Sugar Land recently refinanced $9.4 million in bond issues, saving taxpayers $91,000 annually for the next nine years.
The Series 2012 General Obligation and Refunding Bonds replace three existing bond issues and received a AAA rating from both Standard & Poor’s and Fitch Ratings.
The AAA rating is the highest bond rating a municipal bond can carry and represents a bond with minimal risk due to the strong financial management practices of the City.
Bond ratings reflect the City’s creditworthiness and are based on economic base, financial indicators, outstanding debt and management policies and practices. A City’s bond rating is similar to a consumer’s credit score; a higher rating leads to better offers of credit and lower interest rates.
According to Fitch: “Sugar Land’s conservative budgeting practices usually generate actual results better than original projections. The fiscal 2012 total property tax rate is a low (30.245 cents) per $100 of taxable assessed value, reportedly the second lowest in the state for cities in its population range.”
Fitch noted the following as its rationale for assigning the AAA rating:
• Strong financial profile: The city continues its practice of positive operating results and healthy reserve levels.
• Sales tax exposure mitigated: While the general fund relies heavily on sales tax revenues, potential exposure to economic volatility is mitigated by strong fund balances and a low property tax rate.
• Ppsitive management policies:The city maintains extensive financial policies and procedures.
• Stable economic base: The local economy is experiencing significant growth, fueled to a large extent by recent transportation infrastructure improvements.
• Manageable debt burden: The city’s overall and direct debt levels are high but credit concern is offset by residents’ high income levels and the partial support of overlapping municipal utility district debt with utility revenues.