Moody’s Investors Service has raised its rating on the International Falls Economic Development Authority’s $11.4 million of taxable lease revenue bonds that financed a new headquarters for National Parks Service at the nearby Voyageurs National Park now that the government is using the facility.

The bond sold by the International Falls Economic Development Authority to finance construction of the park headquarters buildings was rated A1 at the time of sale and is now rated Aa3, according to city Administrator Rod Otterness.

“The upgrade is simply because uncertainties at the time of sale — would the project be completed on time? would the project be completed within budget? — are now resolved,” he said.

And while Otterness said the higher rating upgrade has no immediate practical effect to the city or the EDA, should the EDA choose to refinance at some future point, a higher debt rating has a positive impact on this future refinancing.

“Because the bonds are backed by the ‘full faith and credit’ of the federal government, these bonds, like many others, are now ‘on review for possible downgrade’ in conjunction with Moody’s recent ‘watch list action’ on the U.S. government’s rating because of failure to yet resolve the debt-ceiling issue,” explained Otterness.

Because the bonds can be traded on the secondary market, the rating can have an impact on the price of these bonds for those buying and selling, he added.

EDA President Tim “Chopper” McBride agreed with Otterness’ assessment that the only impact a rating change has is if the governmental entity, in this case the city, decides to refinance or reinvest.

“A higher bond rating can change the financial gains or losses significantly only if the city seeks new structuring in the financing,” according to McBride. “The city has met all requirements set by the original bond and the contract with the park is secure. With the federal government in a crises, as some say it is, then because the city is tied to the federal rating, it could drop if the federal government fails to solve its budget issues.”

McBride said the rating will not effect day-to-day, month-to-month or year-to-year operations or contract obligations between the park and the city.

“Again, only if the contract is opened for refinancing would a high rating help or a low rating diminish the contract we have now, which is based on an A1 rating,” he said.