FRESNO, CA – Mayor Lee Brand today announced that both Standard and Poor’s Global Ratings and Moody’s Investors Service have significantly upgraded the City of Fresno’s investment ratings, a decision which was based on strong leadership in combination with strong fiscal policies and budgetary performance over the past few years. The improved ratings mean better interest rates on the city’s upcoming bond refinancing, which is anticipated to result in over $35 million in savings over the next 22 years, with a savings of $26.4 million for the General Fund alone.
In the most dramatic news, S&P Global Ratings raised Fresno’s issuer credit rating (ICR) to ‘A+’ from ‘BBB-’, a five level increase. At the same time, S&P raised its long-term rating and underlying rating (SPUR) to ‘A’ from ‘BB+’ on the city’s existing lease revenue bonds and pension obligation bonds (POBs), and assigned its ‘A’ long-term rating to the Fresno Joint Powers Financing Authority, Calif.’s series 2017A and taxable series 2017B lease revenue refunding bonds, issued on behalf of the city of Fresno.
“It’s a testament to the work that former Mayor Swearengin, City Manager Bruce Rudd and I did to pass legislation that addressed short- and long-term budget challenges and facilitate citywide economic expansion,” said Fresno Mayor Lee Brand. “The experts have seen our improved financial performance and they’ve just given us a standing ovation.”
According to Standard and Poor’s, the rating upgrades reflect substantial improvements in the city’s financial management practices and policies, elimination of its structural operating deficits in the general fund, restoration of its available general fund to strong levels, and maintenance of a clean auditor opinion without any going concern in the city’s comprehensive annual financial reports in each of the past three fiscal years.
Mayor Brand added, “This news will have a tremendous impact for Fresno taxpayers and ratepayers. It lowers rates for city services and frees up millions of dollars for priorities like hiring more police officers.”
In related news, Moody’s assigned a Baa1 rating to the City of Fresno (CA) $89 million Series 2017A (tax-exempt) and $31.6 million Series 2017B (taxable) lease revenue refunding bonds for Master Lease Projects. They also upgraded the city’s outstanding master lease revenue bonds and lease-backed Series 2004 A & C bonds to Baa1 from Baa2, upgraded to Baa2 from Baa3 the rating on the city’s 2006A Convention Center bonds, and upgraded to Baa2 from Ba1 the rating on the 2002 Pension Obligation Bonds.
According to Moody’s, the upgrades reflect continued, meaningful improvement in the city’s fundamental economic profile, with ongoing growth in taxable property values, sales tax collections and employment.