ENM sees upgrade in credit rating

The Elko New Market City Council received some very good and surprising news at its Thursday, Nov. 21, meeting. The city’s General Obligation bond credit rating jumped three notches to AA+.

Terri Heaton of Springsted Incorporated, the city’s financial advisory firm, explained the upgrade was in conjunction with the sale of a $2.2 million General Obligation Bond. The bond was for a trail project to connect two existing trails, a new garage for the Elko New Market Police Department and the Public Works Facility.

Standard & Poor’s Ratings Services issued the rating. The credit rating is an increase from the A1 rating that Elko New Market had previously received from Moody’s Investor Service. The A1 rating from Moody’s would have been equivalent to an A+ rating on the Standard & Poor’s rating scale. The AA+ rating is only one step below AAA, the highest credit rating provided by Standard & Poor’s.

The AA+ rating places Elko New Market “among the elite ranks of cities in Minnesota rated by Standard & Poor’s,” a memo presented to the council said. Of the more than 250 cities in Minnesota rated by the agency, only 28 have credit ratings of AA+ or higher. Of those, only five have populations below 10,000 and Elko New Market is one of only two with populations below 5,000.

The rating is also notable due to the rapid improvement since the city’s first credit rating of A3 in 2007. According to Heaton achieving the AA+ rating in less than seven years is incredible.

Mayor Tony Gabriel said, "We are very excited and pleased by the rating. It is a reflection of our vision for the city in which we strive to be financially sound, engaging in long term financial planning to provide municipal services without undue burden to the taxpayer. This rating recognizes the hard work of the current and past councils, our staff and consultants to achieve that vision."

Standard and Poor’s identified strong budget flexibility and performance, liquidity and management as part of the rationale for the rating. City Administrator Tom Terry stated that those factors are closely aligned with the city’s budgeting and financial planning philosophy.

Heaton stated that the new rating will save the City more than $50,000 on this bond issue. The savings are due to the lower interest rates as a result of the improved credit rating. Heaton noted that the improved credit rating will also provide savings on future bond issues.

Acting Mayor The council appointed council member Bob Crawford as acting mayor for any times that Mayor Gabriel is absent. Crawford will be replacing council member Ken Sulich, who held the position until recently. Sulich, who is moving to New Prague with his family, submitted his resignation, which is effective Monday, Dec. 2.

There are two candidates to replace Sulich. There are Diana Kroska and Hank Marotske. The council has tentatively set a special meeting on Tuesday, Dec. 10, for interviews of the candidates.