WOODSTOCK —Woodstock Mayor Donnie Henriques is pleased that Moody’s bond rating service has maintained the A1 rating for the city of Woodstock.
The city’s bond rating impacts its cost to borrow money.
“We were very pleased that they came up with that recommendation,” Henriques said. “We just worked hard to maintain our rating.”
The rating service said in the rating action July 25 that the city’s outlook remains negative, based on the trend of negative fund balance and limited liquidity.
Moody’s wrote in its summary rationale that the negative outlook is based on recent trends, “which are expected to improve following a change in management” that took place in 2012.
Woodstock’s Chief Financial Adviser Robert Porche said he is the change in management that Moody’s described, and said that city officials are “pleased with the ‘no change’ affirmation.”
“In light of the last two years’ economic climate, for us not to get downgraded is a good sign, so that’s why we’re happy with the affirmation of the A1 rating from Moody’s,” Porche said.
Porche said since the city made him chief financial adviser in 2012, the finance department and city manager have “worked diligently to clean up” audit issues from prior audits.
“One of those (audit issues) was that we had a negative fund balance, which means we spent more than we made throughout the life of the city,” Porche said. “We’re trying to clean that up to where we have reserves in the bank to weather any potential financial storms going forward.”
Moody’s wrote that to remove the “negative outlook” for the city and make the rating go up, Woodstock should have “continued improvement and stability of General Fund reserve levels,” and a “substantial increase in taxable value.”
The rating may go down if the city fails to report “positive General Fund balance in fiscal 2013,” has a “continued trend of negative reserve levels,” or “substantial declines in taxable value.”
Porche said Moody’s reviews the city’s bond rating every two years.
“(It) doesn’t affect the existing debt that the city has, it affects future bond issuances,” Porche said. “When the rating goes down we pay more interest, so by them maintaining the A1 rating, that way when we go to market and try and secure debt financing through a bond issue, our rates will be better than if they would’ve been downgraded.”