Clayton leaders say the town’s new credit rating will save taxpayers money in time.
The credit-rating firm Moody’s Investors Service recently upgraded the score on Clayton’s debt from Aa3 to Aa2, or two notches from the best possible rating for local governments.
The Moody’s rating is one of several factors lenders consider when the town goes to borrow money. The latest debt score, which Moody’s says represents a “high-quality investment and low-credit risk,” could prompt banks to offer lower interest rates on future Clayton borrowing. Lower rates mean less interest taxpayers have to pay on the town’s debt.
“To me, this is like the official stamp of approval that we are being smart with the citizens’ money,” said Councilman Jason Thompson.
Moody’s, in its review of the town’s finances, lauded Clayton’s “growing tax base near Raleigh,” “below-average pensions” and “balanced operations.” The firm specifically noted the town’s new single-family and apartment developments, growing savings and proximity to pharmaceutical manufacturers like Grifols and Novo Nordisk.
“Challenges” noted in the Moody’s report show the town’s debt burden slightly elevated with a below-average payout over time. But the firm called that debt burden “manageable,” as Clayton leaders plan to limit borrowing and pay for smaller capital projects in cash.
The report also said the town had a “moderate dependence” on economically-sensitive revenue streams, which can include things like permitting fees for construction.
Town Manager Steve Biggs said the new rating will not affect interest rates on Clayton’s existing debt, unless the town refinances.
But “when we go to finance new debt, we will receive a more favorable rate,” he said.
Moody’s has slowly increased the town’s rating since 2009, and the Aa2 score is the highest the town has ever received.
Councilman Art Holder said the town wants to keep its capital obligations down for a few years, before considering a new bond issue to improve and develop two future parks.
In 2008, voters approved a $4 million bond issue that paid for the 66-acre East Clayton Community Park and an 80-acre tract on Covered Bridge Road. The town is waiting to close on another 39 acres on Covered Bridge, which it will combine with the 80-acre tract to form a nature park. In addition, Clayton recently paid $1.2 million for 67 acres of future park land on Little Creek Church Road.
As Holder alluded to, the town plans to pay for the Covered Bridge and Little Creek Church projects with recreation bonds.
“They recognize that the town is doing a terrific job at managing our finances,” Holder said. “It’s been our goal to provide as many services as we can with the money we have without having to raise taxes.”