Bangkok--22 Jan--Standard & Poor's
Standard & Poor's Ratings Services raised its underlying rating (SPUR) to 'AA+' from 'AA' on Peoria, Ariz.'s general obligation (GO) bonds and assigned its 'AA+' rating to the city's $68.44 million series 2009A GO bonds. The outlook is stable.
"The raised rating reflects the city's very strong financial management practices and policies, its continued strong reserve position, and demonstrated ability and willingness to make budgetary adjustments in light of recent weakness in key revenue streams," said Standard & Poor's credit analyst Paul Dyson. "Due to the city's very strong financial management practices, we believe its credit quality and rating are somewhat resilient to the current economic downturn, and given city management's active budget monitoring, we believe the city will successfully navigate this episode of economic difficulty."
The city's population, and in turn real estate growth, has been rapid in recent years, with population up 43% since the 2000 census total of 108,364. The city's secondary AV has grown strongly in recent years, increasing by a 22% average annual rate over the past five years to $2.0 billion in fiscal 2009. Total market value has risen at a similar rate, totaling $18 billion in 2009, or an extremely strong market value per capita of $116,548.
Peoria's general fund financial performance has historically been and continues to be very strong -- unreserved fund balances have been no less than 67% since at least 1999 and totaled 70% for fiscal 2008. In fiscal 2008, the city ended the year with a $2.9 million general fund surplus after transfers, or a small $1.4 million before transfers, with consistent general fund surpluses both before and after transfers dating back to 2004. In additional to sales, property, and state-shared income and sales taxes, charges for services represented $16 million or 15% of 2008 general fund revenues. The depressed real estate market and weakness in sales taxes have resulted in a budget deficit for fiscal 2009 of $6 million, up from the $2.5 million the city had estimated earlier in the fiscal year. Given the city's very strong reserve position, it could have waited to address these issues, but instead decided to immediately make adjustments via a complete "budget scrub." Peoria has additional financial flexibility in the form of a separate reserve for proceeds from its half-cent sales tax.
Bond proceeds will be used to finance capital improvements throughout the city, including storm drain, court facilities, and park and street renovations.
Peoria (population 155,557), is in the northwestern portion of Maricopa County and covers a large 178 square miles.
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Media Contact:
Edward Sweeney, New York (1) 212-438-6643, [email protected]
Analyst Contacts:
Paul Dyson, San Francisco (1) 415-371-5079
Matthew Reining, San Francisco (1) 415-371-5044
Key Contacts:
Americas Media Relations: (1) 212-438-6667
media_ [email protected]
Americas Customer Service: (1) 212-438-7280
[email protected]