Bettendorf will know next week whether the city's bond rating will be downgraded by Moody's Investor Service, a move that would boost interest rates on more than $20 million of general obligation bonds scheduled for sale April 1.
City Administrator Decker Ploehn told the city council he and City Finance Director Carol Barnes are scheduled to have a conference call Tues., March 18 with Moody's representatives and the city's bond counsel, Springsted, Inc. He conceded that the city's large amount of debt scheduled to be issued next month might push the rating higher along with the interest rate on the debt to be issued.
Despite promises of lowering the debt to 70 percent of the city's debt limit two years ago, the new bonds to be issued this spring would push the city's debt limit to 86 percent, the highest of any municipality in the state.
Ploehn pointed out the city's large debt issue this spring is actually to cover two years of debt financing of capital projects, a move estimated to save the city $300,000 in bond issuance expenses. Interest payments on the $20.17 million 30-year bond issue would total nearly $8 million.
After the bond issue next month, the city will have outstanding debt of $133 million, or about $4,000 for every resident of the city. The city administrator says the high debt level is needed to meet the capital improvement demands of a growing community.
After the phone conference call March 18, the city would expect to hear two days later if its current Aa1 bond rating will be lowered by Moody's.
Barnes told aldermen the ratings review was the result of a general revamp of criteria by the ratings agency and not directed just at Bettendorf. She noted that Clive, Ames, Cedar Rapids, Dubuque and Des Moines also were on a list of cities that could potentially be downgraded by Moody's.
CLICK HERE or on the image above to listen to a portion of the bond rating discussion by Barnes, Ploehn and Mayor Robert Gallagher, Jr. at the March 4 city council.
