Elgin bond rating remains at ‘AAA’

• Reprints

Updated: March 16, 2012 8:11AM

ELGIN — The city has maintained its “AAA” bond rating with Fitch’s Ratings.

According to a Business Wire press release, Fitch Ratings has assigned the “AAA” grade to $14.65 million city of Elgin general obligation re-funding bonds, series 2012. The bonds are expected to be sold via negotiated sale the week of Feb. 20. Proceeds will be used to re-fund outstanding bonds. Fitch’s also rated the city’s $89.47 million outstanding general obligation bonds at “‘AAA.”

That rating is the highest attainable by a municipality. It is the same one the city received last year for $9.695 million in bonds being used for rehabilitation and upgrades for the Airlite Water Treatment Plant and underground water system upgrades and for $113.4 million in other ongoing projects.

Fitch’s noted that “Elgin’s conservative fiscal management, extensive financial planning and healthy reserve levels provide ample financial flexibility;” that “the city prudently implemented several new revenue sources in 2012 to reduce dependence on property taxes and declining gaming revenues;” and that “all of the city’s non-self-supporting debt is retired within 10 years,” as reasons for the rating.

Fitch’s also noted that “Elgin’s property tax rate has been flat for over 10 years, and property tax revenues have made up almost 50 percent of general fund revenues. Due to the declines in assessed value, property tax rates will be raised slightly in 2012, but total general fund property tax revenue will go down $1 million (3 percent). The city has budgeted for further declines in property tax revenues going forward.”

And while a vocal group of residents calling themselves OCTAVE opposed tax and fee hikes the city took to balance its 2012 budget, those very same moves were praised by the bond service.

“Beginning in 2012, the city has prudently initiated alternative sources of revenue to offset declines in property tax revenues and diversify its revenue streams. The city implemented a refuse collection fee in January that is budgeted for $4.7 million of revenue in 2012. Additionally, new natural gas, electricity and alcoholic beverage taxes will commence on July 1, 2012, yielding an estimated $3.5 million in 2012. The sales tax will also be increased in July, though the additional 0.5 percent will be directed to a capital improvement fund,” the release noted.

“The 2012 budget features a $7 million surplus, highlighted by revenue generated by the new tax sources. Additionally, the city has actively managed its expenses, and eliminated 29 positions in late January, saving $1.8 million in 2012,” the release adds.