City of Edina Debt & Cash Flow
We have received questions about the City’s bond rating and debt. The City has not made any recent changes, or received new information related to debt. City Council and Staff regularly discuss the City’s long-term financial strategy to ensure flexibility and resiliency for future needs. Below is a summary of the City’s bond rating and debt.
- The City’s debt totals about $112 million, and 80 percent of it is scheduled to be paid off in 10 years. Annual payments for all current debt are planned 3 to 5 years in advance, and paid for by property taxes or user fees, depending on the type of debt.
- The City maintains the highest possible triple-A bond rating from both Moody’s and Standard & Poor’s, which were re-affirmed in 2019. Debt is one portion of ratings process. Other factors such as a robust tax base, strong budgetary performance, liquidity and financial management supports the city’s overall extremely strong credit profile.
- For several years, the City Council and staff have discussed a long-term strategy to increase cash payments for future projects and reduce long-term reliance on debt. The strategy is to increase funding to the City’s Construction Fund as debt is paid off.
Questions and Answers:
Q: Does this mean that the City is low on funds?
A: No. Financing for debt is evaluated and the amount issued is determined based on available cash balances and the impact on either user rates or property taxes. Annual payments on debt are budgeted and planned for. Staff is not recommending paying off debt sooner than called for based on current market conditions.
Q: What is the debt for?
A: $60.4 million is for infrastructure improvements, such as streets and utilities, which are funded through utility fees and special assessments.
$37.6 million is for public buildings, such as City Hall, Fire Station 1, and Public Works, which are funded by the annual property tax levy.
$14 million is for various recreation facilities improvements including Braemar Arena and Golf Course, which is funded through user fees from those facilities.
Q: Moody’s credit report mentions the City’s debt. Is the City’s bond rating in jeopardy?
A: No. The comments from Moody’s are not new and have been mentioned in previous reports as well. Both Moody’s and Standards & Poor’s cite our robust tax base, very strong budgetary performance, liquidity, and management as outweighing the concerns for the level of debt. For both agencies, the level of debt is only 10 percent of the overall score. Edina is one of just a few communities in Minnesota with both triple-A bond ratings. Others include Apple Valley, Bloomington, Burnsville, Eagan, Eden Prairie, Maple Grove, Plymouth, Rochester, Roseville and Woodbury.
Q: Do you have a plan to reduce the level of debt?
A: For many years, the City Council and staff have been discussing a long-term strategy to increase cash payment for future projects and reduce long-term reliance on debt by increasing funding to the Construction Fund as debt is paid off over several years.
Q: Why haven’t I heard about this before?
A: The City shares information in a variety of ways. Information about the City’s bond rating and debt has been published in Edition: Edina, the monthly newsletter mailed to all homes in Edina; in press releases posted to the City’s website; and through City Extra emails. You can subscribe to receive this information via email by visiting EdinaMN.gov/CityExtra. Additional information is also provided in the Quarterly Financial Report, Comprehensive Annual Financial Report and the Popular Annual Financial Report. All of these are available online at EdinaMN.gov/FinancialReports.
For more information about the City’s debt and bond rating, contact Assistant Finance Director Kyle Sawyer at 952-826-0420.
Read a post on this topic from Mayor Jim Hovland.