Page 256 - Watauga FY21 Budget

DEBT SERVICE

Moody’s also assigned an Aa3 underlying rating to the City’s $7.36 million Combination
Tax and Limited Pledge Revenue Certificates of Obligation, Series 2011. The Aa3
rating reflects the City’s stable financial operations and healthy reserve position. In
September 2011, Fitch Ratings affirmed the City’s $1 million 1998 Certificate of
Obligations at “AA-” with a rating outlook of “Stable.”

Moody’s also assigned an Aa3 underlying rating the City’s $7.730 million Combination
Tax and Limited Pledge Revenue Certificates of Obligation, Series 2012. The rating
reinforced the above strengths listed, as well as the solid management practices
reflected in an increase in the City’s formal fund balance policy and maintenance of
ample reserves. Challenges cited include the declines in the city’s tax base and the
negative five year average annual growth rate in assessed value.
Standard & Poor’s Rating Services assigned its ‘AA’ long-term rating to the City’s $3.50
million Combination and Limited Pledge Revenue Certificates of Obligation, 2014. The
rating cited very strong budgetary flexibility, very strong liquidity, adequate budgetary
performance and adequate debt and contingent liabilities.

Standard & Poor’s also assigned its ‘AA’ long term rating to the City’s $5.885 million
Combination and Limited Pledge Revenue Certificates of Obligation, 2016. The rating
cited very strong management, with strong financial policies and practices, very strong
budgetary flexibility, very strong liquidity and adequate economy and budgetary
performance in support of this rating.. Standard and Poor’s also assigned its ‘AA’ long-
term rating to the 2017 Certificates of Obligation issuance and 2018 Certificates of
Obligation Issuance.

In August, 2019, City Council approved an $8.490 million Combination and Limited
Pledge Revenue Certificates of Obligation. Proceeds will fund water and sewer projects
and equipment, and some general fund capital equipment. The majority of the debt,
$8.065 million, will be repaid with Utility system revenues and $425,000 of the principal
will be paid by the I&S component of the tax rate. Payments will begin in February,
2020 at approximately $70,000 annually for the General Fund portion of the debt, and
approximately $344,000 for the Utility Fund. Standard & Poor Rating Services
assigned a ‘AA’ rating to this issuance.
In August, 2020, a proposed $3.0 million Combination and Limited Pledge Revenue
Certificates of Obligation issuance is proposed. Proceeds will fund a Fire Station
restroom renovation project, continuation of the Whitley Road Street Project, and
construction of a restaurant incubator site to spur economic development in the City.
Additional projects funded are a roof replacement for the Library facility, construction of
a equipment and vehicle storage facility (pole barn) for the Parks facility, and various
capital outlay items.

248