Credit rating agency gives Maumee good news
11/12/2008Maumee is feeling the effects of a swooning economy along with other communities. Its revenues are flat, and it's adjusting to last year's closing of Ford Stamping and the loss of $900,000 in payroll taxes.
But last week, a major credit rating agency gave the city a shot in the arm.
Moody's Investors Service gave Maumee a Aa3 rating, which means bonds the city plans to auction Tuesday will be high investment grade and incur lower interest costs over their 20-year life.
Moody's, in its report, presents an optimistic picture.
It found that Maumee's high rating reflects "sound financial operations" and said it expected the city to maintain this position.
The rating agency also noted that Maumee's debt was manageable and was expected to remain this way.
Proceeds from the $4.85 million bond sale will pay off short-term debt and provide permanent financing for infrastructure improvements Maumee made outside the Shops at Fallen Timbers.
The improvements include new sewers and waterlines, the widening of Russell Road, and an upgrade of Monclova Road.
Interest and principal payments on the tax exempt, general obligation bonds will be made through a tax increment financing agreement General Growth Properties, the owner of the shopping center, has with Maumee.
Under the agreement, additional taxes owned on the enhanced value of the property resulting from the improvements will be used to pay off the bonds.
City Finance Director David Hazard said given the blue chip rating, he's optimistic securities dealers will buy the bonds at a reasonable interest cost to the city.
Mr. Hazard noted that the global credit crunch has loosened up a bit.
"We feel the auction is our best option at this point. The market has settled down from what we saw at the end of September and in mid-October. We're confident we'll find a buyer," he explained.
The auction will be conducted on a Web site used by securities dealers. The dealer offering the lowest interest cost to the city will get the bonds, he said.