Perrysburg credit score bumped up PDF Print E-mail
Written by ALEX ASPACHER Sentinel Staff Writer   
Monday, 23 December 2013 10:18
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PERRYSBURG - Don't expect a sudden windfall or a tax reduction, but a bump in the city's credit rating announced last week has officials counting their financial blessings.
Perrysburg's long- and short-term credit ratings, established by Standard & Poor's as AA- in 2008, were boosted to AA+, a two-step increase Administrator Bridgette Kabat called "unbelievable" at last week's city council meeting.
"In 18 years (working) in the public, I have never been in an entity that's experienced a jump like that. It's usually a big struggle to upgrade," she later said in an interview.
The ratings agency's analysis indicates that in the past few years, the city has reduced its debt, built a reserve fund and maintained policies and practices that limit financial risks.
"The stable outlook reflects our view of the city's consistent financial performance and underlying economy benefiting from strong management," Standard & Poor's stated in a summary of the adjustment. 
"That's a real testament to the council and administration we've had in place here for a number of years," Kabat added. "They've held strong convictions on budgeting practices and putting away funds for a reserve fund."
The benefits are difficult to quantify, but Kabat said a financial adviser indicated the two-step rating increase could be worth a better interest rate of up to .25 percent when issuing future debt. The appearance of more financial security could also make Perrysburg more marketable to prospective businesses.
"That's one of the things companies look at," said Dave Creps, the city's finance director.
A big part of the rating increase is the result of an effort to pay off the city's general fund debt, according to Creps. Before a targeted effort to pay it off, debt was listed at $5.14 million in 2009. That money was used to construct buildings, improve parks and make other infrastructure upgrades over time. Payments reduced the debt to $3.35 million the next year and eliminated the obligations by the end of 2011.
The next step was to begin placing money in a "rainy day fund," so officials for several years funded it with 5 percent of the previous year's expenditures, the maximum amount allowed by Ohio Revised Code, Creps said.
That fund now stands at about $1.7 million, and while nothing has yet been budgeted for 2014, Creps said he's "cautiously optimistic" that the maximum funds, or about $900,000, can be squirreled away again.
"Over the past five years, we've gone from a position of having a bunch of debt on the books to having no debt and having a reserve balance," Creps said. "Ratings companies like to see that."
Last Updated on Monday, 23 December 2013 10:27
 

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