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Moody's adjusts some Aaa cities' ratings, Cedar Rapids keeps 'negative outlook' rating

Linn County adjusted to stable outlook

In its report on the city of Cedar Rapids in May, Moody’s justified its negative outlook for the city because of what it said was the
In its report on the city of Cedar Rapids in May, Moody’s justified its negative outlook for the city because of what it said was the "risk" that the city has taken on by owning a hotel and convention center. (Brian Ray/The Gazette)

No city is more proud than this one of its top Aaa bond rating, a rating the provides lower interest rates on debt and a rating that the city has maintained for 41 years in a row.

This year and last year, though, Moody’s Investors Service continued the city’s Aaa rating, but with a blemish called a "negative outlook." The rating agency attributed the outlook, in part, to the city’s flood-recovery link to the federal government and the federal government’s "weakened credit profile."

On Friday, Moody’s announced that it has adjusted its negative outlook to a stable outlook for 37 local governments with Aaa ratings and indirect links to the federal government because of Moody’s decision on Thursday to adjust its outlook to state for the federal government.

However, Moody’s retained its negative outlook for three Aaa-rated communities with indirect links to the federal government — Cedar Rapids as well as San Antonio, Texas, and the Fairfax County Water District.

In its report on the city of Cedar Rapids in May, Moody’s also justified its negative outlook for the city because of what it said was the "risk" that the city has taken on by owning a hotel and convention center.

At the time, City Council member Kris Gulick, chairman of the council’s Finance and Administrative Services Committee, said Moody’s doesn’t like cities owning "non-core assets" such as hotels and convention centers.

In its announcement on Friday, Moody’s included Linn County and the city of Ames among the 37 local governments with Aaa bond ratings that it moved to a stable outlook from a negative outlook.

Steve Tucker, Linn County’s finance director, called Moody’s announcement "excellent news" for Linn County.

Linn County government is smaller than the city of Cedar Rapids’ and takes on only a small amount of debt in comparison to the city, which has high-maintenance enterprises like its water and wastewater divisions.Only four cities in Iowa maintain Aaa bond ratings, Cedar Rapids, Iowa City, Ames and West Des Moines. Fewer than 200 do nationwide, Gulick, who is immediate past president of the Iowa League of Cities, said in May.

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