THE CITY'S BOND RATINGS - General Obligation Bonds and Utility Revenue Bonds - HAVE GONE DOWN. From two different credit-rating agencies: Moody's and Standard & Poor's.
One independent Truth in Accounting released a report in January 2019 stating that Mesa's Finances are troublesome.
. . . This post is intended in good faith to help you understand
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Historical MCO News:
02/05/2018 – Moody’s Assigns Aa2 To City Of Mesa, AZ's General Obligation Bonds, Series 2018
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OK, but let's take a look at a ratings chart from 2015 and a ratings chart from last year 2018
THE CITY'S CREDIT RATINGS HAVE GONE DOWN
What that means = Higher Interest rates on Municipal Debt
2018 Bond Ratings
|
Type of Bond
| Standard & Poor's | Moody's |
| General Obligation Bonds | AA- | Aa2 |
Utility Revenue Bonds
| AA- | Aa2 |
"The City issues debt in the form of bonds in order to finance long-term capital improvements such as streets, buildings, utility systems, etc. computers. ??????
The financed assets should also have at least the same useful life as it would take to repay the bond (e.g., a building would qualify, but a police sedan would not).
Issuing bonds allows the City to meet infrastructure needs while paying for the assets as they are used. Because municipal bonds are typically tax-exempt, they usually carry a lower interest rate than other types of debt, and are therefore an attractive source of financing. . . "
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BLOGGER NOTE: Notice that one underlined word in the above statement from a city webpage: debt. When the City of Mesa spends money, somebody is responsible to pay it back somehow, except for federal funding, and grants from different sources that might have strings-attached.
That's a link farther down in this post to the page where readers of this blog - or anyone - can see more about accounting.
The City uses two main types of bond financing:
The ratings for these bonds are show above.
General Obligation
Utility Systems Revenue bonds.
There's an annual public process to present, hear and discuss the proposed budget for the next fiscal year that usually starts just after January - and goes on for months until the end of May.
General Obligation (G.O.) Bonds are used to finance
- public safety
- street
- park
- library
- storm sewer projects.
They are repaid primarily through
G.O. Bonds are backed by the full faith and credit of the City.
Utility Revenue Bonds are used to finance
gas
water
wastewater
electric
solid waste projects.
Utility Revenue bonds are repaid from revenues received from the customers of each particular utility.
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For more information, visit the City of Mesa Data Portal on Bonds.
Contact
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Aa2 What is Aa2?
Aa2 is the third highest credit rating that ratings agency Moody’s assigns to fixed income securities like bonds. The higher the rating, the more likely the issuer is to meet its financial commitments and the lower the risk of default.
BREAKING DOWN Aa2
The credit ratings assigned by the various ratings agencies, like Standard & Poors, Moody’s and Fitch, measure the probability that the borrower will default. They are based primarily upon the insurer's or issuer's creditworthiness.
Moody's ratings, for example, start Aaa for prime bond issuers with the lowest risk down to C, which is usually given to securities that are in default with little chance of the principal or interest being repaid.
The time, effort, and money necessary, including such things as commission fees and the cost of physically moving the asset from seller to buyer.
Transactions costs should also include the bid/ask... Read More
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RELATED OFFICIAL CONTENT:
The Accounting Division is responsible for maintaining accurate financial records and providing timely financial information to the
- public
- bondholders
- grantors
- auditors
- City Council
- City management.
This division is responsible for the areas of general ledger, accounts payable, accounts receivable, payroll, special assessments, fixed assets, cash management, investments, debt management and grant accounting.
Comprehensive Annual Financial Reports (CAFR)
(documents are PDF format)
Single Audit Reports
Expenditure Limitation Reports
