By Erich Wagner
Laura Triggs, the city’s acting chief financial officer, felt upbeat ahead of her team’s trip to the market Wednesday to sell bonds and raise money for city infrastructure and school upgrades.
“We got AAA from both [ratings agencies],” Triggs said. “We’re happy. We work hard for those ratings.”
Earlier this month, Moody’s and Standard & Poor’s reaffirmed Alexandria’s AAA bond rating, allowing the city to borrow money at low interest rates. But for the third year in a row, Moody’s gave the Port City a “negative outlook” because of its proximity to Washington and ties the federal government.
City officials said — as they have in past years — that the caveat does not affect borrowing money.
“It’s almost the opposite,” Triggs said. “We’re such a good credit that last summer we [were] oversubscribed six times. So there were six or eight bids; there was competition for those bonds.”
Triggs said the negative tag is common in Northern Virginia since many federal government employees live here. And ratings agencies are keeping a closer eye on the region because a harsh federal austerity program could hurt local governments’ revenues.
“It could negatively impact us,” she said of the possibility of further federal budget cuts. “Of course we still have something we could do about it with our fiscal management team.”
Stephen Fuller, director of George Mason University’s Center for Regional Analysis, said that the negative outlook is more of an asterisk for lenders than a sign to push up interest rates.
“It just alerts potential issuers to ask some questions and be a little more cautious in their due-diligence work,” Fuller said.
The city’s finances are in good order, in Fuller’s estimation, with revenues on the rise. The major federal ties to Alexandria are either self-sufficient, in the case of the U.S. Patent and Trademark Office, or not in danger of budget cuts, in the case of the coming National Science Foundation.
“The effort to attract the NSF may seem a little incongruous to diversifying [the tax base],” he said. “But more [importantly], it creates an aura that will hopefully make Alexandria more attractive to private business investment.”
There is one thing that could negatively impact the city’s borrowing — ironically, the improving economy.
“It’s something that affects the overall municipal [bond] market,” Triggs said. “With the good news from the [Federal Reserve] and the fact that overall the interest rates on homes have gone up in the past 30 days, those are the things that impact us more than the negative outlook.”
City staff continues working on getting Alexandria’s negative outlook removed, but Triggs said it likely wouldn’t be stripped until uncertainty at the federal level goes away.
“If there’s a good federal budget,” she said. “It’s linked to the actions of only Moody’s, so when they feel the federal government is stabilized, [the government’s credit rating downgrade] will disappear, and when that disappears, ours disappears.”