Gainesville’s credit rating has dropped again due to its collective debt, the bulk of which comes from the municipal utility.
Moody’s Investors Service — one of three bond rating agencies — issued the city an Aa2 credit rating, one notch down from Aa3, the city announced Tuesday. It is the fourth-highest long-term investment grade given by the agency and is still considered a top-tier short-term grade.
Officials attribute the downgrade in part to a methodology change that now includes enterprise fund debt. For Gainesville, that means including Gainesville Regional Utilities, which has approximately $1.7 billion in debt, about $622 million of which is from the historic purchase of the controversial biomass plant.
GRU, which provides services for 93,000 customers around Alachua County, makes up about 80% of the city’s total debt.
In 2023, the general government side anticipates paying $13.8 million back, budget documents show. GRU plans to pay back $35.7 million.
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Moody’s kept the city’s Aa3 non-ad valorem rating intact, which is applied to its outstanding bonds. Officials say that rating reflects the city’s ability to repay debt without issue.
“The stable outlook reflects the likelihood that the City will continue to maintain a stable financial position given the strong underlying economy and revenue growth,” a Gainesville news release said.
In May 2021, S&P Global Ratings knocked down GRU’s credit rating by two positions, from AA- to A. The two-notch downgrade is the first of its kind for GRU and is the fifth bond rating downgrade since 2010.
Florida Legislature’s Joint Auditing Committee
Last year, the Florida Auditor General’s Office released a 64-page report that scrutinized the financial controls of Gainesville, which included GRU’s debt, an amount that could potentially triple in 30 to 40 years due to interest and added debt.
In November, the city received a letter from the Florida Legislature’s Joint Auditing Committee that its fiscal year 2020-21 financial report is more than three months overdue. Officials have since turned in the documentation.
Mayor Harvey Ward intends to speak with the committee in Tallahassee on Feb. 9 to share the progress Gainesville has made as it works to complete its next report by the state’s June deadline.
“As always, the City is sharply focused on its finances and is continuing to stay on track following the late filing of last year’s 2021 Annual Comprehensive Financial Report, the city release said.
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