Funds To Go Toward DSS, City Hall, Utility Projects
Lexington City Council voted at its meeting last Thursday to approve a resolution authorizing the issuance of more than $21 in municipal bonds to fund several upcoming projects, including the new Department of Social Services building and the renovation of City Hall.
The DSS building has a budget of $10 million and the city hall renovation is budgeted to cost $6.5 million. Debt from the DSS project will be paid off over 25 years with two years of capitalized interest, while the city hall renovation will be paid over 20 years with level debt repayment.
Additionally, the bonds will fund the first phase of the Jackson Street utilities project and improvements to the stormwater systems on White Street and in the Diamond Hill area. Those projects have respective budgets of $3.39 million, $780,000 and $640,000. The debt for those projects will be paid over 20 years, with the repayment for the Jackson Street project coming from the city’s utility fund and the stormwater projects being repaid from the recently established stormwater fund.
The resolution that was presented to Council contemplates the city not exceeding a 5.50% interest rate and not exceeding $23 million in total debt. Bond pricing is expected to take place in early March and bond closing – when proceeds are deposited into the city’s accounts – will take place in late March. All of the projects funded with this borrowing will get underway in 2025 and should be completed in 2026.
Chuck Smith made the motion to approve the resolution, with David Sigler providing the second. The motion passed in a unanimous 6-0 vote.
-The city recently received outstanding credit ratings from two of Wall Street’s most respected credit rating agencies: Moody’s and Standard and Poor’s.
Standard and Poor’s provided the city of Lexington with a “AA” rating, while Moody’s assigned the city a “Aa2” rating. Each firm’s credit rating systems are slightly different, but for each rating system the city of Lexington received the second highest rating possible.
The city sought these credit ratings in late 2024 because of Lexington’s plans to issue the $22 million in municipal bonds.
These ratings signal to Wall Street investors that the city of Lexington bonds are a very attractive and secure investment, say city officials. As a result, the city’s municipal bonds should be sold at a very low interest rate because the city is such a safe investment.
Mayor Frank Friedman represented the city of Lexington in December rating calls with both credit agencies.
Friedman noted, “The city has taken years of careful planning to prepare for undertaking these major projects. We have been careful stewards of taxpayer funds, and these very strong bond ratings will save us all on interest costs as these bonds are repaid.”
Friedman is in his third term as Lexington mayor and himself works as an investment adviser at CornerStone Bank in downtown Lexington.
In its statement about Lexington, Moody’s noted the city’s strengths include strong financial reserves, conservative budgeting and management, and adherence to formal fiscal policies. Moody’s noted the city of Lexington also has challenges, specifically the community’s small size and a high percentage of tax-exempt property.
To read the Moody’s or Standard and Poor’s rating statements about the city of Lexington, visit https:// www.lexingtonva.gov/government/departments/finance. For additional information about the projects the city plans to undertake, email Lexington City Manager Tom Carroll at TCarroll@LexingtonVa. gov.
Editor’s note: The second half of this story was from a press release from the city of Lexington.
