CEDAR PARK, Texas - The City of Cedar Park has earned a perfect AAA bond rating from S&P Global.
The international credit rating agency raised the city's General Obligation Bond debt from an AA+ rating to an AAA rating, the fourth grade increase in the past 16 years for the city.
The city says a bond rating is similar to an individual person or business's credit score and higher bond ratings means the city can issue debt and refinance existing debt at a lower interest rate, ultimately saving taxpayer money. It also allows the city to stretch bond dollars further to accomplish additional projects.
Financial analysts assess a city on four components when determining its rating: City management, local economy, financial health and debt management. S&P analysts noted Cedar Park’s consistently strong performance on all four components.
According to Mayor Jim Penniman-Morin, Cedar Park is the 20th city in Texas with an AAA bond rating and the city has the sixth-lowest tax rate of those cities.
Cedar Park City Council member Anne Duffy noted that the city's practice of defeasance, or paying off debt early, in her reaction to the news. She says the city adopted the policy in 2017 and the city says since then, it has saved $5.1 million in interest.
The city says that receiving the AAA bond rating at the beginning of the May 2022 bond program maximizes the benefit for residents as it has already saved the city around $745,000 in total debt service costs on the 2022 General Obligation Bond issuance.
In May 2022, a majority of voters approved a total of $158.8 million in General Obligation Bonds for transportation, parks and recreation, and public safety. The new debt – especially when issued at lower interest rates afforded by this AAA bond rating – can be supported within the existing debt service portion of the tax rate, says the city.