The Village of Lombard has recently achieved a significant milestone in its financial journey. S&P Global Ratings (S&P) has assigned a rating of BBB to the Village with a Stable Outlook. This represents an increase in the Village's Issuer Credit Rating (ICR) by six notches since its last rating in 2018 when it was rated B. This notable increase has improved the Village's financial standing and is a positive indicator of its financial stability.
Historically, the Village has long been in a strong financial position, having been rated as AA until 2008 when it was upgraded to AA+. However, the Village had its credit rating lowered to BBB in January 2012, related to debt requests of the Lombard Public Facilities Corporation (LPFC), and the credit rating was further downgraded to B in February 2014. S&P withdrew its rating of the Village in July 2019, when the Village no longer had any rated debt outstanding.
The Village of Lombard has been taking strategic steps since 2017 to return the Village to an investment grade credit rating, with a goal of achieving a BBB by 2023, as outlined in the Village’s 2021-2024 Strategic Plan. There were four major takeaways from the 2018 Village rating that the Village focused on during the last five years, including updating the Village’s debt management policy, complying with the obligations under the LPFC restructuring, demonstrating that the Village could access the debt markets, and finally, having a plan in place to pay down the liabilities of the state-mandated pension obligations. By actively addressing each of these areas, the Village has successfully achieved this strategic goal. This investment grade rating will offer several benefits, including better loan terms, cost savings, and increased confidence among investors.
In S&P’s ratings analysis, the Village was credited with taking a variety of fiscally responsible actions over the past several years:
“The Village demonstrated strong financial performance in recent years, highlighted by three consecutive audited general fund surpluses, fueled by strong sales and income tax revenues and the receipt of American Rescue Plan Act funds. For fiscal 2023 (year-end Dec. 31), the Village anticipates using approximately $8 million of reserves, which represents surplus amounts from the previous fiscal year, a portion of which will be spent for additional pension contributions and to add to the capital replacement fund.
The Village expects to adopt a balanced 2024 budget. Owing to its recent trend of positive operations, the Village has increased its reserves to 43% of expenditures in audited fiscal 2022, which we anticipate will decline somewhat in 2023 but still remain very strong.”
Village President Keith Giagnorio stated, “I am very proud that the Village Board has chosen to be especially prudent with Village finances and spend less than we have coming in. In our challenging years, whenever we looked to raise additional revenue for providing services, we would also reduce spending by the same amount, and tough decisions had to be made by the Village Board in that process. However, in making those difficult decisions, the Board has put the Village in a strong financial position to continue to face financial challenges in the future, and that is being recognized in this rating from S&P.”
Trustee Andrew Honig, Chair of the Finance & Administration Committee, said, “The residents that serve on the Finance & Administration Committee have provided invaluable recommendations to the Village Board over the years, helping to provide guidance on tough financial decisions that the Village has had to make. These recommendations have helped the Village maintain strong reserves and liquidity while at the same time addressing the Village’s long-term financial challenges of funding state-mandated pension obligations and addressing its aging buildings. The rating from S&P is a strong affirmation of the Village’s commitment to facing these financial challenges into the future.”
While attaining a BBB credit rating is a significant improvement, the Village of Lombard remains committed to pursuing further financial excellence. The Village will continue to closely monitor its finances and be ready to adapt to any changes, whether internal or external, to ensure its financial stability remains strong.