Algonquin earns AAA rating from Standard & Poor’s
ladkins@dailyherald.com
Standard & Poor’s bond rating agency has given the village of Algonquin a AAA rating, the highest grade the company issues. It’s also a grade village officials say will likely save more than $600,000 in interest payments.
The rating came earlier this month while Algonquin officials were refinancing a $7.7 million debt that stems from the expansion of its wastewater treatment plant at 125 Wilbrandt St.
The project started in 2005 and cost $15 million. Village President John Schmitt said it is the most expensive project in the village’s history.
The village issued $9 million in bonds to pay for the project. Water tap-on fees from new development paid for the rest of the plant’s expansion, said Michael Kumbera, assistant to the village manager.
As part of the refinancing process, the agency reviewed the village’s entire financial history before it assigned the new rating, Kumbera said.
“Essentially, Triple-A means a very low risk of defaults — basically we will make our repayments on the bond and have an extra high capacity to repay the debt,” Kumbera said. “It’s not a snapshot in time, this is a historical performance.”
The rating also gives the village a more favorable interest rate on the debt remaining. It was previously 4 percent and it’s now 2.5 percent Kumbera said. That lets the village save about $638,000 on interest payments.
Schmitt credits previous Village Manager Bill Ganek and new Village Manager Tim Schloneger for putting Algonquin in this enviable financial position.
“When Bill came to the village 22 years ago, we didn’t even have a budget and ... we developed a budget and he got us beyond solvency to the point where a Triple-A rating is certainly deserved,” Schmitt said. “I will add that Tim Schloneger contributed to those efforts.”
Algonquin’s previous rating was AA+, a level below its current score. Standard & Poor’s issued that rating in 2008.
The village is on schedule to retire the plant’s debt in 2025, Kumbera said.