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The Verde Independent | Cottonwood, Arizona

home : latest news : local May 26, 2016

8/29/2013 2:43:00 PM
S&P raises Clarkdale's bond rating
Main criteria for evaluating special tax bonds
• The size and depth of the economic base

• The stability, diversity, and magnitude of the pledged special tax revenue stream

• The level of debt service coverage -- both coverage of annual debt service and coverage of future maximum annual debt service

• Bond covenants, such as funding a debt service reserve; restrictions on additional parity debt issuance; or whether excess revenues after payment of debt service flow back to the bond issuer or are retained under a closed flow of funds exclusively for early debt retirement

-- From Standard and Poor's website

Yvonne Gonzalez
Staff Reporter

Standard & Poor's rating agency notified Clarkdale officials last week that it had raised the town's bond credit rating from A to AA.

The bump up is based on factors like sales tax collections and the town's ability to pay bills, like its $665,000 Municipal Property Corporation bond, which will be paid off by 2016.

Clarkdale Clerk Kathy Bainbridge said the town's bond rating has been going up every few years despite having a small base of stores and venues to collect sales tax from. 

"It's hard for a smaller community to improve their bond rating, in most circumstances because we are very limited in our sales tax base," Bainbridge said. 

Sales tax collections are evaluated on consistency both including and excluding special projects, and whether they are sufficient to pay off debts. The town took out its bond in 1996 to pay for a sewer interceptor line.

The "AA" rating is second-best grade among 12 that start at "D" and go to "AAA."

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Reader Comments

Posted: Saturday, August 31, 2013
Article comment by: Now have lost faith in S&P analysts

Anyone who thinks Clarkdale is in a stronger financial position than Cottonwood needs to have their head examined.

Posted: Saturday, August 31, 2013
Article comment by: Really VI

"In actual practice, Cottonwood Water Works will be directly acquired by the City of Cottonwood. Then an independent agreement will allow for the exchange of property between the two municipalities."

This is taken from a 12/10/2005 story penned by Mr. Hutchinson. Before you go overboard patting Clarkdale on the back you might want to recollect that Cottonwood had to carry the bond load for the Cottonwood Water Works purchase which is listed as a liability for Cottonwood and an asset for Clarkdale. Easy to tout your fiscal standing when someone else has to carry your debt load on their books.

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