Dr. Samuel Shaheen of SSP Associates welcomes partner tenants to Uptown project at groundbreaking last October. (Photo courtesy Saginaw Future, Inc.) BAY COUNTY RISES WITH UPTOWN! Moody's Upgrades Bond Debt Rating to Aa3
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Potential future economic growth in the Uptown at RiversEdge project has apparently prompted a major national financial rating service to pin a gold star on Bay County.
Uptown's promise, diverse, stable employment and conservative financial management, despite property valuation declines in recent years, has caused Moody's Investors Service to upgrade Bay County's bond debt rating to match that of Midland County.
The crucial benchmark for Bay County now rated at Aa3, up from the previous A1, also is based on tight financial management, according to a Moody's Global Credit Research report issued 1 March 2013.
The rating is a key to lower rates on $60 million of general obligation tax bonds the county expects to issue over the next three years to finance construction of a new water plant, with the first installment of $12 million coming in September 2013, said County Executive Thomas L. Hickner.
Mr. Hickner commented: "That this very positive Bay County financial picture has been recognized by an outside bond rating firm is the kind of outcome the board of commissioners, staff and myself have been striving for. We also have to give credit to employee groups for working with us on finances during tough times for all governments.
Paul Rowley addresses crowd
during October 2012 presentation.
(Photo courtesy of Bay Future)
"The county received a $12 million loan from the state's Drinking Water Revolving Fund for the project of which a portion may qualify for principal forgiveness. All of the county's debt is fixed rate and there is no exposure to interest rate swap agreements."
The new plant will treat and distribute water from Lake Huron at Whitestone Point near AuGres under an agreement with the Saginaw-Midland Water System. This deal has recently been consummated after about a half-century of discussions and indecision.
"The upgrade to Aa3 reflects the county's sound financial operations supported by steady growth in reserve levels and the presence of alternative liquidity," states the rating announcement issued by public finance analysts Matthew Wieser and David Levett.
The analysts cited "strong reserves in the general fund and delinquent tax fund and conservative financial management which has driven stable financial operations."
The analysts cited "sizable tax base with below average resident income profile" in the rating affecting $1.43 million of the county's $23.8 million general obligation limited tax debt.
"Despite recent layoffs at facilities in neighboring Midland County (general obligation limited tax rated Aa3), Dow Corning, Bay County's second largest taxpayer and employer, specializes in silicon and silicon-based technologies and is reported to have leased 100,000 square feet of office space starting in 2014 at the Uptown Bay City development in Bay City (general obligation rated A1)."
Uptown is a 43 acre brownfield site, formerly occupied by the Industrial BrownHoist/American Hoist & Derrick companies plant, located between Veterans Memorial and Lafayette Street bridges.
SSP Associates of Saginaw has broken ground for initial buildings in first phase investments expected to reach $50 million and provide employment for about 500, according to city and SSP officials.
First tenants include Dow Corning Corporation, McLaren Bay Region Medical Center and Chemical Bank. Plans are for the site to combine medical and commercial office facilities and residential living with restaurants, specialty retail shops and a hotel-conference center.
Consumers Energy, which accounts for 8.9 percent of the county's total assessed valuation with the utility's largest of seven power plants located on Saginaw Bay, also was cited by the Moody's analysts, who noted further:
"The county's income levels have weakened compared to national averages over the past decade with median family income estimated at 85.5 percent of the nation in 2010, down from 96.1 percent in 2000. The county has also realized a steady decline in population over the past three decades, including a modest 2.2 percent decline between 2000 and 2010 census periods to its current population of 107,110."
The debt rating could rise to Aa2 with substantial expansion and diversification of the county's tax base and strengthening of the county's demographic profile, Moodys' commented. The rating could decline with erosion of the tax base and demographic profile below similarly rated entities and/or significant reductions in reserves and liquidity levels in the general fund and/or other funds. ###
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