Stutsman County receives credit rating for bonding; $7.1 million for road to be assessed back to GRE, SEPA
Stutsman County received a credit rating of AA and a AA- for bonds from Standard & Poor’s Financial Services, which will help the county get favorable interest rates when it issues bonds.
The ratings go from AAA to D, and an AA rating is the second-highest rating available. Ratings between AA and CCC may have intermediate steps with a minus or a plus.
“The credit rating is like a personal credit rating. The better credit rating, the less interest we’ll pay on debt,” said Casey Bradley, county auditor/chief operating officer.
The reason the county’s rating for bonds is AA- is because of how state statute is written, he explained. The North Dakota Century Code doesn’t include a statutory requirement that the issuing agency pay a default out of its fund balance before it has the authority to levy to make payments.
Still, the AA rating means a borrower has a very strong capacity to meet its financial commitments.
The ratings summary for Stutsman County specifically noted its “very strong budgetary flexibility, with general fund reserves expected to remain above 75% of expenditures; very strong budgetary performance demonstrated by general fund and total governmental fund surpluses; very strong liquidity providing very strong cash levels to cover both debt service and expenditures; very strong debt and contingent liabilities position, with low debt service expenses as a percent of total expenditures and no major pressures from pension costs.”
It also noted the county had “strong management with good financial practices; and currently weak, albeit strengthening, economy with below-average per capita effective buying income…”
“That’s kind of what we were expecting. We were expecting to get a very good rating,” Bradley said. “… it’s great for the county.”
In this case, the credit rating was needed to issue $7.1 million in bonds for the Great River Energy road, which the Stutsman County Commission authorized Tuesday.
There were four bids for the bonds, and commissioners accepted the one for a 3.2378 percent interest rate from Raymond James Investors. As of Monday, an average rate for such a bond would have been about 3.8 percent.
The difference in rates due to the AA- credit rating could save the county roughly $35,000.
The borrowed money will all be paid back through special assessments. Great River Energy will pay 40 percent of the cost, and the Spiritwood Energy Park Association will pay 60 percent.
The project is to upgrade an L-shaped section of road — a portion of 93rd Avenue Southeast and a piece of 35th Street Southeast between 93rd and Stutsman County Highway 62.
Currently the roads are gravel, but when the project is complete, they will be upgraded to Interstate-level.
“The intent is to facilitate corn coming in and out of the ethanol plant,” Bradley said. “It’s a benefit to SEPA because that way, any other commercial traffic can use it.”
Sun reporter Kari Lucin can be reached at (701) 952-8453 or by email at email@example.com