Council hears that Gainesville's borrowing power is strong

GAINESVILLE – Gainesville's City Council heard good news at their called meeting Thursday afternoon from Dianne McNabb, Director of Public Financial Management, Inc.

McNabb's firm has had a relationship with the city, supplying financial services and advice. Her comments brought a smile to everyone seated at the Council table.

"It’s obvious how favorably the City of Gainesville is viewed by the capital markets," McNabb said.

"There was exceptional demand for the City of Gainesville’s bonds," McNabb began. "Moody’s affirmed the City’s general obligation and credit rating at AA2, which is extremely high for a local government."

"S&P (Standard & Poor’s) affirmed a plus rating but assigned a "positive outlook” to the rating…which basically means we can expect an upgrade from them in the near future."

McNabb added that in the current economy rating agencies (such as Moody’s and S&P’s) are not generous with upgrades, receiving a "positive outlook" is a very good sign and should be commended.

McNabb explained that Gainesville’s 2012 tax-exempt 7-year bonds received a rate of 0.99 percent, including all underwriting costs, and that the City’s 15-year taxable bonds received a rate of 2.56 percent.

The taxable bonds will be used to finance the purchase of the former Hall County jail. Taxable bonds are required for this transaction because the property is currently leased to a for-profit company.

McNabb further explained that using the improved interest rates will allow bonds issued in 2004 to be redeemed, realizing a net saving to the City of almost $55,000 annually.

"One of the contributing factors to this great rating," Mayor Danny Dunagan said, "was our reserves that we had built up."

But the question needs to be asked: Since Gainesville now appears to have easier access to borrowing, will spending become easier?

City Manager Kip Padgett was quick to respond, "No, we’re not going to borrow more just because we can. We’re not going to do that."

"We’re building up our reserves…making sure each acquisition is in line with our mission and goals…not buying anything we don’t need," Padgett added.

The final pricing of the Series 2012 Bonds was approved unanimously.