City Hall emphasizes the good news after Fitch put this town's spending spree in persepctive . . . Take a look:
City general obligation and appropriation-backed bond ratings affirmed
Moody’s Investors Service, Standard and Poor’s Ratings Services and Fitch Ratings have affirmed the ratings for the City of Kansas City, Mo.’s outstanding general obligation bonds at Aa2, AA, and AA, respectively.
While Moody’s and Standard and Poor’s affirmed the ratings with a stable outlook, Fitch revised its outlook for the City’s credit to negative. The ratings also apply to the upcoming issuance of general obligation bonds to be priced on March 8, 2012, in the maximum amount of $217.375 million. The proceeds of the upcoming bond sale will be used for basic infrastructure, zoo exhibit renovation and expansion, construction of a new East Patrol police station and crime lab, construction of a new North Patrol police station, and the purchase of police helicopters. In addition, the City plans to refund its outstanding Series 2003F and Series 2004F general obligation bonds for present value savings.
At the same time, Moody’s, Standard and Poor’s and Fitch affirmed the ratings on the City’s appropriation-backed debt at A1, AA-, and A+, respectively. The ratings also apply to the upcoming issuance of special obligation bonds to be priced on March 15, 2012, in the maximum amount of $76 million. The bonds will be issued in two series; Series 2012A will be tax-exempt and Series 2012B will be taxable. The proceeds of the Series 2012A bonds will be used to acquire and install a new revenue collection system for the City as well as to fund infrastructure improvements. The proceeds of the Series 2012B bonds will be used to finance real estate acquisition and blight remediation for the 63rd and Prospect redevelopment project, refinance a portion of a variable rate note and fulfill a contractual obligation related to construction of downtown residential housing. The Series 2012B bonds will also be used to refund three outstanding bond issues for present value savings.
“This is very good news. All three of the rating agencies affirmed our high ratings and both Moody’s and Standard and Poor’s gave the City a stable outlook. These ratings will assure that we get the best interest rates as we seek to prudently make needed investments throughout the City. We will take seriously the recommendations made by the agencies to strengthen our already strong financial footing as we make decisions on how to best serve the taxpayers of Kansas City. While the credit agencies have all affirmed our high credit rating, I intend on pushing our City to be even better stewards of our residents’ hard-earned tax dollars,” said Mayor Sly James.
Media inquiries and requests for information can be addressed to City Treasurer Tammy Queen, Finance Department, at 816-513-1024.
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Kansas City bonds always sell like AAA securities. That was true even during the municipal bond crisis in the early 1970's, when NYC defaulted.
ReplyDeleteThis great condition is due to a wonderful Controller for the City of Kansas City during the 1960's and l970's. He just wouldn't let the spendthrifts have their way. I think I remember his name as Jack Urie, and he had a national reputation as one of the best municipal finance experts in the country.
It is just too bad that we dont have him around anymore. He did more this city's financial reputation than any other person at the time.
Don't worry, Marcuson is in charge of the city's finances now.
ReplyDeleteWhat could possibly go wrong?
The S & P really? How much info do you need to accept how badly they have been discredited? This just means that KC isn't paying them for a favorable rating like Wall Street does.
ReplyDeleteEury and Kipp are good guys. Very fiscally conservative, and that's part of the problem. Didn't spend any money on fixing infrastructure when they should have and now we have to pay more to catch-up.
ReplyDeleteKipp did nothing but cover for Hallmark when the Hyatt collapsed, not exactly a good guy!
ReplyDeleteThese credit ratings groups are more known for getting things wrong than getting them right.
ReplyDeleteLook, the credit ratings are important form the standpoint of the cost to issue the debt.
ReplyDeleteIf KC needs money and it has to pay a single percentage point extra due to losing a rating, that adds up to hundreds of millions of dollars in extra interest. And who gets that interest? The bond holders. And who buys those bonds? Rich 1% types mostly. Think Kauffman. Think Kemper.
So they win no matter what happens, but they win ever bigger if KC gets a lower rating.
"While the credit agencies have all affirmed our high credit rating, I intend on pushing our City to be even better stewards of our residents’ hard-earned tax dollars,” said Mayor Sly James.
Even better than what? I mean, the City budget cover is a promo for the All-Star game. A single event and it is the entire focus?
But the (rating companies) outlook is going negative. Why? Because people are leaving, the tax base is shrinking, crime is on the increase, unfunded pension liabilities are adding up, and our infrastructure is in a desperate condition. Add to that our train-wreck of a city council and what you have is a recipe for further credit deterioration and further urban blight and more crime and less tax revenue.
Fail.
J. W. Helkenberg