Orange earns A in finance

May 07, 2008 07:26 pm

— By Tommy Mann Jr.
The Orange Leader

It’s good to know the city you reside in is able to take care of its debts. It’s even better when the city is recognized for doing so.
The city of Orange recently received ratings from two of the most well known companies which administer such scores based on a city’s financial health.
The city received an “A+” rating from Standard and Poor’s Ratings Services, and an “A2” rating from Moody’s Investors Service.
“This is tremendous news,” said Brown Claybar, mayor of Orange. “This is another win for the city of Orange and its residents. It means the city is able to borrow money in the most favorable terms and it has less of an affect on the taxpayer.”
Standard and Poor’s is the world’s foremost provider of independent credit ratings, indices, risk evaluation, investment research and data, and it provides investors with the independent benchmarks needed to make an informed decision about investment and financial decisions, such as the sale of bonds.
Moody’s Investor Services provides research data and analytical tools for assessing credit risk and is one of the world’s most respected sources for credit ratings and risk analysis for approximately 100 countries, 12,000 corporate issuers, and 29,000 public finance issuers.
According to the Standard and Poor’s underlying rating of Orange, the general obligation debt rating was raised from an “A” to an “A+” this year.
“The upgrade reflects the city’s continued tax base growth and diversification,” Standard and Poor’s stated in a press release. “And consistently strong financial performance, despite ongoing capital needs.
The rating increase was based on the following credit strengths: an expanding and diversifying property tax base; a strong financial position with high reserves; and rapid debt amortization or ability to pay its obligations in a series of installments.
“There is no fluff to this rating,” Claybar said. “It just means once a rating is assigned, then the bonds can go out in the capital market, and the buyers know what the risk is. An ‘A+’ rating is as high as you can get for a city.”
With the tax base supported by large industrial district, the taxable assessed value, as determined by Moody’s, is $579 million for fiscal 2008, which is a 14.8 percent increase from 2007.
Although the majority of the increase is due to property appraisals, Moody’s Investor Services believes growth will likely continue as the city of Orange recently annexed part of Little Cypress, which will be reflected in the assessed value for the first time in 2009.
The Moody’s Investor Services reports states in addition to the assessed value reported within city limits, the city’s industrial district value is estimated at $1.01 billion in fiscal 2008.
In exchange for providing limited city services and an agreement not to annex the industrial district, the participants pay the city a payment-in-lieu of tax.
The city of Orange has retired 78.1 percent of its obligation debt in ten years, which was a recognized factor by Standard and Poor’s. After this sale, the city has no plans to issue in debt in the foreseeable future.

Reach this reporter at 409-883-3571, Ext. 2619 or tmann@orangeleader.com