Sandy City receives rare AAA bond rating
Nov 04, 2019 02:49PM
By Justin Adams
A better bond rating for Sandy City means lots of cost savings for the city. (Pixabay)
By Justin Adams | [email protected]
Just like any regular person who wants to take out a loan, a municipal government can get a better deal on the terms of the loan if they’re in a better financial position. A city’s financial situation is measured by their bond rating, and Sandy City just scored the highest bond rating possible.
The city recently was upgraded to a AAA bond rating by Standard & Poors, one of the three big credit-rating agencies. It was an upgrade from Sandy’s previous rating of AA+, which the city had maintained since 1999, according to Brian Kelley, the city’s finance director.
“It’s similar to anyone’s credit rating. You build credit, and when you go to get a loan or any kind of financing, your credit score has a big impact on the interest rates you can get,” explained Kelley.
The process to get the bond rating upgraded included putting together a presentation about the city’s financial position as well as an interview with S&P representatives. The company then took a few weeks to analyze the city’s data, after which they came back with the AAA rating.
Kelley said he believes a few factors may have played into the city getting the upgraded rating. First, the economy as a whole being strong helps to ensure that the city’s sources of income are reliable. Second, Kelley said new criteria being used by S&P allows them to consider not only the financial situation of the city itself, but also the region surrounding it. Since Utah’s economy is even stronger than the national average, that helped Sandy achieve its AAA rating.
Sandy is just the sixth city in Utah to get the highest possible bond rating, and is one of 63 municipalities in the country to do so, out of a total of 851 that were assessed by S&P, according to Kelley.
The improved rating means Sandy City can finance bonds or loans at lower interest rates. “When you’re doing multimillion-dollar projects, it adds up to a lot of money in interest savings,” Kelley said.
That could prove especially important for Sandy, considering the city has multiple capital project needs, such as the possibility of rebuilding the parks and recreation building or Alta Canyon Recreation Center. The possibility of issuing a bond for such projects was discussed during the council’s budget process this year, and will likely be another big focus next year.