Making an A

When Jack Dillingham went before the Cape Girardeau City Council last week, he told them something that would have made any schoolchild happy on report-card day. They had gotten an A. Dillingham, with the Piper Jaffray brokerage firm in Kansas City, was telling the city that it had scored well in a bond rating that was done by Standard & Poor's Rating Service.

On one hand, that means that when $7.8 million in bonds go on sale this week to fund improvements like a new fire station, facilities renovations and equipment upgrades, buyers will be able to purchase bonds knowing their investments are solid.

On the other hand, city officials took the information as third-party affirmation of what they've been saying for quite some time -- that the city is in good financial health. Also, it provides economic developers with another tool when they're trying to entice new businesses into the area.

"It's a positive," Dillingham said. "It shows that Standard & Poor's looked under the covers and saw what Cape Girardeau was, which is basically a community with strong financial health and a good economic base."

The A grade isn't the highest. Bond-rating grades start at AAA, followed by AA, then A, with minuses sometimes following the grade. There are also Bs and Cs, which Dillingham said are "non-investment grades" when it comes to issuing municipal bonds.

That said, he also noted that of 37 Missouri cities with a charter form of government -- a requirement for issuing special-obligation bonds -- he couldn't recall any other getting as positive a report as this.

The report said the city has several strengths, including its role as a regional economic base. It says that the city is in a strong financial position, has good reserve levels and fiscal priorities to maintain such levels and a moderate overall debt burden.

"It was extremely flattering as we were there sitting listening to him basically comment on the tremendous financial condition the city of Cape Girardeau is in," said Mayor Jay Knudtson. "Citizens may challenge city government, as they're entitled to. But this exemplifies that we're on the right track from a financial standpoint. In my opinion, it shows that we are a good government and a fiscally responsible government."

Shallow but diverse base

The report covers several areas, including unemployment, economic conditions and income levels.

While the city's population is 35,350, the daytime population swells to nearly 100,000. While the report says the local economic base is somewhat shallow, it is diverse, with employers across the spectrum, including health care, retail, manufacturing and higher education.

The city's role as an economic center for Southeast Missouri has led the city to maintain a relatively stable labor force, the report says. Retail in the city has lead to per-capita retail levels typically recording above state and national levels. In 2003, the city was at 159 percent of the state level and 152 percent of the national level.

The city's unemployment rate of 4.6 percent is lower than the state's (5.3 percent) and the nation's (5.5 percent). However, income levels are also below average, the report says.

The true market value of the city is $1.7 billion, or what the report calls a modest $47,940 per capita.

The city's financial position is solid, the report says. It is highlighted by a fiscal year-end general fund balance of $6.2 million. Also, through March, the city's collections are up 2.5 percent compared with what it had budgeted.

Not everything was glowing. The report says the city is too reliant on sales taxes, though Dillingham said that is true of most cities. Development in the city was also described as modest, though the report does note the big-box retailers that have moved into the area, including Kohl's, Old Navy, Sears Grand and others.

City manager Doug Leslie said it's one thing for city leaders to tout how good the financial situation is. But it means more for an outside firm with the reputation of Standard and Poor's to say similar things.

"It provides the addition of a third-party view," he said. "Mr. Dillingham made strong statements about Cape Girardeau. It makes a difference when somebody else says it. It drives it home when you see it summarized like that."

Economic developers in the area said they were interested in getting copies of the report that can be shown to firms interested in starting operations here or relocating to the area.

"When you get those kinds of comments from an independent source about the city's economy, that's a real positive and certainly something we can use," said John Mehner, president and CEO of the Cape Girardeau Chamber of Commerce.

Mitch Robinson, executive director of Cape Girardeau Area MAGNET, agreed.

"I'm definitely going to be getting a copy of that report," he said. "It's a very important outside review of the city and its financial strengths. Anytime you have a prospect in, they're going to take people like myself or the mayor's word with a grain of salt. This adds some weight."

smoyers@semissourian.com

335-6611, extension 137