Kandiyohi County gets good credit rating, bond rates
WILLMAR -- Kandiyohi County's good credit rating is being rewarded with a favorable interest rate on a $3.7 million bond that'll be used to build roads.
The county received eight bids Tuesday for the general obligation road construction bond. The lowest bidder was from an investment group from Chicago with a rate of 4.1371 for the 20-year bond.
"We think it's a good bid," said Shelly Eldridge, from Ehlers & Associates Inc.
Eldridge said getting eight bids -- when five is considered good -- and attracting bids on a national basis shows that Kandiyohi County is considered a good credit risk.
The county currently has a "very strong A2" rating from Moody's Investors Service for the new $3.7 million bond as well as the county's $38 million of outstanding general obligation bonds, she said.
Eldridge said she had her "fingers crossed" that the rating would be upgraded during the most recent review, but said Moody's maintained the A2 rating. Getting a bump up in the rating system could've gotten the county a slightly better interest rate, but not much, said Eldridge.
A summary of the credit review by Moody's provides a snapshot of the county's financial health.
The report said the county's "moderately-sized $3.7 billion tax base" has had an annual average increase of 8.9 percent since 2000 and "officials expect growth to be sustained as developers continue building up-scale lake front homes."
The low, 3 percent unemployment levels in the county is also a positive sign, according to the report, with July 2005 unemployment levels below the state and national levels.
Under a heading that said "high yet manageable debt burden," the report said that Moody's "believes that the county's high debt burden is manageable due to a moderately growing tax base, satisfactory financial position, and limited future borrowing."
The county's 4.7 percent tax burden is "primarily attributable to overlapping entities" and that the county's direct debt burden is a "much more moderate 1.7 percent," according to the report.
The county's "satisfactory financial position" is expected to be maintained because of growth in taxable valuation and "prudent financial management," according to the report, which stated the county:
Ended fiscal 2003 with a $370,000 operating surplus.
Built the general fund reserves to $5.3 million, which is 28.4 percent of general fund revenues.
Projects another operating surplus in fiscal 2004 that will add about $70,000 to undesignated general fund reserves.
Has a $4.6 million fund balance in the road and bridge fund.
Has a $5.3 million fund balance in the Human Services fund.
The board was pleased with the interest rate for the bonds and approved resolutions to award the sale of the bonds.