Earlier this month, Moody’s, Fitch Ratings, and Standard and Poors affirmed the City’s 2022 Bond outlook. The ratings apply to series A & B General Obligation bonds and included Moody’s (Aa1), Fitch Ratings (AA+), and S&P (AA+).
City Manager Michael Mallinoff credits the stable outlook for Annapolis City debt obligations to Finance Director Jodee Dickinson’s 2018 implementation of new financial systems that more accurately track City finances. These systems were implemented at the direction of former City Manager Teresa Sutherland and further solidified during City Manager David Jarrell’s tenure.
“I must commend my predecessor, David Jarrell, for his two years of City financial management,” Mallinoff said. “He steered the City toward infrastructure improvements and resiliency efforts, including the rebuild of Hillman garage and the reimagining of City Dock.”
The 2022 ratings will be key to the City’s December 7 bond sales, which include $36.77 million in series A (tax-exempt) and $8.5 million in series B (taxable) bonds. The series A General Obligation monies will be used to finance certain capital projects in the City. Proceeds from the series B bonds will be used to refund the subordinate debt associated with the Hillman Garage project for savings.
Prior to Mayor Buckley’s tenure, the bond rating for Annapolis was Aa3. In 2017, the rating was upgraded to Aa2 with a positive outlook. It remained there until 2021 when the ratings were upgraded to AA1 and AA+.
In early November, Mayor Buckley, City Manager Mallinoff, and Finance Director Dickinson traveled to New York City to pitch the City’s financial position to ratings agencies.
“In my first term, we began a process to align the City with modern accounting practices,” said Mayor Buckley. “That meant ensuring every expenditure has a line item and every outlay is accounted for. This methodology was crucial as we navigated the pandemic and subsequent economic challenges. These ratings show that Annapolis is a strong City with a solid tax base and liquidity across government functions, which has helped us weather a difficult period in the City’s history.”
About Bond Ratings
Bonds are units of debt that represent a loan (typically made by corporations or governments). Bonds are some of the safest investments due to the ability of credit rating agencies to assess the risk of default by studying available public information. Agencies rate the bonds by assigning grades: AAA is the highest quality and grade, followed by AA and A. Bonds rated B and C are low-grade and highly speculative. Grade D bonds are in bankruptcy or default. The higher the bond’s rating, the lower the interest rate it will carry. Bonds are used by municipalities like the City of Annapolis to finance capital expenditures and projects.
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