City Rating Upgraded By Moody's

City of North Bay News Release

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Moody’s Investors Service raised the senior unsecured domestic debt rating for the City of North Bay to Aa2 from Aa3 (Judged to be of high quality by all standards).

Moody’s News Release is quoted as saying:

“The upgrade reflects recent increases in reserve levels, which provide internal liquidity to protect the city’s financial position against unanticipated shocks, in conjunction with continued discipline in managing operating activities, generating consecutive surpluses for capital purposes and reducing the city’s reliance on debt issuance.”

“North Bay has implemented measures to increase reserve levels in recent years, thereby strengthening internal liquidity. In April 2005, the city council adopted a reserve funding policy to increase reserves progressively through the allocation of excess operating revenues and one-time revenues, such as from land sales, which has been the de facto policy for the last several years. Reserves (including reserve funds and development charges) equaled 60.4% of net direct debt in 2005, up from 34.8% in 2003.”

“North Bay’s well-structured financial plan continues to generate operating surpluses, which support pay-as-you-go capital financing and limit new debt issuance. Moody’s anticipates that, over the next few years, net direct debt as a percentage of revenue should peak at approximately 30% (from a current level of 24%), reflecting debt issuance associated with a water treatment facility, and then fall thereafter as the city relies more heavily on pay-as-you-go financing for general public works projects. Debt servicing costs are expected to remain low over this period.”

Deputy Mayor Peter Chirico, who is the City’s Budget Chief, said “This is great news for the taxpayers of the City of North Bay. For the fourth year in a row, the cost of borrowing for the City continues to drop given the upgrade in our credit rating. This means there is less burden on the taxpayer as we continue to follow a plan that works.”

“Moody’s has recognized that this City Council has stuck to the plan and developed a long-term strategy, which addresses the need for continued infrastructure spending in a controlled and fiscally responsible manner. The sale of surplus land has not only allowed the City to replenish its reserves, but also generate new property tax revenue that will continue annually. The reserve funds will allow the City some flexibility should emergencies arise.”

“I will be bringing forward additional reports over the next few weeks, outlining our surplus land sales and reserve funds which has contributed significantly to the great news received today.”

“This council and all staff have not only endorsed this plan, but have embraced it and know it is a solid plan. We congratulate our CFO, Brian Rogers and his staff for a job well done. Our Mayor and Council should be extremely proud of this accomplishment and the job they have done.”

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