City’s bond rating upgraded to AA+ by Standard & Poors

The city of Lynnwood’s bond rating has been upgraded to AA+ from A+ by Standard & Poors Rating Services.

Lynnwood Finance Director Lorenzo Hines shared the good news at Monday’s City Council work session.

In upgrading the city’s bond rating three notches, Standard & Poors cited the following factors:

  • Strong economy, with projected per capita effective buying income at 94 percent of the national level. The city has a local economy based in retail and small business that has benefited from the local economy.
  • Very strong overall budget flexibility with an available general fund balance that increased to 36 percent of general fund expenditures, according to 2012 audited financials, which is notably higher than the negative fund balance reported in 2010.
  • Strong overall budgetary performance, with an operating surplus in each of the past three audited fiscal years, including a strong 10.4 percent in 2012. The positive performance has been driven by the city’s strong sales tax revenue growth.
  • Strong liquidity supports Lynnwood’s finances with total government cash at 58 percent of total governmental expenditures and 13x debt service.
  • Strong debt profile, with overall net debt at 2.5 percent interest of market value and moderate amortization, with 43 percent of debt due to be retired in 10 years. Total government debt service represents around 5 percent of total government funds expenditures.
  • Standard & Poors viewed Lynnwood’s management conditions as strong with good financial management practices under the company’s financial management assessment methodology. Standard & Poors stated the stable outlook reflects its opinion of the maintenance of very strong budgetary flexibility and performance, as demonstrated by consecutive surpluses that have built a strong available fund balance. Standard & Poors added that the rebounding local economy provides an amount of stability in the future. Should the city’s reserves fall significantly or another downward cycle in the economy leads to a reduction in sales tax revenue, then Standard & Poors said there could be some downward pressure on the rating but the company does not anticipate changing the rating during the two-year outlook timeframe.

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