By William C. Singleton III
The city of Homewood got a bump up in its credit rating by Standard & Poor’s Ratings Service.
The city moved from AA to AA+, according to the rating service. The rating service grades the city’s general obligation warrants, with a higher rating carrying a more favorable rate in the financial market. AAA is the highest rating, and D is the lowest.
“With a credit rating like that, when you do borrow money, you get it at a much better rate,” Homewood Mayor Scott McBrayer said. “The last bond issue we had for the parks and recreation center, that $16.5 million was sold in about three hours. So you have investors out there chomping at the bit waiting for them (our warrants) to be released.”
Standard & Poor’s considers Homewood’s finances as “stable.”
“The stable outlook reflects Standard & Poor’s opinion of Homewood’s consistent financial performance, supported by, what Standard & Poor’s considers, good financial management practices and its strong economy,” the report states. “We do not expect to change the rating within the next two years because we believe that Homewood’s budgetary flexibility will likely remain very strong and that city residents will likely continue to participate in the broad and diverse Birmingham MSA (Metropolitan Statistical Area).”
However, the report also states that the rating could be lowered “if Homewood’s budgetary performance, economic indicators or debt and contingent liability profile were to deteriorate.”
McBrayer said the upgraded rating means Homewood has made significant progress in correcting financial accounting problems within City Hall.
Shortly after McBrayer became mayor five years ago, he and council members called for an independent audit of city finances. The audit revealed 51 areas of financial mismanagement. The council and mayor worked to put financial policies in place to ensure greater financial accountability in city government.
“The first audit found 51 counts of not good accounting practices,” McBrayer said. “We’ve got that down to two, and we’ve got our credit rating up. We’ve averaged $1 million in surplus a year over the last five years and over $11 million in a rainy-day fund. I think we’re going in the direction we need to financially.”