Iowa City receives top ranking by Moody's Investment Services

BY EMMA WILLIS | JUNE 17, 2013 5:00 AM

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For the 37th-consecutive straight year, the city of Iowa City has received a top credit rating by a national financial-analysis company.

Moody’s Investors Services, which rates the financial well-being of cities across the country, gave Iowa City an Aaa credit rating, the highest credit honor and one given to only 193 U.S. cities, including three in the state of Iowa.

The agency also granted the city an Aaa rating for outstanding general-debt obligations.

On a national scale, the majority of Moody’s reviewed cities earned an Aa2 rating, the third highest honor. In Iowa, the average rating was substantially lower, as most cities earned an A1 rating, the fifth highest ranking.

In its annual report, the company cited Iowa City’s  “sizeable tax base and stable economy bolstered by the presence of the University of Iowa” and “healthy financial operations.” 

Among the challenges that the city faces, the report warned of an employment base dominated by the UI, despite its long-standing stability within the community.

The company said a deterioration of the tax base or weakening of socioeconomic indicators along with declines in financial reserves and debt growth may present the city with future challenges.

“We are pleased that Moody’s has reaffirmed the City’s Aaa GO bond rating,” Iowa City Finance Director Dennis Bockenstedt said in a June 14 news release. “We understand that a bond rating is a snapshot in time and that the city must continue its diligence in conducting its financial affairs. The rating reflects those efforts as well as the quality of the community as a whole.”

City Councilor Terry Dickens agrees that the city Finance Department is has allowed the city to maintain its top financial status.

“It’s a matter of what you can borrow,” he said. “If we do borrow for a project, we want our interest rates as low as possible.”

Dickens said with careful planning, Iowa City officials try to spread out the timeline of city projects to allow them to be able to borrow the amount they need without overspending.

“We really worry about making sure we don’t have any debt,” he said.

Dickens says the city hope to continue this trend; however, with newly approved Iowa tax laws coming into effect, he said, the future can always be uncertain. Once the tax laws are implemented, he said, the city will have less money to work with this fiscal year.

Regardless, he believes the city remains in “very good shape” and sees at least another good year in the future.

Iowa City’s rating following a June 7 downgrade of the city of Coralville’s financial footing, following a three-year trend. Coralville currently has a Baa2 rating with the company.

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