VILLAGE CONNECTION – Estero Earns AAA Bond Rating

On November 21, 2024, national credit rating agency Standard & Poor’s (S&P) Global Ratings assigned a bond rating of “AAA” to the Village of Estero. This is the highest rating possible in the nation, shared by only one other community in Southwest Florida (Naples) and only seven cities in the state of Florida.

The process of a bond rating is the most extensive review of the entire operation from a credit rating perspective. It represents a validation of the highest quality of fiscal controls and policies. The purpose of a bond rating is to demonstrate to any lender and the public the health of the Village’s financial position, the professionalism of Village staff and the ability to repay any debt that might be issued by the Village Council.  

As the “gold standard” for financial stewardship, this rating ensures that the Village of Estero would likely get the lowest possible interest rate on any debt that the Village would secure.

The bond rating process has been extensive and ongoing for much of 2024. The Village’s efforts culminated with a presentation to the S&P Rating Committee on July 8. Supporting work included:

• Completion of the annual budget and annual audit. Annual “clean” audits, completed by an outside firm, validated the Village’s approach to its operation and commitment to professional stewardship of the community’s resources.
• Thorough review and final adoption of extensive fiscal policies that cemented the conservative approach to the Village’s finances, including substantial financial reserves, required public disclosure of all financial records and well-documented policies regarding all aspects of the Village’s financial operation.
• Completion of an independent study by the Regional Economic Research Institute at Florida Gulf Coast University regarding specific socioeconomic data associated with the Village of Estero.

The S&P bond rating remains in effect indefinitely, barring a substantial change in the Village’s financial condition or the issuance of significant municipal debt.

Financial Impact:

The benefit of securing a credit rating is that the financial markets pay less for debt (in the form of lower borrowing costs – translated to lower interest rates) for top quality debt. Thus, a bond issued for a 20-year term would typically pay significantly less in interest each year for the entire term of the bond.

Typically, local governments have a variety of debts including pension debt and general obligation debt. The Village currently has no debt of any type. The Village issued debt of $24.5 million for the purchase of property that became the Estero River Park. That debt was initially issued in 2018 as a 20-year bond but was fully paid off in just four years.