Williston Bond Rating Lower | VideoRetha Colclasure | 2/28/2013
The long-term bond rating for Williston used to be A-. But in December, Standard and Poor`s downgraded that and one other rating for the city to BBB+.
There`s a lot of development going on in Williston. The city is building a new rec center and still needs a lot of infrastructure improvements.
"Need for $715 million dollars in projects," said Representative Robert Skarphol (R) from Tioga.
Most of that work was created by the booming oil industry, which put a huge strain on existing resources, and on the city`s coffers. Standard and Poor`s says that strain is too much. A credit analyst for S&P says the city`s projected general fund deficits will deplete the city`s cash reserves and the future ability of the city to balance its budget is uncertain. Hence, the downgrade.
"Lowering of rating results in higher interest rates and more cost to do the things they need to do. It also indicates bonding companies are uncertain if they have the revenue to cover the cost of bonds," Skarphol said.
Williston already owes more than $18 million to the state`s Revolving Fund Program. DeAnn Ament, executive director of the North Dakota Public Finance Agency, says Williston has paid back four loans so far.
"We`ve had no issues with repayment over the history of the nine borrowings. The largest loan for the water treatment plant is $13,240,000."
Ament says future loans to the city could be affected.
"If they would apply in the future, we would definitely be taking a closer look based on the fact that the city of Williston has been downgraded."
She says the current Moody bond rating of triple-A for the revolving fund program isn`t threatened, even if Williston were to completely default on its loans. But she says she`s not concerned about Williston`s ability to make loan payments.
Skarpohl introduced a bill to provide a $40 million loan to the Western Area Water Supply Authority and another bill to give more of the oil revenue back to the impacted communities. If passed by the legislature, S&P could take those revenue streams into account, and change the city`s credit rating again.