City's planned funding for USOC rated 'above average'
One of the nation’s leading credit rating agencies has assigned an “above average,” or A1, rating to the up-to-$38 million in certificates of participation Colorado Springs plans to issue to fund U.S. Olympic Committee improvements.
The rating by Moody’s Investors Service reflects the creditworthiness of such types of municipal borrowing, according to an explanation on Moody’s Web site. The A1 rating falls short of an Aa rating, which means “very strong” creditworthiness, or Aaa, which is Moody’s “strongest” rating.
A more creditworthy rating signals that the certificates would carry less risk to investors who buy them. And if the risk is reduced, investors theoretically would be willing to accept a lower interest rate, which would lower the city’s cost to retire the debt.
City officials couldn’t be reached Wednesday to comment on the rating.
The city plans to issue the certificates — possibly this week — to help fund new offices in downtown Colorado Springs for the USOC and several of its Olympic-themed national governing bodies. Proceeds from the certificates also would help pay for improvements at the USOC’s Olympics training center in central Colorado Springs.
Issuing the certificates — a form of borrowing that doesn’t require voter approval — is the next hurdle in the city’s ongoing effort to keep the USOC’s headquarters in Colorado Springs, where it’s been since 1978.
Last year, city officials, the USOC and local developer LandCo Equity Partners announced a $53 million incentives package to provide the sports organization with new facilities in exchange for its commitment to stay in the city for at least 25 years. That deal fell apart amid financial and legal problems.
The deal was revamped into a $42.3 million incentives package and approved by the City Council in August. Like the first deal, the revised agreement called for the city to issue the certificates as a major funding source for the new USOC facilities. City officials have estimated they’ll pay $1.7 million annually over 30 years out of the Springs’ general fund to retire the debt.
A private fundraising effort also is underway to generate $1.5 million by Nov. 18 to help pay for the training center upgrades; that money would match an El Pomar Foundation grant.
In assigning its rating, Moody’s scrutinized city finances and noted city challenges include a “weaker than average, but still adequate general fund balance, limited financial flexibility given restrictive anti-tax measures and a sluggish economy.”
Moody’s praised the city’s efforts to tackle problems by implementing “permanent expenditure cuts rather than one-time measures” but also noted deteriorating city finances.
Moody’s also discussed a lawsuit filed by a local attorney that challenged the certificates; a local judge dismissed the suit, but the attorney has appealed. Moody’s said its rating assumes the city will prevail in the appeal.
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