Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, January 16, 1994 TAG: 9401160138
SECTION: VIRGINIA PAGE: B-4 EDITION: METRO
SOURCE: By JOEL TURNER STAFF WRITER
DATELINE: LENGTH: Medium
Finance Director James Grisso predicts the rate will be between 5 percent and 5.25 percent, the lowest since the 1960s.
The rate on Roanoke's last bond sale, in 1992, was 6.1 percent. The last time the rate dipped below 6 percent was in 1972, when the city sold a $10 million bond issue at 5.8 percent.
The new bonds will finance the Hotel Roanoke Conference Center, a jail annex, renovation of the juvenile detention home and sewage treatment plant expansion.
Roanoke's chances for a low interest rate this week have been bolstered because it has retained its double-A rating on the bonds. It is the second-highest rating for government bonds.
As a general rule, the higher the bond rating, the lower the interest rate.
The ratings are made by Moody, Fitch and Standard & Poor's primarily for investors who are interested in buying the bonds. They reflect a locality's financial condition and ability to pay off bonds.
Only a few Virginia localities have a triple-A rating. Charlottesville, Fairfax County and Henrico County are among them.
Before each sale, localities ask the agencies to rate their bonds.
All three rating agencies cited Roanoke's diversified economy and its stable financial condition.
Moody's said Roanoke's "steady tax base growth, moderate unemployment rates, and income levels in line with the region reflect favorable measures of performance."
Moody's also said the city's "financial operations are consistently maintained with support by various revenue sources."
Said Fitch: "The city's financial performance has been strong, with good balances maintained." The agency went on to say the city's revenue base is "diverse, enabling the city to enjoy the benefits of its regional nature through various taxes."
Standard & Poor's said Roanoke's rating reflects:
A metropolitan area that has experienced economic and tax base expansion despite the recent recession.
A good financial position.
A manageable debt burden.
Even with the additional $35.8 million in bonds, the city will remain far below its debt limit of $300 million.
State law permits cities to issue bonds equal to 10 percent of the assessed value of real estate within their boundaries. The assessed value of real estate in Roanoke is $3 billion.
The city's bonded debt is $88 million.
This includes $30 million for improvements to the water system and $8 million for parking facilities, which will be repaid with special fees and charges. Those bonds don't count against the limit because they are not part of the general fund debt that is repaid with tax revenues.
by CNB