Bond upgrade could save Toledo $100,000 a year
7/17/2008The city of Toledo's new bond ratings from Standard & Poor's and Moody's could save as much as $100,000 a year in interest payments, according to city officials.
The bond ratings - which the financial firms use to rate the ability of the city to pay off its debt, and are the basis for the city's interest rates - were announced by Mayor Carty Finkbeiner during Tuesday night's City Council meeting.
Standard & Poor's raised Toledo's bond rating from A to A+. Moody's changed its outlook from A3 with a "negative outlook" to A3 with a "positive outlook."
During a news conference yesterday, Mr. Finkbeiner said the increases were "historic."
The city has not received a bond rating increase since 1997. Before then, the last rating bump was in 1954, Mr. Finkbeiner said.
He said the "gloomy" situation with the national economy made the increases all the more impressive.
"The nation and the city of Toledo are going through hell," Mr. Finkbeiner said.
"By the action of the administration and by council members, bond [rating agencies] felt that we had shown the stewardship to give us a boost in both of those bond ratings," the mayor said.
The bond ratings will allow the city to borrow money at a slightly lower interest rate.
John Sherburne, the city's finance director, said they could shave one-tenth of a percentage point off interest payments, which could mean between $20,000 and $100,000 a year.
Despite Toledo's increase, it is not among the highest-rated Ohio cities.
Akron, Dayton, Cleveland, Cincinnati, and Columbus all have higher bond ratings with Moody's. Columbus has an "Aaa" rating, the highest of Moody's classifications.
Standard & Poor's ratings showed that Canton and Dayton also carried an A+ rating. Akron has an AA- rating and Columbus has an AAA rating, while Youngstown has a BBB- rating.
Mr. Finkbeiner said the increases were because of the renewal of the city's income tax in March, cost-cutting, an increase in the city's bond fund, and a "diversification" of the economy away from manufacturing. He also said they showed the city's "intelligent, thoughtful budget-cutting" was working.
But Councilman Frank Szollosi - in a news release entitled "Mayor Grandstand or Mayor Tax and Spend?" - claimed the mayor had increased spending.
"In fact, it was over the strenuous objections of the administration and council 'leadership' that many of us took steps to rein in spending," Mr. Szollosi wrote.
Mr. Szollosi said spending has increased by double digits during Mr. Finkbeiner's years in office, and suggested the bond rating increases were mainly because of an increase in the garbage collection fee.
The new ratings will not affect the private development in the Marina District, according to Mr. Sherburne.
Contact Alex M. Parker at:
aparker@theblade.com
or 419-724-6107.