March 14, 2017
The City of Johns Creek received the highest possible credit ratings from the industry's two largest rating agencies, Moody’s Investor Service and Standard & Poors (S&P) Global Ratings. The Aaa and AAA ratings, respectively, were assigned to the City following separate reviews of the City’s credit and financial standing by analysts from each organization.
According to Moody’s Investor Service, only 199 U.S. cities out of approximately 20,000 currently hold its Aaa rating and 338 U.S. cities hold S&P’s AAA rating. In Georgia, Johns Creek is only one of four cities with Moody’s Aaa rating , and one of six cities to hold S&P’s AAA rating.
Johns Creek applied for its first credit rating as part of its process to move forward with obtaining a $40 million parks bond, which was voted on by the residents of Johns Creek during the general election in November. The City will use the parks bond to build out five new parks and refurbish its four existing parks.
“These ratings are a direct reflection of 10 years of sound fiscal policy and planning, which has been envisioned by our elected representatives and carefully implemented by our management and staff,” said Mayor Mike Bodker.
Aaa and AAA are the highest possible credit ratings an organization or government can receive based on its creditworthiness and ability to meet its financial commitments. The ratings will allow the City of Johns Creek to receive bonds with the highest credit quality at a lower rate and thus save taxpayer dollars.
Moody’s indicated that its rating reflects the City’s “ample reserve position and low fixed costs” as one factor. It also cited Johns Creek’s large tax base with strong socioeconomic factors, its healthy financial position bolstered by fiscal policies, and low debt burden among its credit strengths. Moody’s credit report also indicated that Johns Creek’s “stable outlook reflects the expectation that the city’s tax base will continue to benefit from proximity to Atlanta and that the city’s financial position will remain healthy due to long term planning.”
In its report, S&P Global Ratings noted that it believes Johns Creek has the ability to maintain better credit characteristics than the U.S. in a stress scenario.
The report cited the City’s management as a strength. “We view the city's management as very strong, with strong financial policies and practices under our Financial Management Assessment methodology, indicating financial practices are strong, well embedded, and likely sustainable.” The report also highlighted City practices of maintaining a formal long-term financial plan and a 10-year forecast of revenue and expenditures across operating budgets in the general fund, and a rolling five-year capital plan that identifies funding sources and uses among other factors that led to its rating.
With respect to obtaining a bond, "The city's full-faith-and-credit pledge, including an unlimited ad valorem tax levy on taxable property, secures the GO (general obligation) bonds," said S&P Global Ratings credit analyst Alexander Laufer.
GO bonds are issued with the belief that a municipality will be able to repay its debt obligation through taxation or revenue from projects.
View both the Moody’s Investor Service and Standard & Poors Global Ratings reports.