FARMERS BRANCH ~ In anticipation of a bond sale to fund the new joint public safety dispatch system and the voter-approved 10-year street improvement project, bond rating agencies Fitch Ratings and Standard and Poors have both assigned Farmers Branch the highly sought-after ‘AA+’ bond rating.
The City plans to sell $13.8 million in General Obligation bonds later this month, after voters passed $23.5 million for street improvements earlier this year. At the same time, the City will offer $1.9 million in Certificates of Obligation to fund the joint public safety dispatch center project, being orchestrated with the Town of Addison and Cities of Carrollton and Coppell.
Fitch observed that Farmers Branch “maintains a strong financial position, characterized by solid reserves and stout liquidity. Operations are supported by a fairly diverse revenue base that has benefitted from rapidly rebounding sales tax revenues, despite recent recessionary pressures. Management’s conservative fiscal practices and policies have enabled break-even to net surplus operations over the last five fiscal years.”
In noting the City’s “mature neighborhoods,” Fitch added that this is an evolving situation, “with typically higher-end infill projects that benefit from the city’s strategic development plans, such as the recently developed condos and homes near the city’s existing DART station.”
Standard and Poors cited the City’s “strong economy, very strong budgetary flexibility, very strong management and strong institutional framework” among the factors contributing to the ‘AA+’ rating.
The S&P ratings report says “citywide sales tax collections have shown healthy growth, increasing 26 percent since fiscal 2010, reaching $13.7 million in fiscal 2013.”
“We consider Farmers Branch’s management very strong,” the report continued, “indicating managerial practices are strong, well embedded and likely sustainable.”
Both Fitch and Standard and Poors noted the City’s historically conservative debt program, with a debt burden of about 3.5 percent of assessed value and rapid amortization with a majority of the debt due to mature in 10 years.
Standard and Poors has previously scored the City as ‘AA+.’ This is the first time Fitch Ratings has assigned a bond credit rating to Farmers Branch.