Bangkok--21 May--Standard & Poor's
Standard & Poor's Ratings Services revised the rating and underlying rating (SPUR) outlook to negative from stable on the City of Tucson, Ariz.'s outstanding general obligation (GO) bonds, certificates of participation (COPs), and improvement bonds. At the same time, Standard & Poor's assigned its 'A+' rating to the city's series 2010 COPs. Standard & Poor's also affirmed its 'AA-' rating and SPUR on the city's outstanding GO bonds and its 'A+' rating and SPUR on the city's outstanding COPs. Finally, Standard & Poor's affirmed its 'A-' rating on the city's series 1998 improvement bonds.
"The revised outlook is based on our opinion of the city's ongoing structurally imbalanced budgets, in large part a result of softening revenue streams," said Standard & Poor's credit analyst Matthew Reining. "If city officials were to address the budget and bring the city's final performance into a more structurally balanced position, we could revise the rating outlook to stable."
Revenues softened in fiscal 2009, which ultimately led to a $25 million gap. At the end of fiscal 2009, the city's unreserved fund balance totaled $17 million, or 4.1% of expenditures. In November 2009, management lowered revenue projections by $32 million, or approximately 7%, and has been addressing the remaining fiscal 2010 gap through several steps. The city indicates that the projected ending fiscal 2010 unreserved fund balance is $18.7 million, or approximately 4.5% of expenditures. This ending fiscal 2010 fund balance is after the refunding of $15 million of COPs to push forward principal. The city is looking at a challenging fiscal 2011 budget. In total, the city is addressing a gap of $33 million (not including $9.4 million in planned debt restructuring to push forward principal). Management estimates the structural general fund gap will total 8% in fiscal 2011 and is addressing the shortfall through various measures.
Tucson, with a population of 544,000, is the seat of Pima County. It has a broad-based economy centered on tourism, higher education, retail, military, government, and various high-tech and health care employers.
RELATED CRITERIA AND RESEARCH
USPF Criteria: GO Debt, Oct. 12, 2006
USPF Criteria: Appropriation-Backed Obligations, June 13, 2007
USPF Criteria: Special-Purpose Districts, June 14, 2007
Complete ratings information is available to RatingsDirect on the Global Credit Portal subscribers at www.globalcreditportal.com and RatingsDirect subscribers at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.
Media Contact:
Ana Sandoval, New York (1) 212-438-5095,
[email protected]
Analyst Contacts:
Matthew Reining, San Francisco (1) 415-371-5044
Paul Dyson, San Francisco (1) 415-371-5079