Reno well under limit for borrowings

When it comes to attracting bond

investors, Reno earns a solid A.

The city's credit rating for generalobligation

bonds is favorable, although

slightly trailing municipalities in southern

Nevada, in assessments by the prestigious

Standard & Poor's and Moody's

financial advisory firms. Reno enjoys an

A1 (medium to high) rating by Moody's

and an A (investor's grade) rating by

S&P.

Reno also has plenty of bonding

capacity left for projects down the road.

The city has issued $181.56 million of

general-obligation bonds municipal

bonds secured by the city's taxing and

borrowing power far under its state

law-approved limit of $675 million,

which equates to 15 percent of the city's

assessed valuation, said Andrew Green,

the city's director of finance.

That's good news about the city's

economy, continued improvements to

the infrastructure and potential large

contracts for local construction

companies.

"It means jobs for the construction

industry, and improves the quality of life

for those of us who choose to live here,"

said Jon Madole, executive director of

the Nevada office of the Associated

General Contractors.

The bonding capacity lets the city

contribute to building the train trench

through downtown and to fund a longterm

program to rebuild and resurface

the residential streets, Madole added.

"It is vital to a growing economy to

have the bonding capacity to take care

of not just roads and streets, but water

and other projects that make the environment

safer and cleaner. It allows the

economy to continue to expand and for

us to attract desirable industry and businesses

to the area," he said.

A strong credit rating means the

city has better access to credit markets

to borrow money, which in turn means

there might be more opportunities for

local construction companies to perform

work on projects for Reno, said

Andy Artusa, managing director of

Howarth & Associates, a financial

adviser to the city.

"Reno benefits from a diversified

economy," Artusa said. "It has attracted

several companies to set up shop in

Reno. The economic diversification

helps mitigate the risks associated with

a tourism-based economy.

In addition, the city has a very low

debt burden and it strives to finance

projects, such as the municipal court,

with cash."

On the downside, Reno's economy

"still relies heavily on tourism and gaming,"

Artusa said. "The largest property

tax payers in the city are casinos. In

addition, several revenue streams such as

sales and room taxes are paid by

tourists."

The general-obligation bonds are

backed by general property taxes, but

the state-mandated credit limit excludes

bonds secured by special assessment districts

and other funding sources.

"Even with the addition of excluded

debt such as ReTRAC (the proposed

2.1-mile downtown Reno trench project)

and the downtown events center,

the city would be less than half of the

debt limit," Green said.

In comparison to other municipalities,

Moody's gives Reno and Carson

City the same A1 rating, but S&P

gives Carson a slightly higher A+ rating.

Moody's also rates Las Vegas

(Aa3), North Las Vegas (A2) and

Henderson (Aa3) above Reno. In comparisons

to larger cities, Moody's gives

Philadelphia a Baa1, San Diego an Aa1

and Phoenix an Aa1.

S&P puts Las Vegas and Henderson

slightly higher than Reno (AA-) and

North Las Vegas at a par (A). Like

Moody's, S&P also rates San Deigo

(AA) and Phoenix (AA+) above the

Biggest Little City, and the City of

Brotherly Love slightly below (BBB).

Reno's medium-term (maturities of

two to 10 years) general-obligation

bonds and the city's special-assessment

bonds each had slightly higher ratings

(A2) from Moody's than Reno's regular

general-obligation bonds, which range

from 15 to 30 years. S&P gave the same

A rating to each of the three categories.

The grades for Reno's tax-allocation

bonds, for the city's redevelopment

agency, were slightly lower than the

other bonds but still above the speculative

level, with Moody's giving the

tax-allocation bonds a Baa3 and S&P a

BBB.

Reno's general-obligation bonds,

terms, original amounts of issues, interest

rates and maturity dates:

* 1992 Street Bond (non-refunded portion):

20 years, $14.5 million, 5.8 to

6.2 percent, May 1, 2012.

* 1993 Refunding, 17 years, $34.75 million,

4.8 to 5.6 percent, April 1, 2010.

* 1997B Street Refunding, 15 years,

$9.025 million, 4.2 to 5.125 percent,

May 1, 2012.

Reno's revenue bonds, terms, original

amounts issues, interest rates and maturity

dates:

* 1998 Sales/Room Tax Railroad Bonds,

10 years, $6 million, 4.6 percent, June

1, 2008.

* 2002 Event Center Bonds, 30 years,

$108.625 million, 5.125 to 5.375 percent,

June 1, 2032.

Reno's medium-term bonds, terms,

original amounts issues, interest rates

and maturity dates:

* 1996 Medium Term Bonds, 10 years,

$3.46 million, 4.05 to 4.7 percent,

Dec. 1, 2006.

* 1997A Recreation Facility Bonds, 10

years, 5.2 million, 4.1 to 4.8 percent,

Aug. 1, 2007.

Reno also has 10 10-year and two 20-

year special-assessment debt funds,

totaling $7.316,360. Reno's golf course

refunding, a 26-year term, totals

$4,255,000.

Reno voters will decide Nov. 5

whether a $40 million arts and parks

bond will move ahead.