City of Basehor’s bond rating upgraded
The city of Basehor this week learned that its bond rating has been upgraded.
In the process of issuing $1.36 million in bonds for infrastructure projects, the city was reviewed by Standard & Poor’s, and based on the financial stability and management of the city, the financial rating firm improved the city’s rating from AA- to AA.
“The upgrade reflects our view of the city’s sustained strong budgetary performance and very strong budgetary flexibility, coupled with enhanced financial management practices that we consider strong,” the report stated.
The report stated that Basehor’s economy is considered to be strong, with a projected per capita effective buying income of 125 percent of the national level and an overall city market value that grew 3.7 percent over 2014 to $398.5 million this year.
Standard & Poor's also noted the city's favorable position in the Kansas City area and proximity to Lansing, Lawrence and Leavenworth, giving residents multiple employment opportunities.
The report stated the city’s management is strong and rates financial polices and practices as “good,” always maintaining more than 10 percent of budgeted expenditures as reserve funds. It notes the city lacks a formal debt management policy.
But Basehor’s plan to save up for the 2020 city campus project seems to have strengthened ratings, with $1.3 million set aside already in a capital improvement fund, giving the city a high available fund balance and strong budgetary flexibility. The city was noted for strong liquidity, as it limits investments to certificates of deposit and investment pools.
The one mark against the city was that its debt and contingent liability profile was considered weak, but noted that more than 70 percent of the city’s current debt was to be repaid within 10 years, which is a positive credit factor.
The city was upgraded to AA- in 2012. When it maintained that rating as it refinanced bond debt in early 2013, city officials were told that Basehor was the only city or county in the state with a population under 5,000 that held an AA- bond rating — only Fairway, in northeast Johnson County, held a higher rating.
While Standard & Poor's did not confirm Basehor's ranking among like-sized cities this time around, Lloyd Martley, city administrator, believes it likely remains true. The city of Fairway reports that its bond rating was increased from AA to AA+ in August 2014.
"It probably is a true statement because most cities of our size will not be given that good of a bond rating," Martley said. "It has a lot to do with our financial management and location of our city."