In recognition of the City of Boerne’s strong financial position, Moody’s Ratings has upgraded the City’s bond rating from Aa2 to Aa1.
At the same time, the agency assigned an Aa1 rating to the City’s proposed issuance of $4 million of general obligation bonds to complete the $13 million in parks bond funding approved by voters in 2022. In September, City Council will consider the issuance of these bond funds as part of the City’s budget approval process.
“With our upcoming bond issuance for Northside Community Park, an upgrade to Aa1 reduces our interest cost and saves taxpayers over the life of the bonds,” Finance Director Sarah Buckelew said. “Moving forward, we’ll continue to diligently maintain modest debt ratios and control fixed costs by funding capital projects with cash whenever possible.”
With sustained sales tax growth and a focus on thoughtfully expanding its commercial base, the City has positioned itself one tier below Moody’s highest quality rating of Aaa.
“Our Moody’s rating upgrade to Aa1 is a strategic milestone for City Council and our leadership team,” City Manager Ben Thatcher said. “This achievement independently validates our fiscal discipline through healthy reserves, structurally balanced budgeting, and multi-year planning.”
Moody’s considers several factors in its rating determination, including:
- Economy/Tax Base
- Financial Performance and Reserves
- Leverage and Fixed Costs
- Governance/Management
Moody’s offered the following assessment of Boerne:
The Aa1 issuer rating reflects Boerne’s strong financial reserves which are expected to remain around 100% of revenue in fiscal 2025 (September 30 year-end). Though financial reserves may decline in fiscal 2026 as the city cash funds growth driven capital needs, available fund balance should remain in line with peers. The rating also incorporates strong budgetary management, reflected in maintenance of a six-month operating reserve in the general and utility funds, providing significant resiliency against budgetary shocks.
The tax base continues to grow, driven by a favorable location north of San Antonio with solid resident income and strong property wealth metrics. Leverage will remain manageable, supported by a strong revenue growth trend. The city is considering potentially issuing up to $25 million over the next two years. Even so, the long-term liabilities and fixed costs ratios, which are expected to comprise around 130% and 8% of revenue, respectively in fiscal 2025, are likely to remain below Aa1 peers.
The Aa1 rating on the city’s GOLT bonds is at the same level as the issuer rating, reflecting the city’s ample taxing headroom.
The Moody’s rating upgrade follows a separate credit rating upgrade in 2024 by Fitch from AA to AA+, one tier below that agency’s top rating of AAA.
