Fort Smith gets AA rating on upcoming bond issue

The city of Fort Smith received a AA rating on its upcoming $26.405 million bond issuance from Standard & Poor’s — a rating that could lower the cost to service the debt and improve the chances to raise more money from the bond sale.

Bond proceeds will be invested in the ongoing upgrades to the city’s water and sewer system. A June 9 special election saw Fort Smith voters approve a measure to extend a 1% sales tax 18 months to raise up to $30 million needed to cover water and sewer improvements mandated by the federal government. The tax extension pushes from June 2012 to December 2013 the end of the 1% sewer improvements tax approved in 2006.

Since 2001, the city has made $100 million in improvements at water/sewer treatment plans and in the collection system. In 2001, voters approved (68% of the vote) $30 million in sales tax bonds, and voters approved in 2006 (75% of the vote) a $63 million sales tax bond to continue those improvements.

Dennis Hunt, senior vice president of Little Rock-based Stephens Inc., told the city Board of Directors during the Tuesday (Aug. 11) study session of the AA rating and outlined the schedule for the bond sale. According to Hunt, pricing on the bonds will begin Aug. 17, with the closing and receipt of bond proceeds scheduled for Sept. 30. Based on estimates of future tax collections, the $26.405 million bond package should be retired by March 2014. The current 2006 bond obligations will retire by July 2012.

In its report, S&P said the AA rating “reflects the stable, regional economic base anchored by the University of Arkansas (at Fort Smith), and sustained steady economic growth.”