While other similar-sized and larger Kansas cities have seen their bond rating lowered, the city of Great Bend has received confirmation of its sound fiscal practices.
Moody’s Investors Service has assigned an Aa3 rating to the city of Great Bend’s $3.3 million General Obligation Refunding Bonds, Series 2013-A. The bonds are expected to sell July 31.
Concurrently, Moody’s has affirmed the Aa3 rating on the city’s outstanding general obligation debt. The Aa3 rating affects $7.6 million of total-rated general obligation debt, including the current offering.
Proceeds of the current bonds will be used to refund portions of the Series 2004-A Bonds and 2007-A bonds for debt service savings, which is expected to save $35,000 annually.
“Moody’s has been downgrading cities, sometimes for no reason,” said Howard Partington, Great Bend city administrator. “We did not get downgraded like other cities. But our tax base is growing.”
Partington said a critical factor was Great Bend’s economic “pull-factor,” was rated 1.63, which means outside visitors buy more goods and services than are leaving the city’s economy.
In first-class Class B cities larger than 10,000, Merriam had a pull factor of 3.16 and Hays had a pull-factor of 1.91. Great Bend has a pull factor larger that any of the Class A cities with populations over 10,000 people.
Partington said the city’s other key factor was retaining 185 jobs and $11 million in economic impact at Fuller Industries, plus adding capital investment or economic impact of $4.1 million for Golden Belt Cinema 6; $3.5 million, Heartland Ag; $2 million, Great Bend Regional Hospital expansion; $1.5 million, Papa John’s/Baskin Robbins; and $1.5 million, Sutherland’s.  

RATING RATIONALE
Assignment and affirmation of the AA3 rating reflect the city’s adequate but comparatively small tax base relative to similarly rated cities that serves as a regional retail hub; wealth levels below average relative to state and national medians; well-managed, stable, financial operations that are supported by ample reserves; and debt burden that is expected to remain affordable. The bonds are secured by the city’s general obligation unlimited tax pledge.

STRENGTHS
• Growing tax base that serves as a regional center
• Revenue raising flexibility afforded by lack of property tax levy limits

CHALLENGES
• Dependence on economically sensitive sales tax revenues for General Fund operations
• Wealth levels below state and average medians
Located 100 miles northwest of Wichita, Great Bend’s modest $801 million tax base is growing at a slightly above average rate. Full value increased at 2.1 percent per year between 2007 and 2012, compared to a flat growth rate of 0.1 percent for Kansas cities. Great Bend serves as the seat of Barton County and acts as a regional hub for the surrounding rural communities in central Kansas.
With conservative management and healthy reserves, Moody’s expects the city’s finances to remain stable. The city’s General Fund regularly posts year-end operating surpluses, which has made ample reserves possible. The fiscal 2012 General Fund unencumbered cash balance of $5.0 million equaled 41 percent of General Fund revenues, which is well above state and national medians.
Of equal importance is the stability of reserve levels. The General Fund unencumbered cash balance current level is up from $4.7 million in fiscal 2008 with most of the intervening years showing small increases or flat balances over the prior year.
Going forward, officials intend to keep at least $5 million in unencumbered cash in the General Fund. At the end of each year, city management transfers a portion of the General Fund surplus to the Capital Improvements Reserve Fund. Reserves in this fund are also plentiful; the fiscal 2012 year end unencumbered cash balance equaled $4.2 million. We anticipate 2013 will continue prior years’ trends with a slight surplus likely in the General Fund.
The city’s third-largest taxpayer, Walmart draws shoppers from the region, and city officials report stable operations at its other top taxpayers and employers.
Additionally, officials indicate they have seen expansion of the retail sector in 2013 with new restaurants, a cinema and home improvement and hardware stores.
The city exhibits a mix of residential and light industrial use, with some retail development. The city’s socioeconomic indicators are showing signs of stabilization after decades of steady declines relative to state and national medians.
The city’s 2010 ACS estimates family income levels were 95 percent and 75 percent of the state. Favorably, the city’s unemployment rate at 3.7 percent as of April 2013 is below the state (5.3), county (3.8) and national (7.5) levels for the same month.
The city has experienced a 4.2 percent increase in residents from 2000 to 2010. This increase follows decades of decline as the oil industry has played a smaller role in the local economy.
Sales taxes comprise the city’s largest General Fund revenue source (44 percent in fiscal 2012). After a slight decline in 2010, sales tax growth in 2011 and 2012 was solid at 8.9 percent and 5.5 percent, respectively.
Sales tax revenues for 2013 are tracking at similar levels as 2012.
Sales tax revenues are generated by the city’s portion of a 1 percent county-wide sales tax and a 0.75 percent city-wide sales tax.
Receipts from the county-wide sales tax are used for general operations, while receipts from the city-wide sales tax are used for property tax relief, economic development and street improvements (including debt service on GO bonds issued for that purpose).
Of the 0.75 percent city-wide taxes, the 0.50 percent local-option sales tax expires in 2015. Given the history of strong community support of this tax (over 70 percent in the last two votes), it is likely this tax will be renewed. Although Moody’s notes the inherent risk of dependence of an economically sensitive revenue stream, this risk is mitigated by the city’s role as a growing regional retail hub, healthy reserve levels, and lack of state-imposed property tax levy limits.

KEY STATISTICS
• 2010 census population — 15,995 (4.2 percent higher than 2000)
• 2012 full-value — $800.7M
• 2011 full-value per capita — $50,288
• Per capita income (ACS Estimates 2006-2010): $24,519 (89.7 percent of US)
• Median family income (ACS Estimates 2006-2010): $46,969 (74.6 percent of US)