City of Novi now boasts highest Bond Rating - Standard & Poor’s raises rating to AAA based on improved economy, strong management
Release date: Tuesday, December 1, 2015
Contact: Nathan Mueller, Community Relations Specialist 248-347-0431
NOVI, Mich., December 1, 2015 – The City of Novi received positive financial news for residents and business members in conjunction with refunding bonds to save on debt service payments. Standard & Poor’s Rating Service has raised the City of Novi’s high-quality credit rating from AA+ to AAA with a stable outlook.
The AAA rating is the highest issuer governmental credit rating assigned by Standard & Poor’s and is defined as a city “having extremely strong capacity to meet financial commitments.” Novi is now among only approximately a dozen other entities in Michigan with this rating. According to Standard & Poor’s credit analyst Helen Samuelson, “The upgrade reflects Standard & Poor’s assessment of the City’s improved economy, with increasing market value and decreasing unemployment, as well as the City’s passage of more formalized financial policies and procedures.”
“This upgraded bond rating is well deserved and confirms that the sound financial decisions made by the City of Novi are paying dividends,” said Novi Mayor Bob Gatt. “While this is only one objective measure of how the City manages taxpayer dollars, it is truly a testament to the robust financial practices in place that serve as the foundation for all we do.”
Standard & Poor’s notes that “Novi’s economy is very strong. The City has a projected per capita effective buying income of 147% of the national level and per capita market value of $124,081. Due to continued residential and commercial development, the City’s market value and assessed value have increased by approximately 20% and 9%, respectively.” In addition, the financial services company noted that the City has very strong management, adequate budgetary performance, very strong budgetary flexibility, very strong liquidity and very strong debt and contingent liability position.
Novi’s budgetary flexibility is very strong, according to Standard & Poor’s, with an available fund balance in fiscal 2015 of 41% of operating expenditures, or $12 million. The company believes the available fund balance will remain above 30% of expenditures for the current and next fiscal years.
The confirmation goes on to state that “the City has no plans to issue additional debt, and it recently adopted a conservative debt management policy that limits its net direct debt to no more than $2,500 per capita and its debt service payments to less than 20% of combined operating and debt-service funds expenditures.”
“The Standard & Poor’s rating truly reflects that Novi as a City has been doing things the ‘right way’ for a long period of time and the current Mayor, City Council and management team have systems, policies and procedures in place to help ensure sustained success,” said Novi Finance Director Carl Johnson.