S&P Global has assigned all of the City of Round Rock’s most recent property tax-backed debt issues the highest possible long-term rating of AAA, citing “very strong management,” fiscal flexibility and the city’s economy.
S&P Global affirmed the rating in April, which will result in significant interest savings in a series of debt issuances approved by the Round Rock City Council on Thursday, April 25 for transportation projects, public safety and voter-approved parks and recreation, fleet purchases. and expansion of public works facilities.
Round Rock plans to issue $20 million in general obligation (GO) bonds, approved by voters in the May 2023 election, to fund parks and recreation and public safety projects. Additionally, the City Council voted to issue $20 million in Certificates of Obligation (CO) for road projects and the expansion of the Bob Bennett Public Works Complex located at 3400 Sunrise Road, as well as $8 million in dollars in Series 2024 Tax Limited Notes for the purchase of vehicles and equipment. .
The City’s AAA rating saves it approximately $875,000 in interest on its most recent bond issuance, compared to if the City had the lower AA rating, based on recent comparable bond issuances, a said Garry Kimball of Specialized Public Finance, the City’s financial advisor.
In its credit overview, S&P Global cited Round Rock’s access to Austin, several universities and high-tech industries, as well as a large, educated workforce that remains attractive to businesses and individuals, which results in continued economic growth.
The S&P analysis also cited the City’s “robust management policies and practices,” which include analysis of the City’s historical trends, regular budget updates against actual data provided to City Council and the City’s rolling five-year investment plan which identifies projects and financing. sources.
“Round Rock has historically used operating surpluses and excess reserves to fund additional discretionary transfers and large one-time capital expenditures that would otherwise be financed by debt,” the report said. “These discretionary transfers provide the city with additional budgetary flexibility and can be reduced or eliminated in the event of budgetary stress.”
The report continues: “Despite growth pressures and the continued need to expand services, we believe that Round Rock’s strong management practices will help it maintain stable operating performance and very strong reserves that will provide flexibility against potential sales tax volatility stemming largely from its exposure to its largest corporate presence, Dell Inc.”
