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Buckley City Council authorizes bond-rating study before issuing bonds for fire station
Buckley City Council members have unanimously authorized a bond rating analysis of the city, a necessary step prior to the issuance of a $2.5 million bond that will finance a replacement fire station.
"They interviewed us today, asked about our budget and what we're doing to make ourselves solvent," Mayor Pat Johnson said shortly after council adjourned from its Oct. 26 session.
The bond raters will examine the city's revenues against any cost liabilities to determine a rating of investment risk – essentially, whether the city has a good credit history.
The fire station bond is a long-term bond being evaluated in two series valued at $2.5 million each for a total of $5 million. It will be due for repayment to investors on Dec. 1, 2039, according to the letter the bond-rating firm S&P sent to City Administrator Dave Schmidt.
S&P uses a letter rating system of 22 levels for long term bonds. The levels include the top level AAA – a prime investment with little likelihood of default – to ninth highest rated level BBB, the threshold before a bond is considered a "junk bond." The 22nd and lowest level, D, is reserved for an institution in default.
Johnson is optimistic about the rating.
"One thing they asked us was if we owe any money on our fire trucks," Johnson said. "We don't owe anything on the trucks, they're paid for. We don't buy on credit. It's not how I run my household and it's not how we run our city."
Johnson noted that the bond process is new to everyone in Buckley government, as the last time the city would have had to consider a fire station bond was 1950, when the current fire station was authorized.
The only other city asset purchased on credit is the wastewater treatment plant. Plant construction was funded by Public Works Trust Fund loans, 20-year loans with an interest rate of 0.05 percent.
In other action Oct. 26, the council:
• adopted the 2009 edition of the International Fire Code.
• affirmed Pierce County's adoption of an ordinance that requires property owners seeking a tax credit for open space designation to go through a joint process involving both the county and the city.
• approved a sewer operating agreement with the Department of Social Health Services in which the city's wastewater treatment plant will process waste from Rainier State School.
• approved a new contract with City Attorney Phil Olbrechts, who is leaving the firm Ogden, Murphy and Wallace. Under the new contract, Olbrechts will continue to work as city attorney, but the city will still receive services from OM and W's other attorneys.
• approved a grant agreement for relocation of 2,700 lineal feet of the raw water transmission line.