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During their Wednesday, Aug. 21 work session, Suffolk City Council was briefed that the city has once again received a AAA bond rating from the three credit rating agencies, Moody, S&P (Standard and Poor) and Fitch. According to Fitch Ratings, Suffolk has assigned ratings of $10.6 million general obligation (GO) bonds, which are scheduled to sell competitively “on or about” Wednesday, Aug. 28. According to Suffolk Director of Media and Community Relations Jennifer Moore, the bond proceeds will be used for the following road and school projects:

• Pitchkettle Rd. Realignment – $6,037,000 will go towards the balance of funding needed to realign the road to include a turn lane, signal upgrades, asphalt, curb and gutter, closed drainage system, stormwater management, sidewalk and street lighting (Previous years saw $8.4 million in state and local funding were appropriated to the project.)

 

• Route 58 Improvements – $624,859 towards road improvements along Route 58 between Longstreet Ln and the Holland Bypass. $300,000 in state funding is anticipated in FY 25 with additional state and local funds programmed for the project in FY 26 in the Capital Improvement Plan.

 

• Northern Shores Elementary Addition – $3,575,000 will go towards the design and construction for the NSES addition with the project addressing student capacity and eliminating mobile classroom units. $1.2 million was provided in FY 24 to help assist with planning and design. Additional funding is set for construction in FY 26 in the CIP.

During a rating agency update, David Rose of Davenport and Co. LLC, which serves as the city’s financial advisor, presented the “very good news” to council members during their Aug. 21 work session at City Hall. Detailing the background, Rose says that Fitch was unique this year due to recently releasing a new rating methodology.

“What that means, each of these three rating agencies, they’re all independent agencies, every so often at their own cycle they kind of refresh and update how it is they come up with a credit rating for local government,” Rose said. “Moody’s did it a couple years ago, S&P does it so often, this year it happened to be Fitch that had literally gone through this process of updating their methodology and that was released in April. So it kind of dovetailed with what we’ve been doing in terms of your capital planning and borrowing.”

Rose detailed it resulted in the City of Suffolk and other Hampton Roads cities with a Fitch rating being placed on a UCO (Under Criteria Observation) list, needing to take a “closer look” at the cities on the list that have a credit rating, due to this criteria and scale. Rose further says a tour of Suffolk was given to Fitch, to which he called “very, very well done.” Rose presented the results of Fitch, noting the city’s population and economy being “sufficient size and diversification” with the demographic and economic trend and level metrics being “strong.” On factors that could “lead to negative rating action/downgrade,” Fitch detailed a decline in “unrestricted general fund reserves below 7.5% of general fund spending” as well as both a material increase “in long-term direct debt or net pension liabilities and carrying costs assuming current levels of personal income and governmental revenues and expenditures.” Likewise, diminished demographic and economic trends as well as level metrics, would lead to “slower growth” in the resource base.

Rose detailed Moody’s report, which also affirmed the AAA rating. The credit strengths were a “stable and diverse economic base” benefiting from a significant institutional presence in the region, “strong reserves and liquidity”, and “through fiscal and debt policies in place and adhered to.”

“They very much focused on the financial position and how strong that is as a result of prudent management [and] adherence to fiscal and debt policies and the rating further reflecting the city’s growing tax base in the Hampton Roads region of the state,” Rose said. “And so, again, following the policies, the thorough planning that the city does and has done for a number of years were very important to Moody’s.”

Rose also reported that S&P affirmed the AAA rating. Their report noted that Suffolk “benefitted from significant industrial, manufacturing sector, and mixed-use developments during the last several years” thanks to access to the Port of Virginia.

“But clearly, very exciting news and certainly news that we think you should be proud of as it’s clearly a representation of the leadership that you demonstrated in the city,” Rose said.