A rating company recently took the unusual step of upgrading Oak Harbor’s outstanding bond rating, according to Oak Harbor City Administrator Doug Merriman.
Merriman explained that the bond-rating companies review outstanding bond or debt ratings to see if the initial assurance ratings should be adjusted, but ratings usually do not change over the life of a bond.
The Standards and Poors rating committee, however, met last week and agreed to upgrade the city’s bond rating from AA- to AA, which means the city is on strong fiscal footing.
“A bond rating is a grade given to a city’s bond issue that rates its investment quality, the fiscal soundness reflected in a city’s financial statements, and the history of a city’s financial management practices,” Merriman wrote in an email.
The AA rating means that the city of Oak Harbor has “very strong creditworthiness.”
If the city were to issue general obligation bonds today, the AA rating would convert to a lower interest rate than the previous AA- rating, Merriman explained. The AA rating puts the city in the upper group of cities its size.
The highest rating is AAA.
Factors that will likely prevent the city from achieving the highest rating are the smaller population, the city’s lower-than-average per-capita income and the city’s lower-than-average property values. He said very few cities except the very large ones, like Seattle, ever achieve the AAA rating, said Merriman.
“Truly, this is the result of a great deal of hard work over the years by staff combined with strong support by the current city council, and past city councils, to budget with long-term goals in mind to get us to this strong fiscal point,” he said.