Eleven bidders step up to auction for City of Kingsport refunding offer
KINGSPORT ‚¬ With continuing clean audits and high credit ratings reaffirmed by Moodys and Standard & Poor, eleven major institutional bidders jumped at the City of Kingsports $43 million refunding offer this week.
The confidence of the markets, international rating companies and sound fiscal management are all clearly evident by the results of this bond offer, City Manager John Campbell said Tuesday. All of our departments, the Finance Department and Budget office work tremendously hard every day assuring our financial house is in order, and that we are indeed providing the best possible services to our residents at the lowest possible cost.
A refunding is similar to a refinancing opportunity at the household level. The $43 million refunding essentially refinances about 25 percent of the Citys total debt, and will save the city $2.77 million over the life of the bonds, with maturity dates unchanged from the original bond dates.
We applaud the Board of Mayor and Aldermen for the sound fiscal management policies established by the Board, Campbell said. This refunding will save the City about $138,000 annually, which well exceeds the Citys policy of 3 percent savings for a refunding bond offer and eclipsed our internal target of 5 percent savings due to the strong demand from bidders.
Kingsport recently received a clean opinion on its finances from auditors for the 2012 fiscal year, the highest opinion available in public accounting, the 13th straight year with such an opinion.
The undesignated fund balance grew to $12.5 million, well above the Boards self-imposed $11.4 million reserve policy. In addition, the City maintains a Fleet Reserve internal service fund, paid for through depreciation on rolling stock charged back to departments for the use of vehicles.
This fund was at $5.1 million at the end of fiscal 2012, and expected to grow to $6.5 million by the end of fiscal 2013. Although designated for use in rolling stock, the Board of Mayor and Aldermen has full discretion in how those funds are used.
We have a number of internal reserve fund accounts that most cities our size do not have, Campbell said. In addition to the undesignated General Fund balance and Fleet Fund, we also maintain sizeable balances in reserve for our Workers Compensation and Health Insurance programs.
In fiscal 2012, property taxes grew by $1.1 million, and local sales tax collections grew by $1 million.
Kingsport maintained its Aa2 credit rating with Moodys Investor Service and its AA- credit rating with Standard & Poors.
In particular, Moodys noted in reaffirming its rating that the Kingsport housing market remained stable despite the national recession and housing crisis, with average selling prices increasing 20.4 percent in fiscal 2012.
In addition, assessed property value grew by 5.1 percent over the past five years, driven by commercial and residential growth, as well as annexation. And, unemployment continues below state and national averages. Per capita income for City residents in 2012 was 102.9% of the state and median family income of 97% of the state.
