Minneapolis will sport an upgrade to triple-A when it takes its general obligation bonds on their annual trip to the bond market later this month.
Fitch Ratings upgraded the city to AAA from AA-plus late Tuesday, ahead of the city's $113.855 million competitive sale.
The upgrade "reflects Fitch's belief that the city's long-term liability burden will remain moderately low over time driven by moderate future borrowing plans, statewide pension reforms and strong trends of population and income growth," the rating agency said. "The ratings also incorporate the city's strong revenue growth prospects driven by an expanding population and income levels, broad independent revenue-raising ability, and solid budgetary management that has resulted in healthy reserves and considerable gap-closing capacity."
Fitch joins S&P Global Ratings in assigning a gilt-edged rating to Minneapolis, affirmed by that rating agency July 28.
Ehlers and Associates Inc. is advising the city and Kennedy & Graven is bond counsel on the deal, which will be sold competitively.
"That's our default philosophy," said Allen Hoppe, the city's debt manager, given the issue's high ratings and straightforward structure.
The late August date for the auction is not yet finalized, he said.
After
"The story for us is that our recovery is happening so rapidly, and we're doing so much better than we expected, that we had to update our revenue projections for sales tax," said Chief Financial Officer Dushani Dye.
And that was before Taylor Swift and Beyoncé juiced the numbers with big stadium shows in the city in June and July.
The city's residential property tax base is performing well, Dye said. Meanwhile, city officials are keeping an eye on the commercial property tax sector amid trends in white collar work and shopping that were accelerated by the pandemic.
"Even when the commercial sector goes down a bit, the residential sector picks it up," Dye said.
Still, commercial property taxes are pretty steady, she said. "Our assessors' office is keeping an eye on the trends."
The city will also benefit from an item in the recent state budget, which used stronger-than-expected revenue from pull-tab gambling
The state had loaned money to the city for Minneapolis' portion of the stadium financing, which the city paid back with a share of an existing 0.5% convention sales and hospitality tax.
"It turns out to be about $8.7 million annually we will be saving," Dye said.
