City Bond Rating Increases
Conservative spending and “pay as you go” Capital Project Financing benefit Santa Clarita.
Another 20th birthday present for the City of Santa Clarita was delivered last month when the Standard & Poor's Ratings Services raised its issuer credit rating for Santa Clarita, one notch to 'AA' from 'AA-' due to continued good economic growth, excellent fiscal management and diversification and maintenance of a strong financial position.
“The City’s low debt, excellent fiscal management, healthy reserves and commitment to long-term financial planning contributed to the increased bond rating; our second in two years,” explained Ken Pulskamp, City Manager.
“The City's general creditworthiness reflects its primarily residential and wealthy community with easy employment access to the broader Los Angeles metropolitan statistical area; large, diverse, and growing property tax base with average increases of 10.0% annually since fiscal 2002; strong financial profile with a structurally sound budget and strong $33.3 million unreserved fund balance,” said Timothy Barrett, Credit Analyst for Standard and Poors.
"We expect Santa Clarita officials will maintain adequate reserves since they can reduce general fund capital outlays as needed if operating revenues decline or expenses increase. Debt should remain low as officials use pay-as-you-go financing to support much of the city's capital needs," Barrett continued.
The property tax base is large and diverse. Total market value is $20.3 billion in fiscal 2007. Market value is also a high $114,461 per capita. New construction and market readjustments following home ownership changes are driving assessed value growth.
“Through excellent leadership provided by our City Council, along with Santa Clarita’s continued conservative financial management, and a strong local economy will continue to keep Santa Clarita moving in a positive direction,” added Pulskamp.
The City spent $20.3 million on capital projects in fiscal 2006, which reduced the unreserved fund balance to $18.8 million. In addition, preliminary fiscal 2007 results are strong, indicating a $14.5 million increase to the unreserved general fund balance. Officials are projecting to end fiscal 2008 with at least a $1 million surplus after capital outlays.
The overall debt burden is a moderate 2% of market value and $2,328 per capita. The direct portion of overall debt is low at about 10%, and management plans to use pay-as-you-go financing to meet its additional capital needs. The rating action affects roughly $31 million of debt outstanding.
Timothy Barrett at Standard & Poors, New York can be reached at: 212-438-6327. Ken Pulskamp, City Manager can be reached at: 661-255-4900.
Darren Hernandez, the City’s Treasurer, Finance Director can be reached at: 661-255-4925.