The City of Neosho has again received an “A” credit rating, the third-highest possible score, from Standard & Poor's financial services.
The City of Neosho has again received an "A" credit rating, the third-highest possible score, from Standard & Poor's financial services.
This is the second consecutive year the city has received the rating, which was given for the city's 2013 special obligation refunding bonds.
According to Standard & Poor's, an "A" credit rating means the city has a "strong capacity to meet financial commitments," but is "somewhat susceptible to adverse economic conditions and changes in circumstances."
Troy Royer, Neosho City Manager, said the rating is another positive step forward for Neosho.
"It just shows that the city is in stable condition and to me, it shows how much better we are doing to have a second year in a row where we actually have the opportunity to refund [certificates of participation] when they were callable," Royer said. "It shows for a second year in a row an independent, world-renowned agency out there can see that Neosho is advancing financially and as such, has given us this rating."
On Tuesday, the Neosho City Council voted on first reading to approve an ordinance to issue $3,195,000 in special obligation refunding bonds for the purpose of refunding now-callable certificates of participation issued in 2007.
The 2007 bonds were issued for capital projects, including the South Street overpass, the Howard Bush extension, paving of La-Z-Boy Parkway and the Highway 59 improvement projects.
Royer said the city is expected to save upwards of $400,000 over the life of the bonds, ending in 2027.
"These were another set that did become callable to allow us to consider refunding them to recapture the lower interest rates in the market right now," Royer said. "That's the same thing that we did last year, too. To take advantage of the market right now in obtaining the lower interest rate without extending the term of the debt, that's important because a lot of past refinances extended the term."
According to Standard & Poor's report, the city received the "A" rating because of the stable local economy, access to the Joplin metro area, strong reserves and a low debt burden.
"In our opinion, finances have improved significantly since ending fiscal 2009 with a negative general fund balance," the report states. "Officials attributed the deficit to weak sales tax revenue, high-cost capital projects, and poor record keeping. Neosho, now led by a new management team, has improved its finances through a variety of initiatives, including the implementation of a property tax effective for fiscal 2011, the establishment of separate funds for certain sales tax revenue to cover specific costs, and strict spending controls."
In June 2012, the city council voted to refinance debt from certificates of participation issued in 2003. Council voted to refund the COPs when they became callable and issued $730,000 in new certificates of participation.
That refinancing released as collateral 284 acres of city land, commonly known as the Betz-Bond property, while collateral for the new debt series became the city's public works facility on Nelson Avenue.