Lakewood’s Strong Bond Rating Reaffirmed by Moody’sMarch 09, 2016
The city of Lakewood has learned that it will retain its Moody’s Aa2 strong bond rating, placing Lakewood in the top-tier of Ohio cities with the third highest mark given by the financial investor service.
A strong rating saves the city money and, perhaps more importantly, is a representation of the city’s financial strength.
Moody’s pointed to several factors in reaching its decision, including “strong financial operations supported by healthy reserves” as well as the strength of the recently signed master agreement between the city of Lakewood, the Cleveland Clinic and the Lakewood Hospital Association that proactively transforms healthcare in the city.
“Moody’s evaluation of our financial picture reaffirms that the strategies of the past several years have strengthened our city’s finances and our outlook for the future,” said Lakewood Mayor Michael Summers.
Moody’s bond rating measures entities’ credit risk. The city’s financial operations are expected to remain strong as conservatively planned budgets continue to produce operating surpluses.
“This is excellent news, and confirms all of the hard, conservative fiscal work that has taken place over the past eight years, as well as strategic capital and economic development investments in our community that have continued to pay off,” said Lakewood Finance Director Jenn Pae.
“This was done by setting goals and making policies that set aside funds for known and unknown future expenditures, during a time of declining revenues and other fiscal challenges.”
Among those challenges, unfunded pension obligations have put financial strain on cities across the country, including Lakewood.
“Lakewood’s proactive financial strategies and careful stewardship of taxpayer dollars are reflected in this superb rating, and that strong rating pays real dividends, by allowing us to realize significant savings on past-issued debt, and increasing our flexibility and capability to address challenges in the future,” said Lakewood City Council President Sam O’Leary.
Lakewood’s sound financial management — coupled with its economic growth, future investment plans, and city council’s balanced budget — also helped the city maintain its strong bond rating. The higher bond rating will permit the city to borrow funds for capital improvements at a lower interest cost.
A healthy fund balance is the city’s “emergency or rainy day fund” and permits the city to weather difficult economic times, unpredictable disasters, unforeseen expenditures or unanticipated declines in revenues without cutting services or operations, and without imposing new taxes and fees. It also demonstrates fiscal strength and results positively on the city’s bond rating.
“We’ve been able to successfully manage an economic downturn, as well as the loss of revenues from the state,” Summers added. “Under all the financial pressures that cities across the nation are facing, this is an affirmation about the direction Lakewood is going.”