The City of Sequim has received a AA- bond rating from the credit rating agency Standard & Poors. The City is working with D.A. Davidson & Co. in Port Angeles to sell $10 million in municipal bonds as part of the finance plan for the new City Hall and Police Station.
City of Sequim Mayor Ken Hays, City Manager Steve Burkett, Administrative Services Director Elray Konkel, Police Chief Bill Dickinson, Accounting Manager Sue Hagener, and Financial Advisor Annette Sommer, met with representatives from Standard & Poors in San Francisco on Friday, July 12, 2013 in a two hour presentation on the City’s management structure, financial policies, financial history, and current financial status.
“We are very excited about this positive rating,” said City Manager Steve Burkett. “Going through this extensive analysis by an outside agency and receiving such a favorable result reinforces that our conservative financial policies and practices have resulted in a financially stable and healthy position. This high rating will allow us to save thousands of dollars over the life of our bond issue. This rating is not only the result of the financial discipline of the city government, but also reflects on the basic financial integrity and stability of the entire community and our residents. I am very proud that the city of Sequim has the highest bond rating of any city on the Olympic Peninsula.”
“This presentation was a tremendous opportunity for us to sell our dream and vision for the project,” said Mayor Ken Hays. “I was the first person to present and I had the opportunity to watch the response to the rest of our group. I could see the reaction by the analysts as they learned more about Sequim and saw their enthusiasm grow. I am very proud of everyone involved and to have been a part of the team.”
Visit www.sequimwa.gov to view the presentation.
The bond rating is based on a series of qualitative and quantitative analysis. The quantitative analysis includes:
• ratios of market value per capita
• diversity of taxpayers
• available fund balance
• debt serves as a % of expenditures
• overall net debt per capita
• overall net debt as % of market value
• household/per capita effective buying income as a % of the U.S. level.
The qualitative analysis includes:
• An established “rainy day”/budget stabilization reserve
• Regular economic and revenue updates to identify shortfalls early
• Prioritized spending plans and established contingency plans for operating budgets
• A formalized capital improvement plan in order to asses future infrastructure requirements
• Long-term planning for all liabilities of a government, including pension obligations, other post-employment benefits and other contingent obligations and comprehensive assessment of future budgetary risks
• A formal debt management policy in place to evaluate future debt profile
• A pay-as-you go financing strategy as part of the operating and capital budget
• A multiyear financial plan in place that considers the affordability of actions or plans before they are part of the annual budget
• Effective management and information systems
• A well-defined and coordinated economic development strategy
The estimated cost of the new City Hall and Police Station is $15 million. To date, the City has invested $1.6 million in property acquisitions and consulting fees. These were anticipated expenses and have been paid for in cash from reserves set aside over the past 10 years for this project. It is anticipated that the City will additionally spend approximately $3.4 million in cash for completion of the project. A portion of that will be paid from the utility funds for their portion of the building and the balance from current funds set aside.
The annual debt service for the project is anticipated to be $660,000. The debt service will be covered by:
• $225,000 from the Public Safety Tax approved by voters in 2012
• $200,000 from elimination of current rent for city office space, including the Police Station
• $75,000 from Real Estate Excise Tax
• $160,000 from the current budget capacity
The new City Hall and Police Station will be built under a Design Build process. Three design and construction teams have been approved by the Sequim City Council to submit their designs. The designs are expected to be complete in the fall, and Sequim citizens will have an opportunity to provide input prior to a final decision on which team will be awarded the project. Construction is expected to begin in early 2014 and be completed in 2015.
Please contact City Manager Steve Burkett at 681-3440 or sburkett@sequimwa.gov with questions.