Johns Creek earns AAA bond rating

$40M parks bond has lowest rate



JOHNS CREEK, Ga. – Johns Creek will soon have $40 million to begin funding its first recreation and parks bond projects, and the icing on the cake was the city’s initial bond rating came in at the highest level of Aaa by Moody’s Investor Service and AAA by Standard & Poor’s.

The city’s financial adviser Todd Barnes with Raymond James & Associates told the City Council the good news at its work session Monday night that the interest rate will fall between 3.35 percent and 3.40 percent depending on the day the bid was received.

Over the life of the 30-year bond the difference in the city’s AAA bond rating and say an AA rating will save the city between $175,000 and $200,000.

Barnes said few cities are able to attain an AAA rating. It is unusual for a city to start at the top of the heap.

According to Moody’s, only 199 cities out of some 20,000 in the United States have its Aaa rating. Only 338 cities have S&P’s AAA rating.

“Most cities have to work their way up to that position,” Barnes said. “The concept of new cities in Georgia is something of a new phenomenon in Georgia – it’s only about 10 years. Sandy Springs received the Aaa rating from Moody’s and AA from Standard and Poor’s.”

Barnes credits a number of factors that “elevates” Johns Creek’s credit worthiness. Leading the way is the overall high wealth level of residents with a commensurate level in property values. The city has a strong economy and tax base with low debt levels.

“Like real estate, it’s all about local, local, local. Johns Creek is a desirable part of the county. People want to live here,” he said.

The city also does a lot of long-term finance modeling and practices with conservative budgeting and cash management.

“The city has shown it is very attuned to budgeting and has processes in place to monitor where the city’s finances are throughout the year,” he said. “All of that adds up to the highest bond rating.”

Mayor Mike Bodker said he was pleased at the news.

“These ratings are a direct reflection of 10 years of sound fiscal policy and planning which has been envisioned by our elected representatives and carefully implemented by our management and staff.”

Moody’s indicated that its rating reflects the city’s “ample reserve position and low fixed costs.” It also cited the city’s large tax base its healthy financial position and low debt.

S&P stated the city is well equipped to maintain its credit worthiness in a “stress scenario.” It also rated the city’s management as a strength coupled with its annual 10-year forecast of revenues and expenditures and its 5-year capital plan that identifies funding sources.

The city may authorize the purchase of the general obligation bonds up to $40 million at its pleasure to begin implementing its recreation and parks plan.

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