The county is one of only a small number of counties nationwide that enjoy a AAA rating from both Standard & Poor’s and Moody’s, the two largest bond rating firms.
The county’s rating was reviewed because the county Housing and Redevelopment Authority (WCHRA) is refinancing a portion of its existing debt. The original bonds, sold in 2002 and 2003, were used to finance affordable housing in the county. The refinancing allows for a reduction in the interest rate paid on the bonds, which will save approximately $200,000 a year and shorten the payback period by two years. The amount of final savings will not be known until the bonds are sold Sept. 19, but the estimated total savings are expected to be around $5.4 million.
The intended payment source is WCHRA rental revenues. The county would only be obligated to pay on the bonds if the WCHRA is unable to.
The S&P ratings service noted that the county’s finances remain very strong, with adequate fund balances. The county’s preliminary 2013 operating budget does not include any levy increase and is structurally balanced.
In its statement affirming the county’s rating, S&P noted the county’s participation in a deep and diverse Minneapolis-St. Paul economic area, its strong household income and extremely strong market value per capita, and its moderate overall debt burden. S&P considers the county’s financial and managerial practices “strong” under its financial management assessment methodology, indicating practices are strong, well embedded, and likely sustainable.
The county maintains adopted policies in all key areas of the assessment, such as debt management, fund balance, capital improvement plan and budget. The agency also noted the county’s prudent handling of its budget, finishing each year with a general fund surplus, in spite of significant state aid reductions.
The stable outlook reflects S&P’s opinion that the rating will not change within the outlook’s two-year period given the view that management will likely maintain its very strong finances and balanced operations.