City of Hickory receives improved credit rating and prepares to issue second round of bonds
Oct 18, 2019 | Communications , City Manager , City Council , Bond Information , Aviation Walk , Book Walk , City Walk , Downtown , Riverwalk
Published: October 18, 2019
Moody’s Investors Service (Moody’s) upgraded the City of Hickory’s credit rating to Aa1 for its upcoming 2019 general obligation public improvement bonds. In addition, S&P Global Ratings (S&P) recently affirmed the City’s strong AA+ rating.
Obligations rated Aa by Moody’s are judged to be of high quality and are subject to very low credit risk. There are three classifications within the Aa rating (Aa1, Aa2, and Aa3), with Aa1 being the second highest rating available from Moody’s, one notch behind its Aaa rating. Hickory’s new Aa1 rating is an improvement over the Aa2 rating held last year.
AAA is the highest credit rating that can be attained from S&P and signifies that the local government is extremely stable with very little risk of default and significant levels of reserves to weather any downturn in the economy. There are three classifications within the AA rating (AA+, AA, and AA-) from S&P. The AA+ rating is the second highest rating available to municipalities. In 2018, S&P upgraded the City’s rating to AA+ from AA.
Assistant City Manager and CFO Rodney Miller stated, “This upgrade in credit rating from Moody’s validates that the City’s bond program is working and is stimulating other revitalization efforts throughout Hickory. The City’s prudent management and strong budgetary performance further support the economic momentum we are seeing locally.”
The City’s Crafting Hickory initiative for revitalization is already resulting in significant opportunities for growth and development. Two large projects were recently announced for the downtown area of Hickory. The first was a $7 million affordable rental community for seniors located along the planned Book Walk and City Walk paths. The second project will construct a $19 million six-story mixed-use development across from Hickory City Hall in Downtown Hickory.
These projects, along with many other housing and commercial projects currently underway, are examples of the type of economic activity and development the City hoped to stimulate with its bond program.
In 2018, the City worked with the Western Piedmont Council of Governments to produce the Hickory Trail Report, a document which sets clear goals for revitalization efforts and calculates economic impacts of the City’s bond projects. Based on the analysis, the report conservatively estimates that the Hickory Trail will generate $500 million in private investment, 8,000 new jobs, 1,750 new housing units, and a 3,500 increase in population by 2035.
In an effort to market Hickory and its economic resurgence, the City’s Office of Business Development launched MyHKY.com earlier this year. MyHKY.com is an interactive, virtual tour of the Hickory metro region, featuring 360-degree aerial photos, videos, links, and information.
The City of Hickory is committed to financial transparency throughout the bond program and utilizes Socrata, an open data platform, to share financial information. Those wishing to keep track of the City’s spending of bond funds can also visit the Bond Financial Budget section on the City’s website, HickoryNC.gov.
“It’s truly exciting to see the City’s recent investments yield such positive results. Hickory is a special community with a great story to share,” added Hickory Mayor Hank Guess. “The recent bond ratings reflect the economic stability of the City of Hickory and the fact that the City continues to be a good steward of citizens’ tax dollars. Staff at Moody’s acknowledged the City’s efforts with MyHKY.com and Socrata as contributing factors in upgrading Hickory’s bond rating. It is great news for the City to have earned the confidence of the world’s leading credit rating agencies.”
Second round of bonds
The assigned credit ratings determine the City’s interest rate when issuing bonds in relation to the $40 million bond referendum passed by Hickory citizens. Hickory City Council approved, at its October 1 meeting, to issue up to $15 million of general obligation public improvement bonds in 2019, as the second of three rounds of bond issues. The City issued $15 million of bonds in fall 2018 to cover some costs of the City Walk, Riverwalk, U.S. Highway 321/70 gateway, and Trivium Corporate Center, in addition to other project related expenses.
In this second round, another $15 million of bonds will be sold on October 29 with a closing date planned for November 19. This bond issue will primarily fund the second phase of various citywide capital improvement projects, including Riverwalk, City Walk, and enhancements to Trivium Corporate Center.
The third and final round of bonds is scheduled for issuance in 2021.
For more information about the City of Hickory’s bond projects, please visit https://www.hickorync.gov/content/bond-information.