S&P Global has raised Spring Hill’s long-term municipal bond rating, which bodes well for capital improvement projects.
The Manhattan-based finance analytics conglomerate increased the city’s bond rating from AA to AA+ for both its general debt obligation — on about $40 million in the current fiscal year’s general obligation bonds — and its long-term rating. The long-term outlook, therefore, remains “stable” according to the town’s release. Spring Hill’s bonds constitute a credit obligation, payable from existing, ad valorem property taxes.
"We are excited and proud to receive this high rating from Standard and Poor’s ahead of the City’s bond sale in May,” said City Administrator Pam Caskie. “This makes priority city projects like road improvements and a new police station less expensive to complete."
S&P’s glossary defines the AA rating, previously attributed to Spring Hill, as an indication that the municipality has a “very strong capacity to meet its financial commitments.” These debt securities are issued to Spring Hill to, among other things, finance projects like the June Lake development and Buckner Lane widening.
“It also indicates the City is on the right path toward even stronger financial management,” Caskie said. “It is not every day a city of our size receives such a rating.”
The planned police station will be on donated land at Kinsley Place. In addition to the imminent police station, Spring Hill’s current Capital Improvement Plan addresses the need to develop a Community Services Annex expected to house Public Works, Planning and Codes and IT. More emergency services needs are also soon to be met with a future fire station on the intersection of Duplex and Buckner — necessitated by most of northeast Spring Hill being located outside of what the city calls the “reasonable response zone.”
The Buckner widening corresponds also with the restructuring of the Interstate 65 interchange and the intersection of Buckner and Port Royal Road. These and many other developments, including road improvements, can only benefit from a superior bond grade.
"The upgrade reflects the city's continued economic growth, strengthening reserves, and increased financial forecasting, all of which we expect to be sustained," said S&P Global Ratings credit analyst John Sauter. "Direct debt will nearly double with this issuance, increasing to $83 million from $43 million, and is likely to continue to grow, but we feel the city should be able to absorb the increasing costs that comes with this additional debt notably through growing revenue."
This comes as the Federal Reserve convenes to raise interest rates this week amid projections of more hikes to come this year to contend with rampant inflation. Anticipating the Fed’s faster pace on raising rates, the Board of Mayor and Aldermen also planned ahead to avail itself of the municipal bond market by acquiring funds posthaste via bond sale scheduled for next Wednesday, May 11.