Cedar Rapids maintains second-highest bond rating from Moody’s

CEDAR RAPIDS — The city of Cedar Rapids has been assigned a bond rating agency’s second-highest rating because of the city's “healthy financial position,” with a large tax base and revenue-raising flexibility despite risks of the city-owned hotel and convention center and above-average leverage associated with debt and pension obligations.

“This past year has seen a global health pandemic and a devastating derecho storm cause financial challenges for the City of Cedar Rapids,” city Finance Director Casey Drew said in a news release. “The city’s financial management practices have allowed the city to maintain a strong financial profile and this rating from Moody’s confirms the city’s creditworthiness.”

Moody’s Investors Service has assigned a Aa1 rating to Cedar Rapids’ $60.8 million general obligation bonds, Series 2021A; $12.6 million taxable general obligation refunding bonds, Series 2021B; and $7.2 million taxable general obligation refunding bonds, Series 2021E.

The Aa1 rating, the agency’s second highest, indicates the bonds are deemed to be of high quality and are subject to low credit risk.

Moody’s also assigned Aa2 ratings to the city’s $10.9 million sewer revenue bonds, Series 2021C and $11.9 million water revenue bonds, Series 2021D. And the agency has maintained the Aa2 rating on the city’s previously issued water and sewer revenue debt.

According to a news release from Moody’s, the rating is supported by “prudent management and ample revenue raising flexibility.”

The agency also said the city's overall operations have seen “minimal impact from the pandemic” and expect to end fiscal 2021 with a surplus.

The city-owned DoubleTree by Hilton hotel and Alliant Energy PowerHouse convention complex are continually cited as a risk in the agency’s bond ratings. But Moody’s noted that “the enterprise risk is partially mitigated by the modest size of hotel operations compared to the city's budget. Other revenues have not been substantially impacted.”

Although hotel revenue fell “substantially” in 2020 as the spread of COVID-19 disrupted travel and threatened the hospitality industry, the news release said hotel revenue is “beginning to stabilize in 2021.”

Revenue from the hotel-motel tax levied on overnight guests also saw an uptick last summer from the Aug. 10 derecho as contractors and residents in storm-damaged homes booked hotel rooms in town, city officials have said.

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