Moody’s Investors Service has upgraded the City of Cedar Falls general obligation unlimited tax (GOULT) bonds to Aaa and assigns a Aaa rating to its $3.4 million General Obligation Capital Loan Notes, Series 2020. This is the highest rating achievable by an entity and Cedar Falls joins only three additional cities in Iowa that has obtained a Aaa rating.
According to the Moody’s Investors Service report, Cedar Falls financial profile is described as ‘exceptional’. The City was upgraded to Aaa because its strong financial performance has resulted in very robust operating fund balance and cash. Substantial alternate liquidity across other governmental funds further bolsters the City’s financial position. Debt is modest because the City cash financials most of its cash needs as opposed to relying on the selling of bonds.
Fixed costs are low because debt and retiree health care burdens are modest. Pension burden is more moderate from participation in two statewide pension plans. The City also benefits from the presence of the University of Northern Iowa. Financial performance across the City’s enterprise funds (sewer, refuse and stormwater) will remain sound supporting the funds’ healthy liquidity.
The impact of the upgraded tax bond rating benefits both the City and its citizens.
“Attaining a Aaa rating helps the City receive lower interest rates when we sell bonds, which in turn reduces the property tax burden for debt service,” said Jennifer Rodenbeck, Finance and Business Director for the City of Cedar Falls. “The City is very proud of achieving this highest rating from Moody’s. Moody’s recognizes that the City has sound financial practices which include conservative budgeting, low debt outstanding, and strong cash reserves. These practices were achieved thanks to past and present staff and elected officials that have recognized the benefit of maintaining conservative financial policies.”
Moody’s Investors Service also included that the stable outlook reflects expectation that the City’s financial position will remain strong and operating revenue loss from the coronavirus outbreak will be modest.