Bond Rating & Investments
It is in the City's best interest in its stewardship of taxpayer funds to strive to achieve the highest bond rating possible. Certain factors, such as the area's economy and the debt burden of overlapping levels of government (Washtenaw County, the school district) are out of our control, however, there many factors that are within our control. Among them is proper financial reporting, including national certification of financial documents, as well as, certification of employees responsible for financial record keeping. Other factors such as job creation, which the City facilitates through tools such as our Economic Development Corporation and industrial facilities tax exemptions, play a role.
The City is proud of the fact that since 2000, we have seen our bond rating rise from a BBB to a AA, which is the second highest rating category available through Standard and Poor's. In addition, sound fiscal management has resulted in the State of Michigan issuing the City a "qualified" status for bonding, which means that we are not required to have state oversight when borrowing funds. The Qualifying Statements are available on the Michigan Department of Treasury's website.
- AAA: An obligor rated 'AAA' has extremely strong capacity to meet its financial commitments. 'AAA' is the highest issuer credit rating assigned by Standard & Poor's.
- AA: An obligor rated 'AA' has very strong capacity to meet its financial commitments. It differs from the highest-rated obligors only to a small degree.
- A: An obligor rated 'A' has strong capacity to meet its financial commitments but is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligors in higher-rated categories.
- BBB: An obligor rated 'BBB' has adequate capacity to meet its financial commitments. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitments.
- BB: An obligor rated 'BB' is less vulnerable in the near term than other lower-rated obligors. However, it faces major ongoing uncertainties and exposure to adverse business, financial, or economic conditions, which could lead to the obligor's inadequate capacity to meet its financial commitments.
It is important that the City's reserve funds be invested in a manner that is safe, provides liquidity, and gives reasonable yield. Investments are guided by Michigan Public Act 20 as well as the City's own investment policy, which is reviewed and updated regularly. The City's Investment Policy has been certified by the Association of Public Treasurers of the United States and Canada, the national organization for treasurers,