City of Sylvania's bond rating soars to superior, mayor says
8/25/2010Sylvania received a superior bond rating as a result of a credit review conducted this summer in anticipation of a $7 million short-term debt sale to finance recent public works in the city, Mayor Craig Stough has announced.
The AA+ bond rating the city received from Standard & Poor's marks the second upgrade in 14 years for Sylvania and ties the city with Sylvania Township for the highest bond rating in Lucas County, the mayor said.
The rating is one step below the highest score Standard & Poor's offers. Mr. Stough said Sylvania's rating missed the top only because of the city's relatively small size and its location in economically depressed northwest Ohio.
"We are fortunate in Sylvania to have maintained a stronger economic position than many of our neighbors," the mayor wrote in announcing the rating review. "Tax receipts have remained nearly level, allowing Sylvania to avoid the problems of falling revenues, raising taxes, and/or reducing services."
The city recently sold 12-month notes to TD Securities to finance $3.25 million in road and bridge improvements made during 2009 and $3.7 million in street work done this year. The notes carry a net interest rate of 0.5 percent.
A better bond rating reduces the interest rate the city, and by extension its taxpayers, pay to borrow money, Mayor Stough observed. Using 12-month notes for the most recent debt sale allows Sylvania to take advantage of historically low interest rates to finance needed construction without spending down city reserves, increasing taxes, or assessing property owners.
City officials plan to reevaluate financing costs next year to determine if the construction debt should continue to be carried with short-term notes or transferred to a long-term bond sale.
- David Patch