Suffolk unveils $39.5M bond strategy
Published 9:00 am Friday, June 27, 2025
Suffolk City Council reviewed a detailed financial plan during its June 18 work session, outlining the city’s upcoming bond issuances for fiscal year 2025-26. The presentation, led by financial advisor David Rose of Davenport & Company, focused on general obligation bonds and a new round of stormwater revenue bonds.
The proposed plan includes approximately $35 million in new general obligation bonds to support capital projects identified in the city’s multi-year Capital Improvements Program (CIP) and $4.5 million in stormwater revenue bonds. Both financing efforts are designed to align with Suffolk’s self-imposed fiscal policy guidelines.
“We’re in a very strong position,” Rose told council members, noting that Suffolk continues to enjoy a AAA bond rating from all three major credit rating agencies. “That rating is a reflection of the city’s conservative and disciplined approach to borrowing.”
The city has a longstanding policy of limiting debt service to no more than 10% of general fund expenditures. Current projections show Suffolk’s debt ratio hovering between 6% and 7% over the next decade, well within policy limits. Additionally, the city maintains a separate cap on overall debt as a percentage of assessed property value, with current forecasts staying below 2% — half the allowable threshold.
Rose emphasized that interest rates remain historically favorable, with fixed municipal bond rates for AAA-rated issuers currently near 4%. “We’re locking in rates that, in historical terms, are very solid,” he said.
The stormwater bond component, totaling roughly $4.5 million, will finance multiple projects under the city’s self-sustaining stormwater enterprise fund. Because the fund operates on user fees, the bonds do not impact the general fund or tax rate. Rose recommended a dual-path strategy for the stormwater debt: soliciting proposals from private banks while also considering the Virginia Resources Authority (VRA) as a potential lender.
Pending council approval, a public hearing on the general obligation bonds will be scheduled in July. Bond sales are expected to close shortly after Labor Day. If a favorable bank offer is accepted, the stormwater financing process could conclude by September; otherwise, the city may proceed with VRA in November.
Council members expressed support for the plan, with Mayor Michael Duman noting the importance of adhering to the city’s fiscal discipline.
“There’s a difference between what we’re capable of financing and what we choose to finance under our policies,” Duman said. “That’s what protects our AAA rating.”
Council also discussed the rationale behind deferring principal payments during the first 18 months of borrowing—a practice Rose said helps align debt repayment with project completion timelines and supports long-term budget planning.
“This strategy allows us to minimize budget impacts early on while major projects are still under construction,” Rose said.
Council is expected to vote on the related bond ordinances in the coming weeks.