On July 17, 2024, the City of Chanhassen’s bond rating agency, Standard & Poor’s (S&P), once again affirmed Chanhassen’s ‘AAA’ bond rating with a stable outlook, meaning they do not expect the rating to change in the next two years. ‘AAA’ is the highest bond rating available to a municipality.

As of July 1, 2024, 27 Minnesota cities, including one other Carver County city, Victoria, shared this highest rating.

The bond rating was evaluated as the City prepares to issue $24.25 million in General Obligation Capital Improvement Plan bonds to fund the new City Hall, with Council Chambers and Senior Center.

In affirming the bond rating, S&P wrote, “We believe Chanhassen’s very strong budgetary reserves and liquidity sufficiently demonstrate financial flexibility.” S&P cited the following factors in its report:

• Affluent residential suburban communities benefit from the broad and diverse Twin Cities economy, which is highlighted by extremely high incomes and robust year-over-year tax base gains.
• Strong financial performance, with five consecutive audited general fund surpluses and forecasts for fiscal year 2024 indicating another surplus in line with budget, supporting a very strong reserve position.
• Weak debt-and-contingent-liability profile, with relatively high net direct debt as a percent of total governmental funds revenue, albeit with low debt service carrying charges.
• Strong financial policies and practices under their Financial Management Assessment methodology, highlighted by annually updated capital improvement and long-term financial planning, with a solid institutional framework score.

Why does an ‘AAA’ bond rating matter?

Investor Confidence: ‘AAA’-rated cities are considered extremely safe investments, so investors have confidence in these municipalities’ ability to repay debt.

Lower Borrowing Costs: Cities with ‘AAA’ ratings can borrow funds at lower interest rates, which translates to cost savings for taxpayers when financing buildings, street reconstruction, and utility improvements.

Financial Stability: ‘AAA’ ratings reflect strong financial management, prudent fiscal policies, and robust economic conditions, which result in resilience during downturns.