|Standard & Poor’s Ratings Services has raised the City of Chula Vista credit rating to A (the City previously had an A- rating). An A rating indicates the City has a “strong capacity to meet financial commitments, but is somewhat susceptible to adverse economic conditions and changes in circumstances.”
The analysis released by the agency stated, “the stable outlook reflects our opinion of management’s actions to stabilize the city’s financial performance and of the city’s strong reserves. The stability of the ratings will largely depend on our view of the city’s ability to sustain a good financial position, partly evidenced by the maintenance of good reserve levels.”
Other factors cited in awarding the A rating include:
• City of Chula Vista participation in San Diego area’s broad economic base
• Above-average income and wealth indicators
• Improved financial performance after a prolonged trend of deficit spending, resulting in sustained good reserve levels; and
• Adoption of an enhanced reserve policy and plans to develop its funding strategy.
“This ratings upgrade demonstrates that despite our financial challenges during the last two years, we have met our obligations, built our reserves and have been prudent with taxpayer money,” said Finance Director Maria Kachadoorian. “The A credit rating reflects our commitment to public accountability and financial diligence.”
The City of Chula Vista was one of the first cities to feel the severe impacts of the recession in 2006. What followed were hundreds of foreclosed properties, severe drops in property and sales tax revenues, significant municipal budget deficits, and a 26 percent reduction in City staffing. The City of Chula Vista weathered this financial storm by taking bold, proactive actions. Real pension reform, a leaner workforce, and efficiency measures have improved the budget outlook. These actions were critical to the City improving its credit rating with S&P. With the economy improving, sales tax revenues increasing, and the housing market recovering, Chula Vista is cautiously optimistic that the worst of the cuts are over and a better financial future is attainable.
Standard & Poor’s credit ratings express the agency’s opinion about the ability and willingness of an issuer, such as a corporation or state or city government, to meet its financial obligations in full and on time.
Posted: June 17, 2013