Straight A’s

The City of Decatur received improved ratings from Moody’s Investor Service last week, putting the city and related entities in a better position when pursuing capital projects.

The city’s issuer and general obligation limited tax (GOLT) rating improved to Aa3 from its previous A1 investment grade. The Decatur Economic Development Corporation’s sales tax revenue rating improved to A1 from A2. The Wise County Water Supply District also received an Aa3 rating.

Moody’s ratings gauge an entity’s ability to pay off debt obligations without consideration of any pledge, security or structural feature. Decatur City Manager Nate Mara said the improved grades will help the city, Decatur EDC and Water Supply District when those entities pursue bonds.

“In the next five years, we’re going to seriously consider expanding the wastewater treatment plant, and we realize we’re going to need facilities over the coming years — fire stations, a municipal building, this all will come up at some point,” Mara said. “These are all good things to help line us up to make a good decision when the time comes and be competitive in the bond process.”

The factors considered in Moody’s evaluation this year resulted in the uptick. This year, Moody’s factored Decatur’s ability to generate sales tax revenue and the sustainability of generating those yearly revenues. Moody’s also considered Decatur’s participation in the broader Dallas-Fort Worth Metroplex this year.

“Now, we’re being compared to the Dallas-Fort Worth Metroplex instead of being compared to cities that are to the west of us,” Mara said. “We’re being lumped in with the Metroplex, and we’re a player.”

Moody’s pointed out Decatur’s healthy reserves, average property wealth and resident income profile as positives that led to the Aa3 rating. The report listed the city’s average leverage due to debt as a constraint for a higher rating.

“The upgrade of the rating on the Decatur Economic Development Corp.’s sales tax revenue bonds to A1 reflects the close relationship between the EDC and the City of Decatur, coupled with strong pledged revenue performance that has improved coverage levels,” Moody’s said in a press release. “The rating also incorporates Decatur’s strong and well-diversified economic base with solid growth that is expected to continue over the near term.”

An Aa3 is the fourth-best Moody’s rating on a scale of 21 grades. The updated ratings improved the City of Decatur, Decatur EDC and Wise County Water Supply District each by one position.

Mara said the upgrades are a result of fiscal responsibility, sustainable growth and Decatur’s diverse economy.

“Important changes such as these come after many years of steady leadership from our elected officials, appointed boards and staff,” Mara said. “Thank you to our citizens and those who work in, or visit, our beautiful city. We are grateful to serve such a wonderful community.”