During its Tuesday night meeting, the Versailles City Council received remarkable news – its credit rating by Moody’s Investor Services has jumped from A to AA on its general fund and to A1 on its sewer and water operations.
Stan Kramer, a Versailles resident with First Kentucky Securities Corporation and the city’s consultant on bond issues, explained he learned this while doing the due diligence on the bonds being issued by the city regarding its purchase of the Yokohama plant under an interlocal agreement with the Woodford County Fiscal Court and Woodford County Economic Development Authority. The purchase is being financed via a bond process and is expected to close before June 30 this year.
“(In preparing the bond issue), we submit a whole lot of documents (to Moody’s) on how the city works, its financials, on both the water and sewer operations and general fund,” Kramer said. “(The higher ratings Moody’s assigned) speak to the general strength of what the city does and its financial controls. It is the highest rating the city has ever received.”
Since the issue of financial risk came up in the council’s discussions when it voted 5-1 to proceed with the purchase of Yokohama, Kramer also addressed that issue, indicating the city was in a strong position in terms of risk exposure.
“Part of what we do in our process is a risk analysis. (Kentucky state) law governs this, and it says a city of Versailles’ size has a 5 percent debt limit based on valuation, which means the safe (amount of debt issued by the city) is $63.7 million,” he explained. “So, including the debt that will be assumed in the Yokohama purchase, the city will have a total debt of $24 million, (which means) the city still has three times the debt left before risk (becomes too high).”
In an email after the meeting, Versailles Mayor Laura Dake told the Sun, “This is very good news for Versailles. This historically high bond rating means that we are considered a low credit risk, which translates into more favorable borrowing terms, including for our upcoming bonds. On an individual level, it’d be like financing a vehicle — the higher your credit score, the better your interest rate. According to Moody’s credit opinion, ‘Governance is a key consideration in this rating and reflects the city’s history of conservative budget management and stable financial performance.’”
Merewood playground
Versailles-Woodford County Parks and Recreation Department director Rich Pictor presented the current plan to install a new playset at the Merewood Subdivision playground. The current one is over 25 years old, and, among other issues, is not ADA-compliant.
The new playset will cost, including installation by the department, $25,000. Pictor said the new playset should be installed by the first week of June, just after school is out for the year.
Ordinances
The council unanimously approved three ordinances. Two of them related to the bond issuance for the Yokohama plant purchase.
The other one adopts verbatim the zoning ordinance amendments enacted by the Fiscal Court earlier this year, dealing with a variety of issues, principally the in-family conveyance rules, in the agricultural zones. City Attorney Bill Moore explained that this will have very minimal impact on the land the city is responsible for, but the Planning Commission has requested that Versailles land use ordinances remain uniform with those of Midway and the county.
Contracts
Council approved a number of contracts as the fiscal year winds down.
The big item was a contract with Johnson’s Emergency Vehicle Solutions for $1,493,760 for a new ladder and pump vehicle. This follows the presentation and recommendation of Versailles Fire Department Chief T.A. Rankin and the Public Safety Committee on a vehicle purchase and replacement plan for the department during the council’s meeting on March 16. The city is receiving a discount for full payment at the time of contracting. Given the very tight market and demand for fire vehicles, Rankin expects the new truck to be delivered in approximately 18 months.
Rankin told the council the department particularly likes this type of vehicle because it is a “two for one, we are getting not just a ladder truck but a water pumper too.”
City Clerk Elizabeth Reynolds presented a recommendation for a loan to cover the purchase of the truck. Working with City National Bank loan officer Michael Duckworth, who attended the meeting to provide information if needed, Reynolds said a 5-year balloon loan offered the best product. The interest rate is 5.2 percent with a 15percent amortization. At the end of the 5-year term, the council can decide whether to refinance the balloon payment or pay off the loan. Reynolds pointed out that City Bank and Duckworth were good to work with and offered the best options.
The other approved contracts were: $33,420 to Midwestern Buildings for the fire training facility building; $14,900 to Jonathan Summers for an addition to the Wastewater Treatment Plant garage; $32,500 to S4 Water for a one filter rehabilitation at the Water Treatment Plant; $7,334.27 to Woodford Sealcoat for cemetery seal coating; and, an emergency contract for $30,558 to Buchanan Contracting for a man-hole replacement at the intersection of Crossfield Drive and the U.S. 60 Bypass. (Department Director Mitzi Delius pointed out that since Buchanan was already in the city working on a project and was available, that the city was not charged the typical emergency surcharge).