New Hope Earns 'AA' Rating from S&P

New Hope Earns 'AA' Rating from S&P
Posted on 12/18/2018
On December 6, 2018 Standard & Poor’s released their RatingsDirect® report on the city of New Hope, Minn. S&P Global Ratings assigned its 'AA' long-term rating to New Hope’s series 2018A general obligation (GO) tax abatement bonds, and affirmed their 'AA' rating on the city's existing GO bonds and their 'AA-' rating on the New Hope Economic Development Authority's series 2011A taxable lease-revenue qualified energy conservation bonds, issued for the city.

An ‘AA’ credit rating is the second-highest rating S&P issues. ‘AA’ is defined as: “An obligor rated 'AA' has very strong capacity to meet its financial commitments. It differs from the highest rated obligors only in small degree.”

Below are excerpts from S&P’s report on why New Hope received such high ratings from their assessment of the city:

• [New Hope’s] strong economy, with access to a broad and diverse metropolitan statistical area;

• Very strong management, with strong financial policies and practices under our Financial Management Assessment methodology;

• Strong budgetary performance, with operating surpluses in the general fund and at the total governmental fund level in fiscal 2017;

• Very strong budgetary flexibility, with an available fund balance in fiscal 2017 of 52% of operating expenditures;

• Very strong liquidity, with total government available cash at 147.8% of total governmental fund expenditures and 29.1x governmental debt service, and access to external liquidity that we consider strong;

• Very weak debt and contingent liability profile, with debt service carrying charges at 5.1% of expenditures and net direct debt that is 244.1% of total governmental fund revenue; and

• Strong institutional framework score

Historically, New Hope has maintained strong operations, ending each year with general fund surpluses. This building of fund balance has allowed the city to maintain a high degree of financial flexibility when creating its future projections. Backed by a strong management team that has implemented a number of robust policies and practices, the city is on track to continue its historical trend of stable operations, in our opinion. The local economy also supports the city's operations, having experienced a fair amount of growth in recent years.