Standard & Poor?s Finan?cial Services, a company that publishes financial research and analysis on stocks and bonds, notified the city of Hillsboro last week that it has upgraded its bond rating from an A- to an ?A with a stable outlook.?
A city?s bond rating affects the interest rate it must pay when it takes out bonds for capital improvement projects such as streets and other infrastructure.
?For an organization our size to make progress like that, incrementally, is a great thing?at least in my view,? City Administrator Larry Paine said of the new rating.
?We?ve been working on trying to do all of the various requirements that come our way from the financial environment to make the city a sound business operation,? he added.
?Something like this demonstrates that the rest of the world is recognizing we?re making progress.?
Paine said Hillsboro?s financial situation was evaluated as part of a corporate-wide review being conducted by S&P.
?We didn?t ask for it,? Paine said. ?They just said, ?Hey, we?re starting this, give us this information.??
Financial management practices by city government is a key component S&P considers. Paine said council actions such as developing a balanced budget, staying within the budget and having a plan for building cash reserves strengthen a city?s financial situation.
But the review also takes into account factors beyond city government?s control, he added.
?It?s a multitude of things that come along and all kind of roll up together,? Paine said. ?It recognizes the economy we?re going through, it recognizes the fact that our businesses have some stability to them.?
Paine also mentioned economic factors such as Hillsboro being selected by a Fortune 500 company to open a local store, a growing likelihood of seeing a new hospital built, and annual increases in local sales revenue.
?It?s not just what I did, it?s not what the council did, it?s not just what the staff has done, it?s not just what the people have done,? he said
?It all runs together and says, ?This is what we think the financial picture looks like for the city of Hills?boro. This is how we will rate it.??
Paine said an upgraded bond rating won?t have an immediate impact, but it will make a positive difference the next time the city needs to sell bonds for a major capital-improvement project.
?In terms of a million-dollar bond issue, it?s thousands of dollars (less in interest payments),? he said.
?It?s not something that can be immediately quantified, but it?s positive for the taxpayers here when we have to do that.
?When you do things like go to the bond market for a street project, you want to get away with not having to pay a lot of money for it in interest.
?Everything you can do to limit that interest payment is a good thing.?