An Aa1 rating from Moody's Investor Service will help the city of Bexley receive more favorable interest rates -- and save money -- as it embarks on the relocation of its City Hall and service garage, Mayor Ben Kessler said.
Moody's announced in early May that the city has retained an Aa1 financial rating for 2014, a recertification from its last rating three years ago. The rating indicates an organization's ability to pay back debt by making timely interest payments and the likelihood of default.
An Aa1 rating is the second-highest rating that Moody's issues. A good rating allows the city to secure favorable interest rates when financing projects such as the City Hall and service garage relocation, Kessler said.
"Our internal projections for this project were based upon a 3.5-percent interest rate assumption," he said. "Upon achieving this rating and going to market, we're around 3.1 percent on our interest rate, resulting in an annual savings in the range of $10,000 on this project."
Moody's bases its ratings on several factors, including an analysis of an organization's strengths and weaknesses and ability to generate cash in the future, according to the financial service's website.
"They look at our expenses, they look at our cash reserves, they look at the stability of our income," city Auditor Bill Harvey said. "It helps that we got a tax increase a couple of years ago."
Bexley voters approved a 0.5-percent increase to the city's income tax rate in 2011, after suffering the elimination of the estate tax and reductions to the Local Government Fund at the state level. Bexley's income tax revenue grew by an average annual rate of 8.5 percent from fiscal years 2008 to 2013, according to the city's calculations.
The city's tax base, valued in 2014 at $1.3 billion, has held steady despite recent regional declines in real estate. The city estimates that resident wealth levels are 168.3 percent above the state median and 178.3 percent above the national median, with a value of $101,868 per capita.