Schaumburg's AAA bond rating reflects responsible response to pandemic
Schaumburg officials are characterizing the village's recent retention of the highest attainable credit rating as both an objective endorsement of its financial management during the pandemic and an aid to successfully navigating its way back to normal times.
Just as with an individual person's credit score, Schaumburg's AAA bond rating reflects not only how much money it has access to but how it's managing it and reducing expenses as many of its revenue sources are experiencing negative impacts from COVID-19.
The reaffirmation of the village's bond rating is not based on an outdated assessment but on information from this very summer as its response to the pandemic was looked at specifically by the S&P Rating Service.
"Despite a vulnerable revenue stream and pressure from the COVID-19 recession, we expect Schaumburg will likely have sufficient resources to address any potential revenue decreases due to its reserves and liquidity, which we still consider very strong, coupled with a robust and proactive management response," S&P reported late last month.
While statewide business restrictions at various periods of the pandemic have led Schaumburg to estimate a loss of $22.3 million in taxes and fees during the current budget year, the village has responded by making approximately $16.4 million in budget cuts since March in addition to entering the downturn with a healthy level of reserves.
So how does this help?
Schaumburg Village Manager Brian Townsend said the strong credit rating is a boon to the village as it prepares to issue new debt for road improvement projects and to refinance the debt on its 14-year-old convention center and adjoining Renaissance Hotel.
Both the hotel and convention center have served as catalysts to drive business elsewhere in Schaumburg during better economic times since their completion and are being counted on to do the same when such times return.
"It's going to come soaring back," Schaumburg Mayor Tom Dailly said, pointing to the convention center's recovery from the Great Recession as evidence. "I expect the same thing to happen again."
But the fact that these properties are owned by a financially strong entity like the village is what allows for their successful refinancing during the pandemic, Townsend said.
"If that was a stand-alone enterprise, we would have a more difficult road ahead," he added. "There's no hiding the fact that the hotel and convention center are hurting right now."
Among the more publicly visible financial adjustments the village has made this year were the furloughing of most of the staff at the Al Larson Prairie Center for the Arts until next winter and the cancellation of 2020's special events including Septemberfest, which would normally have started next week.
But the work continues. Village board members will soon consider keeping Schaumburg's already suspended trolley service shut down through the holiday shopping season, and are expected to take an even closer look at the expectations of this budget year at its midpoint this fall.