Moody’s Maintains City of Dubuque’s Strong Bond Rating 

JANUARY 23, 2025

Moody’s Ratings has assigned Aa2 ratings to three series of general obligation bonds the City of Dubuque will soon issue to fund approximately $24 million in improvement projects. Moody’s ratings range on a scale from Aaa (highest) to C (lowest), with 19 different designations in between. This assigned rating maintains Dubuque’s existing Aa2 rating, which is the third-highest possible rating. 

The bonds will finance a variety of projects, including: 

• nearly $6 million for fire station improvements and new equipment (including two ambulances, a ladder truck, a pumper fire engine, and a rescue boat),  
• nearly $9 million towards the Iowa Amphitheater project on Chaplain Schmitt Island,  
• $3.2 million to implement parking system improvements, and 
• the remainder for new solid waste collection trucks, ImOn Ice Arena improvements, and taxiway improvements at the Dubuque Regional Airport.

Moody’s credit analysis states, “the City of Dubuque’s local economy benefits from its role as a regional economic center, with solid resident income and full value per capita. Financial operations are strong and will remain so despite declines in fund balance over the next few years, as it expends funds from the pandemic. Long-term liabilities and fixed cost ratios are moderate and will remain so despite future borrowing needs.”   

According to Moody’s, the Aa2 issuer rating for the City of Dubuque’s bonds reflects the city’s healthy economic base, which serves as a regional economic center. Other rationale stated for the rating include: 

• Full value per capita and adjusted resident income are solid at around $109,000 and 98% respectively, though weaker than Aa peers, in part because of a large student population.  
• Available fund balance was strong at around 60% of revenue at the close of fiscal 2023 (year-end June 30), and cash was stronger at 85% of revenue. The City’s available fund balance will likely remain well over 45%, despite some planned draws in fiscal 2024 and fiscal 2025 to spend down federal funds from the pandemic.  
• Despite the state adopting new property tax restrictions, revenue raising flexibility remains strong because the City maintains significant margin in its employee benefits fund and is not utilizing its emergency levy.  
• The long-term liabilities ratio will likely remain well under 300% inclusive of the current issuances and future borrowing plans, and fixed-costs ratio will remain well below 20%.  

The full rating announcement issued by Moody’s on Jan. 23, 2025, can be viewed at https://cityofdubuque.org/DocumentCenter/View/60131/Moodys-Rating-Action-Moodys-Ratings-assigns-Aa2-to-City-of-Dubuque-IAs-GO-Bonds. 

The Dubuque City Council approved the issuance of the bonds following a public hearing at their meeting on Jan. 21, 2025. Following the sale, the City will have about $245 million of total debt outstanding, less than 38.5% of its statutory debt limit. As part of the City’s debt-reduction plan, the City strategically issues debt each year, but more debt is being retired than issued. 

Moody’s upgraded the City’s rating to Aa2 in July 2023. The improved rating assists the City in securing the best terms for financial products like loans, which can provide substantial savings for the City and taxpayers. According to Moody’s, the issuer rating was upgraded to Aa2 because “the City has strong financial operations and ample revenue-raising flexibility, which has resulted in steadily improved available fund balance and cash. The city serves as a regional economic center and its regional economic growth rate has outpaced the nation over the past five years. The city’s local economy is likely to remain strong because of its mix of commercial and industrial industries, stable population and steady tax base growth.” 

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MEDIA CONTACT
Jenny Larson, Chief Financial Officer
jlarson@cityofdubuque.org, 563.589.4398