County's AAA bond rating reaffirmed by Moody's after moves for water system support

OTTAWA COUNTY — Ottawa County has re-secured its AAA bond rating from Moody's, assuring the county and the various municipalities within it of the best credit rating to finance their respective debt.

Ottawa County residents will save an estimated $1 million in interest costs because of the top rating, said Administrator Patrick Waterman.

“This AAA rating affirms that Ottawa County continues to approach its finances with care, discipline, and a long-term view,” Waterman said. “Independent recognition from Moody’s matters because it reflects both our financial strength and our commitment to being good stewards of public resources.”

The financials explained

Moody's, a subsidiary of Moody's Corp, is a leading global credit rating agency that provides forward-looking opinions on the relative credit risk of debt obligations, financial institutions, and governments.

Bond ratings are letter-based grades assigned by agencies like Moody's, S&P and Fitch to assess a bond issuer's creditworthiness and default risk. Ranging from AAA (safest) to D (default), they help investors gauge risk and determine the interest rates issuers must pay. 

The rating agencies typically look at several "credit strengths" that insulate the county from economic instability, which can range from how diverse the economy is to how debt is managed to how effective fiscal management is within a municipality.

Among the factors Moody's cited in its determination were:

• Robust reserves: The county maintains a strong available fund balance; the ratio was over 70% in fiscal 2024 (fiscal years run Oct. 1-Sept. 30) and its liquidity ratio was about 75%.
• Stable economy: Moody's said the county supports a resident income ratio of 117%. The metric compares a municipality's median household income to the national average to evaluate a local government's economic strength and revenue-raising capacity.
• A wealthy tax base: Ottawa County has a full value per capita over $160,000, Moody's said, meaning "taxable wealth" of a community relative to its population. "Full value" represents the total market value of all taxable property within the county (residential, commercial and industrial), while "per capita" means the total full value is divided by how many residents reside within it.
• Strong management: The county also benefits from strong, proactive management policies and practices that sustain its robust fund balance and liquidity, Moody's said. "Financial ratios will remain strong even after a small use of general fund balance in fiscal 2026 for capital and other one-time expenditures," the agency said.
• Low long-term debt: The county's long-term liabilities ratio is low, consistently under 200% of its revenue. Counties frequently act as a financial "backstop" or intermediary for cities, villages, and townships, usually through structured mechanisms to help local units secure better interest rates or manage infrastructure costs. "The county often issues debt on behalf of underlying local governments through its component units. Leverage would rise only modestly if component unit debt and revenue is included," Moody's said.

Investing in water infrastructure

Moody's determined Ottawa's rating in late February after the county board of commissioners in December approved the issuance of "refunding" bonds for the water supply system for the city of Wyoming.

The Ottawa County Water Supply System Refunding Bonds are municipal debt instruments issued by the county, primarily to refinance existing debt at lower interest rates to achieve cost savings for participating municipalities.

Refunding a bond is essentially the process of refinancing it. It involves issuing new bonds with lower interest rates or better terms to pay off older, higher-interest debt, often compared to refinancing a home mortgage to reduce payments.

Although located in Kent County, Wyoming and Ottawa County share a critical intergovernmental partnership regarding water, as the city serves as a regional wholesale water provider for a large portion of Ottawa.

The Donald K. Shine Drinking Water Plant is located on Lake Michigan in Park Township, however, it is a City of Wyoming asset that serves 230,000 people, including residents in Zeeland, Park, Olive, Blendon, Holland, Georgetown, Jamestown, Gaines and Byron townships, the cities of Hudsonville and Grandville — in addition to a portion of Kentwood and the City of Wyoming.

The Ottawa County board voted to issue the infrastructure bonds — not to exceed $18,960,000 — which resulted in $17.5 million in refunding bonds for Ottawa County Public Utilities. The bonds are expected to be sold in mid-April.

The move "refunded" or refinanced for a second time a 2007 bond issue for the Wyoming Water System, which was first refunded in 2015.

Including the sale of the bonds in April, the county will have about $45 million in debt outstanding, Moody's said.

What are future risks?

Despite the positive reaffirmation, there have been local concerns in recent years about the bond rating being at risk.

Those concerns largely stemmed from governance concerns rather than immediate financial insolvency after far-right political group Ottawa Impact assumed a controlling majority of the county board of commissioners in January 2023 through December 2024 — resulting in numerous lawsuits against the county. 

In addition to the high-profile legal battles, budget cuts and disputes over how to spend state and federal grant funds, the county saw significant administrative turnover, including having seven administrators from January 2021 through October 2025 — four of whom were during Ottawa Impact's two-year reign.

Waterman, who served as deputy administrator for Ottawa County from late 2022 through July 2023, left to work as the deputy city manager for Wyoming while the water infrastructure issue was discussed.

He returned to Ottawa County in late 2025, when he was hired as the next administrator in September.

Although rating agencies consider administrative stability, it can be a subjective factor — but it can carry serious weight.

Examples include:

• Chicago (2026): In February, both Fitch Ratings and Kroll Bond Rating Agency downgraded Chicago’s General Obligation bonds. Although the city's pension debt was a factor, the agencies explicitly cited political gridlock because of ongoing disagreements between the mayor’s administration and the city council.
• Atlantic City, New Jersey (2014–2015): During a fiscal crisis, Atlantic City faced several downgrades that were tied not just to the closing of casinos, but to administrative paralysis, including “the lack of consensus among elected leaders on how to return to structural balance.”
• Scranton, Pennsylvania (2012): Frequently cited by credit rating agencies and municipal analysts as a "worst-case scenario" regarding how political infighting can lead to financial collapse, Scranton’s credit rating was slashed to non-investment grade following a complete breakdown in administrative function. In a 2012 special report titled "Credit Trends: Pennsylvania Local Governments Face Credit Pressure," Moody's highlighted Scranton as a "pocket of severe credit stress." The report explicitly noted that the city's financial deterioration was "exacerbated by poor management decisions" and a high debt burden.

Although the current rating remains at the highest level, Moody's 2025 report noted that the county’s residential wealth and income ratios slightly trail the median for other AAA-rated local governments — although it hasn't been enough to trigger a downgrade — listed the metric as a "credit challenge."

Other potential factors that could put the rating at risk in the future were:

• If the trend of operating deficits and/or declines in the district's available fund balance or cash ratios approaches 25%.
• If the county saw a significant increase in long-term liabilities that would be 250% above its annual revenue or if its fixed costs neared 15% of its general fund expenditures, it typically signals a transition into a higher-risk category regarding financial flexibility and creditworthiness. 

Although an initial rating is assigned when a municipality issues debt, agencies conduct periodic reviews — typically on an annual basis — to determine if the current rating is still warranted.

— Sarah Leach is the executive editor of the Ottawa News Network. Contact her at sleach@ottawanewsnetwork.org. Follow her on Twitter @ONNLeach.