Moody's re-assigns desirable Aa3 bond rating to Lakewood

Thomas J. George · Post by **Thomas J. George** » Thu May 10, 2007 8:47 pm

Observers,

New York, May 8 2007-Moody's Investor Service has assigned a Aa3 rating to the City of Lakewood's (OH) $10.84 million Various Purposed GOLT Bonds, Series 2007. The Aa3 rating applies to $59.828 million of general obligation limited tax debt, including the current offering.

MODEST BUT IMPROVING FINANCIAL POSITION..

Moody's expects the city's financial position to remain stable over the near term...the city reduced its workforce through attrition and achieved other operating efficiencies so as to restore structural balance, leading to modest surpluses in fiscal 2005 and fiscal 2006.

Income taxes, the city's primary operating revenue stream at 50.1% of fiscal 2005 revenues, were flat to declining from 2001 to 2003, but rebounded in fiscal 2006.

MATURE SUBURBAN CLEVELAND CITY EXPERIENCING MODEST GROWTH

Lakewood's mature tax base continues to see modest growth...significant commercial and residential development projects are underway or recently completed. Projects include town home and condominium projects mixed with retail outlets.

Resident income levels slightly exceed national norms, with per capita and median family incomes equivalent to 110.9% and 106.8% of national figures, respectively.

MANAGEABLE DEBT LEVELS

Moody's expects the city's debt position will remain above average, yet manageable, given continued modest tax base growth and moderate future capital needs....and (debt) retirement is favorable with 64% of principal repaid within 10 years.

Kenneth Warren · Post by **Kenneth Warren** » Thu May 10, 2007 9:34 pm

Congratulations, Mr. Mayor, to you and your finance team, on your efforts and your successful presentation to Moody's. Although you did not get your income tax increase, you managed to keep the fiscal ship moving in the right direction, exceeding, I would say, expectations.

By the way, I think it's worth pointing out that an Aa3 rating could be found for bonds issued in a progressive northern city such as Burlington, Vermont in 2006. Not a bad comp, in my book.

Kenneth Warren

Lynn Farris · Post by **Lynn Farris** » Thu May 10, 2007 9:55 pm

Congratulations to everyone, Mayor, Council, especially our finance director Ms. Jennifer Pae and Finance Committe Council President Seelie, Councilperson Madigan and Councilperson Butler.

This should put to rest all those nay sayers who keep saying that the city is broke.

Thanks you all.

Bryan Schwegler · Post by **Bryan Schwegler** » Fri May 11, 2007 5:13 am

Thank you Mr Mayor for sharing this great news. I applaud you, the finance director, and City Council for achieving this.

Gary Rice · Post by **Gary Rice** » Fri May 11, 2007 7:14 am

Allow me to extend my congratulations to the Mayor, and all who were involved in the recent continued and remarkable success stories that comprise the contemporary Lakewood saga.

This type of working together for a common goal can produce results far beyond "reasonable expectations".

There are so many interests involved in a city; from labor, to business, and the citizenry. For all of us to have been able to do as we have done thus far together, speaks well for the future of our town.

It's a great time to live in Lakewood!

Jeff Endress · Post by **Jeff Endress** » Fri May 11, 2007 7:15 am

This is indeed welcome news. I think that the Mayor was hard at work on the bond rating when the inquiry was put forth about "anyone seen the Mayor lately".

Jeff

Suzanne Metelko · Post by **Suzanne Metelko** » Fri May 11, 2007 9:21 am

Jeff,

Didn't you say he was with you at the Library?

This is indeed good news. It shows that the city didn't need a tax increase as originally proposed by Mayor George.

In the meantime - what about the report of the Tax Committee to City Council? What should we make of that?

Suzanne

Jeff Endress · Post by **Jeff Endress** » Fri May 11, 2007 10:03 am

No Suzanne.....I said that I had seen him at the library and that he told me that he had been in Chicago......But, the Mayor is bound to pop up pretty much anywhere.

Have a good weekend

Jeff

Suzanne Metelko · Post by **Suzanne Metelko** » Fri May 11, 2007 10:46 am

Jeff Endress wrote:No Suzanne.....I said that I had seen him at the library and that he told me that he had been in Chicago......But, the Mayor is bound to pop up pretty much anywhere.

Have a good weekend

Jeff

and...........?

Jeff Endress · Post by **Jeff Endress** » Fri May 11, 2007 11:26 am

and...........?

Enjoy the sunshine and get some gardening done?

Jeff

Ryan Patrick Demro · Post by **Ryan Patrick Demro** » Sat May 12, 2007 2:30 am

Here is the full story, an excerpt from a weekly Jennifer Pae email:

This week we received the final report from Moody's for our 2007 General Obligation Long Term (GOLT) debt issuance (see Attached). This confirms that we have retained our Aa3 rating, and the negative outlook designation given with our 2005 issuance has been removed. However, I want to elaborate on the following heading in the report "MODEST BUT IMPROVING FINANCIAL POSITION; INCOME TAX RATE INCREASE EXPECTED":

So Moody's was told that we would be increasing taxes.

City Council rejected the tax this year and I will lead the effort to defeat it again.

Jim O'Bryan · Post by **Jim O'Bryan** » Sat May 12, 2007 7:02 am

Ryan Patrick Demro wrote:Here is the full story, an excerpt from a weekly Jennifer Pae email:

This week we received the final report from Moody's for our 2007 General Obligation Long Term (GOLT) debt issuance (see Attached). This confirms that we have retained our Aa3 rating, and the negative outlook designation given with our 2005 issuance has been removed. However, I want to elaborate on the following heading in the report "MODEST BUT IMPROVING FINANCIAL POSITION; INCOME TAX RATE INCREASE EXPECTED":

So Moody's was told that we would be increasing taxes.

City Council rejected the tax this year and I will lead the effort to defeat it again.

Ryan

"Here is the full story, an excerpt from a weekly Jennifer Pae email:"

How do we get the full story with an excerpt?

Where is the rest?

Did Jennifer Pae put that in all CAPS?

Thanks for the insight.

Does this mean you are taking the pledge not to raise taxes?

For how long? 1 year? 2 years? 3 years? 4 years? more?

Can you actually lower our taxes?

Where will the cuts be made?

How much will be saved?

What programs will we loose?

How will this help security and cleanliness of our city?

Just curious.

.

Suzanne Metelko · Post by **Suzanne Metelko** » Sat May 12, 2007 7:44 am

Two years ago the mayor presented the idea of an income tax hike. It was defeated because it couldn't be substantiated clearly and within the context of a strategic plan. Running out of money wasn't a good enough reason.

The city still doesn't have a plan, and still can't tell us what happened to create the need and what future needs may be. Those are important questions when doing financial forcasting. What are the assumptions that were used to determine the request? Without that we have no clue as to how the idea of a tax increase was arrived As an example: had we had good financial management the city would have understood and anticipated the impact of NE Ohio's economic downturn on the city's ability to generate income tax. Did that happen? And if so what are the projections for the next five and ten years? What is the impact of the city of Cleveland's new urban clean out? What types of alternative staffing or technology have been considered? What services are the citizens of Lakewood willing to pay for?

The last time the city was only able to say that they could generated a dollar amount of "X". The city could not tell us whether X was enough, how long it would last , would we need another increase the next year, if not how soon? Was there something creating the shortfall that could be managed differently? Was resource managment an answer?

Those of us who wanted those answers, those of us who asked for a plan were publicly painted as "anti tax republicans". That was the city's answer to any questions about the tax request. So I'll say it again -

We may be out of money but we don't know if we need an income tax - we don't have a plan.

Jim O'Bryan · Post by **Jim O'Bryan** » Sat May 12, 2007 7:56 am

Suzanne Metelko wrote:We may be out of money but we don't know if we need an income tax - we don't have a plan.

Suzanne

Are you working for/with Ryan Patrick Demro?

Just curious, we know Stan and DL Meckes work with Tom George.

I am curious as I asked Ryan Patrick Demro his plan for cutting taxes, or not raising them, and you answer with this no plan mantra.

Please notice I never said, "anti tax republicans" with non-partisan election it should not even matter? I never called Ryan a "Blackwell Republican". Ryan did, I always thought why bring it up?

FWIW

.

Dee Martinez · Post by **Dee Martinez** » Sat May 12, 2007 8:07 am

We have two candidates for mayor and both have given us PARTS of the story, the parts that support their positions and neither has given us the full picture.
What are we citizens supposed to make of this?