The Surprise City Council authorized staff to proceed with the first bond sale related to the General Obligation Bond Election approved by voters last fall.
Tuesday night’s vote coincided with Standard and Poor’s (S&P) upgrade of the city’s General Obligation (GO) Bond rating from AA- to AA.
The credit rating firm cited the following criteria for the upgrade (view full report):
- Strong financial policy management and practices
- Low debt
- Adequate economy
The agency also noted a flexible budget strategy and stable performance as a positive in supporting the bond rating upgrade, “Surprise's budgetary flexibility is very strong, in our view, with an available fund balance in fiscal 2017 of 36% of operating expenditures, or $38.8 million. We expect the available fund balance to remain above 30% of expenditures for the current and next fiscal years, which we view as a positive credit factor.”
The higher the rating, the lower the investment risk to the bond purchasers and the interest rate to the city on the borrowed funds.
This first sale of bonds will not exceed $40 million and will be used to fund public safety, traffic congestion mitigation and pavement preservation projects.
The remaining nearly $20 million in bonds will be sold at a later time to meet with future project timelines. The expected next sale would be in summer 2020.
The principal and interest payments will be paid for through a secondary property tax.
The first bond issuance will result in a secondary property tax of $0.42 per $100 of assessed limited property value, which will begin in the next fiscal year, starting July 1, 2018.
You can follow the process at www.surpriseaz.gov/decidesurprise.