City of Snoqualmie bond rating gets big upgrade
October 2, 2008 · Updated 9:19 AM
Members of the Snoqualmie City Council clinked glasses of sparkling cider at a recent meeting to celebrate a big upgrade to the city's bond rating, which could save the city tens of thousands of dollars per year.
In a rare event, Standard & Poor's upgraded the bond rating for the city of Snoqualmie from A- to A+, a two-step upgrade. It is unique for Standard & Poor's to award such a steep upgrade, especially for a city the size of Snoqualmie.
The city requested the review by Standard & Poor's as a recognition that it has turned around from being a city with numerous financial challenges four years ago, to currently having strong capital improvement and long-term capital planning; sound investment and debt management policies; significant reserves; and a promising financial forecast founded on an extensive econometric model, according to city spokeswoman Joan Pliego. These factors and many more were the basis for the upgraded rating.
"We were rated 'strong' - the top category for Standard & Poor's assessments - on seven out of seven factors of financial management," said Harry Oestreich, the city's finance officer. "This says a lot for our community. We provided extensive documentation and detailed answers to dozens of questions. And we showed them how we built our financial forecast based on 75 econometric factors related to the city of Snoqualmie. The model looks 20 years out into our financial future."
The major benefit of the rating upgrade to the city of Snoqualmie is that it improves the ability of the city to market its bonds to financial institutions, providing lower interest rates and lower bond insurance premiums.
The A+ rating applies to Snoqualmie's general obligation bonds, bonds that will support city projects such as construction of a new city hall and possible construction of a community center, as well as providing for a better market for the city's 2002 bonds that were used to build the new Snoqualmie Fire Station on Snoqualmie Parkway.
On Jan. 28, 2008, the city of Snoqualmie issued $7 million worth of utility revenue bonds to the bond market. While the utility bonds are rated an A by Standard & Poor's, bond brokers will likely take into consideration the general obligation bond rating of A+ as it is a further indication of the city's strength as a whole. These bonds support the city by providing matching funds for the recently awarded federal Economic Development Administration grant to modernize and improve the utility and street infrastructure in historic Snoqualmie, as well as to accomplish several necessary improvements to the utility system.
"We've made major changes to our financial policies," Oestreich said. "Our city council is working with our staff and business community to develop our economy so that we can be better supported by sales tax instead of one-time revenue coming from the residential and commercial development on Snoqualmie Ridge. One hundred percent of our money is in investments that earn interest. There are so many facets of our financial standing that have improved and continue to improve. I felt a rating upgrade was deserved and so we made the request. But I didn't expect a two-step upgrade. That really is exceptional."
Other Washington state cities with an A+ rating from Standard & Poor's include Issaquah, Maple Valley, Vancouver, Lynnwood, Renton, Spokane, Bonney Lake and Poulsbo. All cities except Poulsbo in the A+ category are larger than Snoqualmie, which has a population of about 9,200.
To learn more about Snoqualmie's bond rating increase or the financial information used for the rating upgrade, contact Oestreich at (425) 888-1555.
Standard & Poor's, a division of The McGraw-Hill Companies (NYSE:MHP), is the world's foremost provider of financial market intelligence, including independent credit ratings, indices, risk evaluation, investment research and data.