City granted high credit rating to support garage construction

Dana Wong

Moody’s Investor’s Service granted Evanston its highest-possible credit rating to a municipality for the issuance of $34.1 million in bonds to support construction of the new Sherman Plaza parking garage. The strong credit rating will save it hundreds of thousands of dollars, city officials said.

The new 1,600-spot garage will be built during the next year to replace the current garage on Sherman Avenue between Church and Davis streets.

The AAA bond rating, which was granted last month, saves money by taking advantage of the lowest interest rates in local markets. Moody’s, a global credit rating, research and risk analysis firm, awarded the city the highest rating based on Evanston’s credit history and asset liquidity, said Diane Golub, a Moody’s analyst.

“The likelihood an event of default will occur is remote, given the city’s financial flexibility, its prime quality credit rating which helps to ensure strong market access and its expected ability to borrow short-term if necessary,” she said.

Evanston became the first city in Illinois to achieve the AAA rating when Moody’s granted it in 1986. Now there are nine other cities in the state with the rating.

City Manager Roger Crum said maintaining the AAA bond rating was especially helpful this year.

“I’m very pleased with Moody’s rating especially during the hard economic times during the 2001-02 fiscal year,” he said. The city expects a deficit between $3 million and $5 million for the 2003-04 fiscal year.

Crum attributed the city’s economic success to responsible management and Northwestern’s large, “recession-proof,” student population. In addition, revenue enhancements provided the city with the flexibility to address operating and capital needs.

Moody’s representatives said they expect Evanston’s credit to remain strong through the next fiscal year, a view Crum echoes.

“The city’s economy is expected to be very good next year, with revenue earned off strong (local) sales and property taxes,” he said.

But Crum cautioned Evanston’s limited industrial activity and low revenue from a hurting state economy could affect next year’s ratings.