Back in January, the Carmel City Council approved $242 million in bonds to fund various infrastructure projects such as new roundabouts, improved drainage and more.
Now the bonds have been given a AA+ rating by Standard and Poors, a bond rating agency. A good bond rating is somewhat like a credit rating, it rates the security of a bond is and the borrower’s ability to repay it.
“I’m very pleased,” Carmel Mayor Jim Brainard said.
These bonds are a collection of smaller bonds — mostly $2 million each — broken up by projects. There are several layers of protections for repaying the bonds, including reserve funds. Some bonds have dedicated revenue streams, such as the fee used for the storm water utility.
The bonds are backed by a special benefit tax, which has been the subject of some debate. Brainard said he doesn’t think the tax will ever be used and has emphasized that it’s only there to get a lower interest rate and save the city money. Brainard’s opponent in the last mayoral election, Rick Sharp, often talked about the special tax as something to be worried about.
The bonds have been packaged together and will be sold by the newly created bond bank, which was formed after Carmel became a second class city in January. Brainard said the bond bank has been a great way to improve transparency and sell bonds at a better interest rate. He said it’s also possible that Carmel’s bond bank could help sell bonds for other municipalities.
Recently, the state of Indiana had its credit rating reaffirmed by Standard and Poors with a AAA rating.