SAN FRANCISCO - Moody's Investors Service upgraded the general obligation bond rating of the city of Bainbridge Island, Wash. to Aa2 from Aa3.
"The rating upgrade reflects the stabilizing tax base, and consistent four-year operating surpluses, restoring the general fund balance healthy levels," Moody's said in a report released July 8. "The rating further reflects the city's modest debt and pension burdens, affluent demographic profile and strong management practices."
The upgrade affects $5 million of outstanding unlimited GO bonds. Moody's also upgraded $16.1 million of the city's limited tax bonds to Aa3 from A1.
Bainbridge Island, population 23,000, is in Kitsap County, Washington, on an island in the Puget Sound.
According to Moody's, the city's moderately-sized tax base was growing in 2014. Other credit strengths include a strong socioeconomic profile and health fund balances and reserves, supported by strong fiscal policies.
Challenges include a tax base that was slow to recover from the recession and a near-term projected decline in reserves for capital outlay.
Analysts at Moody's said they could further upgrade the rating if the city exhibits a significant tax base growth, maintenance of structural balance, or a rebuilding of reserves.
If the city's tax base contracts, or if its financial position significantly deteriorates, Moody's could downgrade the rating.
