Shelby Township credit rating set at AA+, economy, management rated, 'strong'

Standard & Poor’s Rating Service gave Shelby Township an AA+ rating based on the Township’s “very strong budgetary flexibility,” under management viewed as “strong with good financial practices.”

Standard & Poor’s, widely renowned as the global leader in independent credit rating for businesses and municipalities, gave the Township its second-highest possible rating. Among the factors contributing to the rating was a 4.9 percent market value increase to $6.27 billion in 2014 bolstered by expectations from Macomb County that the number will continue to grow with the Township’s housing market’s further recovery.

“Everyone who lives and does business in Shelby Township knows what an amazing place it is and that many of the reasons why cannot be quantified in dollars and cents,” Township Supervisor Rick Stathakis said. “What this rating from Standard & Poor’s tells us, though, is that the values that can be quantified, like market value, borrowing ability and budgetary flexibility, are just as strong.

“I could not be more proud that the sound, fiscally-responsible leadership by the conservative majority of our Board of Trustees is being recognized in a way that ensures the Township is on secure financial ground with the kind of flexible, financial capability necessary in today’s economic environment.”

In addition to affirming the Township’s sound financial management, the rating also makes it easier for the Township to find lenders, which is particularly important as officials seek assistance to cover a portion of the $23 million in underfunded police and fire pension liability.

“We’re confident we will not have any issues finding partners to help as the Township moves out from under the police and fire pension burden, but this certainly bolsters that confidence,” Township Treasurer Michael Flynn said. “When lenders see an AA+ rating from Standard & Poor’s on your résumé, it can only help.”

Among the financial factors that played a role in the rating, Standard & Poor’s specifically named the Township’s $12 million general fund budget surplus following 2013, which covered 87.8 percent of all 2013 expenditures.

“We talk a lot about the budgets and surpluses in the general fund, and this is why that is so important,” Stathakis said. “First and foremost lenders and credit rating agencies look at how you pay your bills and how much of a savings account you have to back up those practices.

“Thanks to the hard work of our department heads, Board members and employees, the general fund has been able to increase its savings account by more than $4 million since 2008.”

Standard & Poor’s also credited the Township with cutting costs and increasing permit revenues as reasons why the budgets have remained in the black under the leadership of Township management that is, “strong with good financial practices.”

“While I appreciate Standard & Poor’s recognizing the Township’s ‘management,’ the credit really extends to our department heads and employees,” Stathakis said. “You don’t overcome the serious financial roadblocks we have faced with anything short of a total team effort.

“It is a credit to everyone that the Township survived the economic downturn and has come out of it with such a positive financial benchmark like this AA+ rating.”