Standard & Poor’s Rating Services issued an “A” rating for the City of Andalusia’s finances this week.

The rating jumped two notches from the most recently-issued rating, a BBB+, to an “A,” and changed the outlook from stable from positive.

“This was harder than ever to earn, because Standard & Poor in the past two years has strengthened and tightened its rating system,” Mayor Earl Johnson said. “It was harder to get this ‘A’ than a previous ‘A-’.”

The city sought the new rating in preparation of a bond issue to fund its portion of debt at the South Alabama Regional Airport. The debt was shared with the City of Opp and with the county, and the three entities have worked for months with the South Alabama Regional Airport Authority to refinance the debt. The city’s portion is $8.9 million.

The city also is refunding a 2009 series bond, without extending the terms, which will produce $500,000 in cash. The mayor said this will go into the city’s reserves. The Series B bonds to be issued total $6.44 million, and a portion will be used on the city’s existing debt for interest rate savings, with approximately $2 million going toward downtown redevelopment projects, according to the S&P report.

“We base the upgrade on structural changes the city has made that have significantly bolstered revenues and the city’s budgetary flexibility,” S&P wrote in its rationale for the new rating. “

Johnson said the improved rating boils down to four things.

“We increased our revenue,” he said. “We reduced our expenses. We increased our reserves to more than 15 percent of our gross budget needs, and we reduced the principal of our long-term debt for $4.3 million in the last three years.

“And we’ve done all of that in a weak economy, as defined by Standard and Poor’s,” he said.

The S&P report states, “We consider Andalusia’s economy weak … The city has a projected per capita effective buying income of 75.2 percent of the national level and per capita market value of $65,165. Overall, the city’s market value was stable over the past year at $596.3 million in 2015.”

The report also states that management has met its informal target of maintaining 15 percent of annual operating expenditures in reserve, and says the city has a “strong budgetary performance.”

The report also praises steps taken by the city to increase revenue, namely a sales tax increase implemented in August 2013.

“This is a red-letter day in Andalusia, Ala.,” the mayor said. “It’s than just a good credit rating. It means the health of your operation is good when you have an A rating.

“This is made possible by the support of the city council, and our great staff,” the mayor said. “And the people of Andalusia who have supported us while we do this. We’re going to be a better city for it.”

The new bonds are expected to be executed in the next month.