WILLISTON, N.D. – Williston city leaders say they’re disappointed by a reduction in the city’s credit rating, but they’re committed to managing their debt responsibly and without putting the burden of the oil boom on local taxpayers.
Standard & Poor’s Ratings Services has lowered its long-term rating on Williston’s refunding improvement bonds from A- to BBB+, calling the outlook “negative.”
“The rating action reflects our view of the city’s lower-than-projected audited results, projected general fund deficits through 2013 that we expect to entirely deplete cash reserves, and the uncertainty regarding the city’s ability to balance its budgets and stabilize operations given growth-related fiscal challenges,” wrote Standard & Poor’s credit analyst Kathryn Clayton.
Mayor Ward Koeser said city leaders are conservative about raising taxes because they don’t want local residents to pay for the needs created by the oil boom, he said.
“We don’t believe our taxpayers should bear the burden of this impact,” Koeser said.
City Auditor John Kautzman said Williston had about $46 million in debt at the start of the year and anticipates additional borrowing for the expansion of a sewage treatment plant and the city’s share of an airport expansion.
Kautzman said he had a conference call Thursday with the city’s bonding finance agency and officials there did not sound any alarm bells about the credit rating. Moody’s gave the city a similar credit rating in the early 1990s, Kautzman said.
It’s a concern for the city to have to pay higher interest rates, but the impact won’t be as severe with the current low interest rates, Koeser said.
In the 1980s, Williston paid about $28 million in “bad debt” as a result of developers who walked away from property after the oil boom went bust, Koeser said.
“We’ve always paid our bills and we plan to always pay our bills,” he said.
Williston has identified about $625 million in infrastructure needs, but not all the projects need to be done all at once, Kautzman said.
City leaders are hopeful that House Bill 1358, approved Thursday by the House that directs more oil tax revenue to “hub cities” such as Williston, will be favorably received by the Senate.
Bill sponsor Rep. Bob Skarphol, R-Tioga, whose district includes Williston, said the bill aims to give cities like Williston that are seeing major impacts of the state’s oil boom “a reasonable, reliable revenue stream that would help them address their needs.”
Koeser said the bill addresses what city leaders have been trying to tell state officials.
“We’ve been telling them we are the epicenter. We are the hub city that has by far the biggest impact,” he said. “This needs to be shared by the state, by the developers, by the oil companies.”
Koeser said some have questioned why the city is in the process of building a $70 million recreation center while also responding to major infrastructure needs. But it’s the Williston Park and Recreation District, not the city, that borrowed for that project.
Standard & Poor’s recently gave the park district ratings of A and A-, indicating a stable outlook.
Williston residents approved a 1-cent sales tax for the facility, with half going to the park district and half to the building project. It will expire in 20 years or when the building is paid for.