Despite tough economic times in the state and across the country, village staff have managed their finances well and maintained the third highest bond rating according to Moody’s — an achievement Village Manager Mark Fitzgerald said is worth noting.
The village sports an Aa2 bond rating, which means investors in municipal bonds from the village can expect a high quality investment with very low credit risk. As a result, the village can borrow with ease,which keeps property tax levels stable.
The village’s high bond rating was worth noting Monday on a night when officials approved the issuance of $6.8 million in 10-year municipal bonds to fund the 2011 capital improvements budget. That budget includes road construction, building projects and equipment purchases in the village.
“In these times I think this deserved a special mention,” Fitzgerald said. “This is no small success story…it’s easy to hear a lot of doom and gloom, but the reality is, that in this area we are doing just fine.”
Fitzgerald said the village’s strong tax base resulting from its close proximity to Milwaukee, its stable fund reserve level and sound financial management rated high with Moody’s.
“We are extremely conservative in terms of our budgeting and how we spend dollars,” Fitzgerald said. “As we operate, the bond raters view us favorably. They view what we are doing as a positive, and frankly, they view the policy direction of the village very favorably.”
The village maintains a high fund balance of $8.1 million, which is about 35 percent of the annual operating budget. Basically, the village could fund day-to-day operations for nearly 100 days on reserves.
Two main factors were the challenges to the village’s bond rating, according to a report from Moody’s. Residential development remains stagnant in the village, as is true around the state. The village is also open to some risk with the Radisson Hotel project. The village issued a $17.7 million loan to the hotel developer, which is to be paid back by May 2014.
Looking into the future, substantial new economic development in the village, and increased property values could help push the village’s bond rating up another level.
“It will be very difficult in this economy to get an upgrade,” Fitzgerald said. “But if we keep going the way were are now, we will be just fine.”