S&P upgrades North St. Paul to AA+; city weighs levy, debt and capital priorities

City Manager Brian told the North St. Paul City Council at a workshop that Standard & Poor’s upgraded the city’s bond rating from AA to AA+ after a bond-rating call and submission of financial materials, a change officials said reflects stronger reserves and improved fiscal planning.

Quoting S&P’s analysis, Brian said the upgrade “reflects our view of the city's material increase in available reserves to stronger levels than we expected and we expected to sustain. It also reflects our view of the city's relatively recent adoption of a formal fund balance policy as well as a regularly updated long term operating forecast, which we believe demonstrate its commitment to maintaining structural balance.” He credited council direction, department heads and staff for 10-year capital and financial planning, adoption of a fund-balance policy and routine budget amendments.

Brian said the city completed a bond sale earlier in the day and planned to ask the city council to approve the bond results at a subsequent council meeting. He reported the sale produced a true interest rate of about 4.02% on an issuance the presentation tied to the streets program (the materials discussed roughly $6,700,000 for the current issuance). He warned that a 1-percentage-point increase in interest rates on a similar 20-year issuance would raise principal-and-interest costs by about $864,000 over the life of the bonds, illustrating sensitivity to market shifts.

Officials reviewed debt levels in comparison with a neighboring jurisdiction, Mounds View. Brian said North St. Paul’s governmental debt at the end of 2023 was about $20.5 million; he discussed higher enterprise-related debt and explained that heavier debt levels contribute to higher utility rates and property-tax needs. (Transcript contains varied figures when the numbers were read aloud; the city manager supplied the comparisons.)

On the 2026 budget, Brian said the council’s ongoing dedication of levy increases for parks, facilities and streets produces a starting point of about a 5.6% levy increase to stay on the planned capital schedule. He added that he is proposing a 6% target for 2026 to allow limited flexibility for priorities, and he said city staff will seek expenditure reductions, surplus uses and other revenues to minimize levy pressure. He also said the city manager’s goal is to avoid utility-rate increases in 2026, noting staff will prioritize requests and consider grants and other non-levy revenue sources.

Council members asked about alternatives, including grants and a pending sales-tax moratorium that the council may need to address when it expires. Brian said the University of Minnesota Extension offers sales-tax analysis that several nearby cities use and recommended starting those conversations in the current year.

No formal council vote on new levies, utility rates or bond refunds occurred at the workshop; the city manager said staff will return with recommendations and that staff and council must weigh spending priorities, debt plans and community affordability before final decisions.