Rating & Outlook Reaffirm Albany’s Sound Fiscal Management
ALBANY, NY – Today, Albany City Treasurer Darius Shahinfar & Mayor Kathy Sheehan announced that Standard & Poor’s (S&P) recently issued Albany an “A+” bond rating with a stable outlook, as well as the results of the January sale of its bond to purchase streetlights in the City of Albany. As part of their bond rating analysis, S&P stated that Albany has “strong management, with good financial policies and practices” and well as “strong institutional framework[s].”
“The ratings agencies and the bond market showed their continued confidence in the finances and management of the City of Albany as our bond rating of A+ with a Stable Outlook was reaffirmed by Standard & Poor’s,” said City Treasurer Darius Shahinfar. “This led to the purchase by Key Bank (who is also the provider of banking services for the City) of $26 million in bonds at a net interest rate of 2.83%. The lower than expected bond interest rate resulted in a savings of about $800,000 in total interest costs based on pre-sale forecasts of 3.15%.”
“This validation by S&P shows that our work to put Albany on the path toward a sustainable fiscal future is paying off,” said Albany Mayor Kathy Sheehan. “As we continue to rebuild our fund balance, hold the line on taxes, and improve our liquidity, S&P’s report also highlights the importance of Capital City Funding and the detrimental impact it will have on our City and our ability to borrow should it be reduced or eliminated.”
As the City’s Chief Fiscal Officer, Shahinfar is responsible for issuing debt and managing the City’s investments. The reaffirmation of Albany’s “A+ Stable Outlook” bond rating was a significant reason for the lower than expected interest rate.
“The bond issuance will be used to purchase City streetlights leading to annual cost savings of approximately $4.5 million,” said Shahinfar. “When all costs are factored in, including the cost of borrowing, the City expects to realize an average annual savings of approximately $1.3 million over the 15-year term of the bond, assuming that further borrowing to complete the sale is unnecessary.” (Note: $3.3 million in bond authorization was not acted upon, but may be used to complete the project if those funds prove to be necessary.)
“The strong bond rating and interest rate reflect the confidence of the capital markets in City leadership, and our ability to address our financial issues and meet our financial obligations despite the constraints we face,” Shahinfar said. “However, in order for Albany to achieve a stronger rating and thrive, we must continue to push for our fair share of State Aid and payments in lieu of taxes (PILOTs) from the New York State. Strong municipal leadership can only take a city so far when we are faced with uncontrolled costs like health care.”
“I also want to thank the Common Council for providing the necessary authorizations for this transaction, and for their continued commitment in shaping Albany’s future,” Shahinfar added.
Fiscal Advisors and Marketing, Inc. served as financial advisor to the City on this transaction. It is the largest independent financial advisory firm in New York State.