012, 6:07 pm
RI issues nearly $4M in bonds for infrastructure work, refinancing
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By Eric Timmons, email@example.com
The city of Rock Island has issued $3.89 million in bonds to financestreet and other infrastructure improvements and to refinance some of the city's old debt.
The city secured an interest rate of 2.2 percent on the bonds, which will be paid off over 20 years. They bring the city's outstanding general obligation debt to $38 million.
Moody's Investor Services assigned the city an Aa2 credit rating ahead of the bond sale, which Mayor Dennis Pauley said helped secure a low interest rate. An Aa2 rating is the third best available and indicates that Moody's regards Rock Island as a very low credit risk.
"This positive bond rating reflects our commitment to do what is needed to maintain the city's financial strength," a statement from City Manager Thomas Thomas said.
Money from the bond sale will be used to pay for $1.5 million in public infrastructure improvements at Ridgewood Road Sustainable Business Park. The bond sale also will finance a $430,000 project to reconstruct 44th Street from 41st Avenue to Blackhawk Road and the reconstruction of 37th Avenue, east of 44th Street for $195,000.
The remainder of the bond issue will be used to service outstanding debt from previous bond sales at a lower interest rate, saving the city $44,000, according to Rock Island's finance director Cindy Parchert.
A Moody's report said the Aa2 rating for Rock Island "reflects the city's relatively stable tax base in the Quad-Cities metropolitan region and diverse tax base."
The Moody's report said the city had "sound financial operations with healthy reserves despite revenue pressures and above-average yet manageable debt burden."
Challenges to the city's strong debt rating include below-average wealth indices in Rock Island, declining population and a dependence on "economically sensitive revenue sources," the Moody's report noted.
The Aa2 rating gives Rock Island a stronger credit rating than Rock Island County, which was downgraded from Aa2 to Aa3 in August by Moody's. The city of Moline was assigned an Aa2 rating in July and last December, Moody's assigned an Aa3 credit rating to East Moline.
Investors bid on bond offers by municipalities, and those with the highest credit rating typically win the lowest interest rate. Municipalities usually request a credit rating before a bond sale to make their debt easier to sell.