DeKalb County got a rare bit of good news Thursday: Its financial outlook is officially stable.
Moody’s Investor Services upgraded the outlook on general debt from negative, while maintaining an Aa3 rating, a signal to investors that there is very little risk to buying DeKalb’s general obligation bonds.
This means taxpayers will pay less in interest on about $144 million the county plans to borrow as part of a refinancing plan by year’s end. The refinancing itself is designed to save taxpayers at least $21 million through lower interest rates.
The upgrade could mean even lower rates – and more savings. It also means after a string of bad headlines – from the 2011 downgrading of the county credit’s score to this summer’s indictment of CEO Burrell Ellis on political corruption charges – DeKalb’s efforts to improve its image could be paying off.
“This is the result of a lot of hard work and tough decisions to improve our finances,” said interim CEO Lee May, who recently traveled to New York to present the latest financial picture to several rating agencies. “We’re happy it has paid off.”
DeKalb has worked to get its financial house in order since it ended 2010 with no money in reserve. In the spring of 2011, rating agencies dropped its credit score three times in as many months.
Later that year, Moody’s upheld the county’s credit rating but assigned a negative outlook it said it would only remove when the county’s “structural balance is restored.”
The county projects to end 2013 with $31 million in reserve – just shy of the $40 million goal that represents having one month’s expenses in savings.
Moody’s cited that improvement in upgrading the county’s outlook for the upcoming bonds.
“The outlook acknowledges the revenue enhancements, expenditure reductions and improved transparency practices implemented by the county in efforts to regain structural balance and meet stated reserve targets,” Moody’s wrote.
DeKalb expects to offer the bonds, including $54 million in general obligation debt and $43 million for payments to Grady Hospital, by year’s end. The county will not know what interest rate its offering earns until it actually issues the debt.
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