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City of Auburn receives AA bond rating from Standard and Poor’s
Standard and Poor’s informed the City of Auburn on Tuesday that the City has received a AA bond rating.
Standard & Poor’s credit ratings express the agency’s opinion about the ability and willingness of an issuer, such as a corporation or state or city government, to meet its financial obligations in full and on time.
It was noted by an S&P analyst that the City’s good wealth levels, location in the Puget Sound area and financial management made for the strong rating. Also mentioned was that although there has been a drop in sales tax revenue, the City has done well in maintaining a strong fund balance and just overall has “a very strong credit.” A rating of AA differs from the highest rated obligation of AAA only to a small degree.
The rating will provide a higher marketability of bonds and in turn a lower interest rate as investors will be willing to bid for the bonds carrying a lower interest rate. The estimated savings to the City attributable to the rating, after the tax credit on the Build America Bonds, is $1.5 million over the 30 year life of the bonds.
Currently, the City is issuing bonds to purchase the leased space in the One Main St. building in the amount of $22.5 million, and to construct utility infrastructure, streetscapes and open plaza in the downtown core. Bond proceeds for the downtown project are $7.2 million. The annual savings to the City for buying the space in the One Main Building in lieu of continuing the lease is approximately $385,000 over the next 30 years.