CHICAGO — Moody’s Investors Service affirmed Ames’ top rating ahead of its sale today of $6.7 million of general obligation bonds, saying the Iowa city’s credit strengths outweigh concerns over the near-term fiscal stress posed by recent flooding in the region.
Moody’s affirmation of Ames’ Aaa rating affects a total of $53 million of GO debt, including Tuesday’s sale. The city does not carry an outlook from Moody’s.
Proceeds from the competitive issue will finance various street and city hall improvements and fund the acquisition of fire equipment. Public Financial Management Inc. is acting as financial adviser and Dorsey & Whitney LLP is bond counsel.
“Affirmation of the gilt-edged Aaa rating reflects the city’s stable economy enhanced by substantial institutional presence and diversification within the employment and tax bases, sound financial reserves and significant revenue raising flexibility, and a manageable debt position with swift principal amortization,” Moody’s analysts wrote.
Ames is facing near-term fiscal stress after suffering damaging floods earlier this month when heavy rains lasting more than three days led the Skunk River and Squaw Creek to crest. The city also suffered several water-main breaks that have mostly been repaired. The city initially will cover response costs with general funds but can seek reimbursement from federal authorities.
The city had a healthy general fund reserve of $7 million, or 28.6% of revenue, at the end of 2009. Damage to residential units and businesses could negatively affect Ames’ taxable valuation but the city would not feel the impact until fiscal 2013.
Moody’s last week warned that flooding across central Iowa could have negative credit implications for the hardest-hit towns, including Ames, its school district, and nearby colleges and universities.