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Fact or Fiction: City of Mukilteo AAA bond rating

Mukilteo Forward is what mayoral candidate, Joe Marine, promises to do. But when he cites past accomplishments like when Mukilteo earned a AAA Bond Rating by Standard and Poor’s, some are left to wonder what that even means, is it even true and what it says about him as a candidate?

Looking to the Past to Know How to Move Forward

“Mukilteo Forward” is Joe Marine’s campaign slogan in Mukilteo’s mayoral race. While those words point to the future, Marine uses his past experience to boost his viability as a candidate. 

Elected in 2006, Marine served as the mayor of Mukilteo for eight years. On his campaign’s website, Marine focuses on how he helped to improve the city’s quality of life during his time in office. 

For example, Marine notes how when he was mayor, Mukilteo “was ranked twice by Money magazine as one of the top ten best small cities in America—a ranking we’d never had before.” Marine goes on to mention that since he left office, “Mukilteo hasn’t ranked in the top ten cities again.” 

Mukilteo was indeed listed as the tenth best city to live in the U.S. in 2009; however, CNN’s Money magazine hasn’t published a best cities list since 2013. In 2011, Mukilteo did make the list again in the ninth slot. 

In addition to the City’s rankings, Marine also says on his website that “For the first time ever, Mukilteo received a AAA bond rating by Standard and Poor’s” when he was mayor. According to Standard and Poor’s website, the agency did give Mukilteo the AAA bond rating during Marine’s term as mayor.

In 2009 Standard & Poor’s assigned its highest municipal bond rating of “AAA” for the City’s issuance of $12,585,000 limited tax general obligation bonds for the construction of the Rosehill Community Center. The 2009 bond debt is backed by the full faith and credit of the City.

However, in August of 2019, Standard & Poor’s downgraded the City’s long-term credit rating from AAA to AA. According to the 2019 Mukilteo Audit Report performed by the Office of the Washington State Auditor:

“The rating action was based in part on the City experiencing what Standard & Poor’s referred to as a ‘period of political acrimony’ including the ‘uncertainty’ pending the outcome of a ballot measure giving voters the opportunity to switch the form of government from Mayor-Council to Council-Manager. At the time the rating check was conducted, the City Administrator position was being filled by an interim contractor.”

By November of 2019, the ballot measure failed, retaining the Mayor-Council form of government. The City Administrator position was filled permanently in April of 2020.

According to the 2019 audit, the city does have a “strong budgetary performance” and “very strong liquidity, with total governmental available cash of 44% of total governmental fund expenditures” a testament to current Mukilteo Mayor Jennifer Gregerson’s leadership.

The City is awaiting its 2021 Audit Report which should be published later this year.

The AAA Rating and How Mayors Help Cities Earn It

When it comes to credit rating agencies, each one uses different rating metrics. For Standard and Poor’s, also known as S&P Global, AAA is the highest rating they give, with a single C being the lowest. The triple-A rating is something to write home about then, as it indicates an extremely strong creditworthiness of a city. 

Charlie Francis, a 45-year veteran of government finance, experienced finance director, and former CFO, noted five different ways of improving and maintaining bond ratings in an article published to governing.com. In addition to consistently monitoring the vital signs of a city’s economic health, Francis stresses the importance of trust and transparency.

“Build a relationship with your rating agency,” he says. While this might sound like a directive to schmooze the people at S&P Global, Francis is actually suggesting that government officials “keep an ongoing dialogue with them and share stories of what your government is doing to proactively manage issues. Share policies and keep them informed of what is happening and how it is being addressed.” 

“Transparency,” continues Francis, “solid management practices, accountability, and leadership all influence ratings and can be improved continually.” And that seems to be the basis of all of Francis’s advice — build relationships with the rating agencies and earn their trust, not to mention know all the answers to each question posed by municipalbonds.com from five paragraphs earlier. 

Understanding Bonds and Bond Ratings

To understand the rating, one first needs to understand bonds. In her Forbes article titled “What is A Bond?,” E. Napoletano, a former registered financial advisor, defines bonds as “investment securities where an investor lends money to a company or a government for a set period of time, in exchange for regular interest payments.”

“Once the bond reaches maturity,” Napoletano continues, “the bond issuer returns the investor’s money.”

A city like Mukilteo uses municipal bonds, in particular. Such bonds help to fund city projects like building new schools or highways. 

Bond ratings are essentially credit risk ratings. According to Standard and Poor’s website, the agency that gave Mukilteo the AAA bond rating that Marine mentions, “Credit ratings are forward-looking opinions about the ability and willingness of debt issuers, like corporations or governments to meet their financial obligations on time and in full.” 

Assessing the credit risk of a city is a lengthier and more in-depth process than it sounds, though. Agencies like Standard and Poor’s analyze a wide range of variables. According to municipalbonds.com, agencies “take into account all of the economic characteristics of the issuer and the bond issue to assign a rating.” 

The site continues, saying that agencies “evaluate the economic well-being of the area: what is the Median income, how concentrated is community’s dependence on certain employers or industries, what is the diversity of the tax base, what is the rate of population growth, is the population younger or older, are tax revenues going up or down, why are revenues going up or down, what are the tax rates and can they be increased without decreasing revenues, is the economic area undergoing challenges, how affluent is the community, city, or state, etc? How safe are the revenues of the issuer if it is a revenue bond?”

Essentially, the bond ratings of a city reflect the city’s overall economic health and how well investors can trust it to pay back the money loaned via bonds. 

As local governments must monitor different variables over a long period of time while also maintaining transparency to earn trust from rating agencies, it stands to reason that this is no small task. Earning a AAA rating, then, is not a feat that should be taken for granted which Marine and the city of Mukilteo should be proud.

To read Francis’s complete list of tips to improve bond ratings, visit governing.com. To learn more about how Rating Agencies operate, visit municipalbonds.com.

2 thoughts on “Fact or Fiction: City of Mukilteo AAA bond rating

  • I dont understand the headline. It is clearly FACT. Joe Marine did get Mukilteo the highest bond rating, it says so right in the article.

  • The title and the article looks politically motivated. We have recently seen actions by Mayor Jennifer Gregerson that has put the city on a path that is even worse than the bond rating being muddied in this article. With a set of choreographed moves, she has set the city on a trajectory for higher density housing. That may be applauded by builders, developers, county and state leaders , but not the Mukilteo resident.

    The article says, the bonds are needed to fund schools and highways. They don’t clarify that those are needed with high density housing which the residents hate, and the city council and the mayor know it. Mukilteo surely will need schools and highways if we pack people into it in apartments and skinny houses. We, the residents don’t want it in the first place.

    If Mukilteo wants to be listed as one of the ten best cities to live in for decades to come, we need to stop high density housing and retain the small town feel that we all love. Replacing Jennifer Gregerson with Joe Marin and council members in support of it with candidates who don’t is our only hope.


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