Standard and Poor’s raises City’s credit rating
Moreno Valley moves from “A-” to “A”
The City of Moreno Valley has received notice from Standard and Poor’s that the underlying credit rating on its lease revenue debt has been raised by one notch from ‘A-‘ to ‘A’ with a stable future outlook. According to S&P, the rating is supported by “the City’s strong economic growth and strong fiscal management policies and practices that have helped the City maintain a sound financial position.”
“This is excellent news for Moreno Valley,” Mayor Charles White said. "I'm very pleased with the City's enhanced credit rating. It reflects well on our City staff and our City Council who have supported these same policies and best practices that are being singled out by Standard & Poor’s as positive characteristics of our credit quality," White said.
The enhanced underlying credit rating by S&P will have the potential of saving the City – and therefore City taxpayers – hundreds of thousands of dollars in future interest expense and bond insurance premiums. There is an inverse relationship between bond ratings and the interest rates at which bonds are issued: the higher the bond rating, the lower the interest rate for the bond due to the decreasing risk of default.
The S&P ratings publication was issued in conjunction with the City’s upcoming 2007 lease revenue bond issue for financing the electric utility substation project. S&P cited several of the City’s general credit characteristics that contributed to the enhanced rating: (1) diverse property tax base, with an assessed valuation that has grown an average of 17.3% annually over the past five years; (2) better than expected performance in major general fund revenue categories due to strong growth in the local economic base; (3) convenient location within the deep, diverse Riverside County economy with access to employment opportunities in neighboring Los Angeles, Orange, San Bernardino, and San Diego Counties; and (4) sound financial performance and strong management policies and practices with solid reserves.
S&P said they expect to see Moreno Valley continue to experience solid economic growth and strong property and sales tax growth and assume this growth will continue to fuel strong general fund revenue increases, allowing the City management to maintain strong reserves that can act as a buffer for potential economic downturns or additional state funding cuts. If population and economic growth slows substantially, if developer fees subsequently decrease, or if the newly established electric utility experiences operational difficulties, City officials could face operational pressures but should have the flexibility to maintain solid finances.