Mayor Tim Kelly on Tuesday announced that S&P Global Rating has awarded a AAA bond rating to the city of Chattanooga. This is the third year in a row Chattanooga has been awarded the highest possible rating by S&P. Prior to 2021, the city had not been awarded a AAA bond rating since 2007.
“This is S&P’s highest quality bond rating rating, which only reinforces what we already know about Chattanooga’s fiscal management and financial health: it is strong and growing stronger,” said Mayor Kelly. “We are making proactive investments in the future of Chattanooga that will supercharge our residents' quality of life, improve the things they already love, and fix the issues that for too long have been ignored. This administration’s good stewardship of city government is reflected in S&P’s view that the future of Chattanooga is strong.”
S&P cited the city’s growing regional economy, strong and stable financial position propelled by significant revenue growth in recent years, supportive financial management practices and policies, and comparatively-low debt burden in awarding Chattanooga its highest rating. Analysts said recent large-scale development announcements, such as major investments in West Chattanooga and the South Broad District, and projected population growth contribute to a positive financial projection for the city moving forward.
“These ratings are the real yardsticks of city management we measure ourselves by, and they are critically important because they mean the lowest possible interest rates for Chattanooga taxpayers,” Mayor Kelly said. “I know there has been some discussion on social media stemming from erroneous reports about Chattanooga’s financial health by online clickbait factories, but I hope this will put those false reports to rest.”
The city’s central location in the surrounding region’s growth as a manufacturing hub, anchored by Volkswagen’s U.S. headquarters on Highway 153 and other auto manufacturing facilities, supplement Chattanooga’s diverse presence of an array of other industries, analysts said in the report. S&P said the city’s balanced operations, strong reserves, and continued economic growth and management provide further stability, leading analysts to “not expect to change the rating within the two-year outlook horizon.”
Analysts also praised the city’s strong and proactive budgetary management practices and solid growth in major revenue categories in recent years, resulting in a significant operating surplus that will bring available general fund reserves to more than 40 percent of annual expenditures.
“Under Mayor Kelly’s leadership, the city of Chattanooga has been able to demonstrate strong financial management practices to make the greatest possible impact on the lives of all Chattanoogans,” said Interim Chief Financial Officer Vickie Haley. “Our operating surplus allows us to make significant investments in major development projects, public safety, affordable housing, outdoor spaces, and the efficient deployment of essential city services that make Chattanooga work effectively for its residents.”