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What Moody’s AAA credit rating means for Boca

Moody’s Investors Service gave Boca a triple AA bond rating again. But what does that really mean for the city’s future?

We asked Jackie Reeves, managing director of Bell Rock Capital registered investment advisory firm to translate. Reeves is chair-elect of the Boca Chamber board of directors and a trustee.

Q: Moody’s reported the city’s credit position and water and sewer credit are the highest of 10 grade levels. The report added the tax base is “significantly stronger” than the U.S. median. And median family income is “very strong.” Why is that a big deal?  

A: A city bond rating is important. It will really portray someone or a city’s credit history, their credit quality over time. Their overall risk. How risky is that city to invest in and live in and work in? It measures the likelihood of the city paying back debt with interest over time.

Q: Is that why the city’s property tax rate or millage wasn’t raised in this budget?

A: A well-run city has the ability or flexibility of a lower rate. It doesn’t need to raise money elsewhere. If you didn’t have a good credit rating and were paying higher interest on your debt, you may have to increase millage.

Jackie Reeves

Q: What is Moody’s looking for specifically?

A: How have you managed your finances over time? What is your debt to equity ratio? Are you over leveraged? It takes into account what the whole area looks like. Strong diverse employment base. Great university. Large and diverse businesses, large corporate headquarters, small businesses, startups. There are some towns, when a big employer left, it cratered the city. When IBM was here in the ‘70s, it changed the town. Now it’s more diverse and blends with the colleges and university to make sure we can grow our talent.

Q: What else factors into the rating?

A: The private airport with a customs feature is very attractive for the community. It allows for a more concierge service for executives and high-net wealth individuals to come and go with ease.

Q: What about Standard & Poor’s and Fitch Group, two other rating agencies?

A: They all operate independently. Their reports don’t come out at the same time. You can go back and see there has been a strong rating over time.

By Marci Shatzman

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