Santa Monica Lookout
|National Firm Gives Santa Monica Top Credit Rating||
When one lives in a city as breathtakingly beautiful and unique as Santa Monica, inevitably that city will be shared with visitors.
By Jason Islas
April 3, 2014 -- For the 19th year in a row, Santa Monica once again earned a top credit rating Wednesday from Fitch Ratings, one of the nation’s three bond rating agencies.
Citing Santa Monica’s “very strong financial operations” and “robust local economy,” Fitch announced, the bayside city earned a Triple A bond rating, the highest the firm metes out to municipalities.
The high rating, which Santa Monica has consistently earned since 1995, helps keep the cost of borrowing money low for the City since it indicates that Santa Monica is a safe investment, according to officials.
“The City of Santa Monica takes great pride in our robust and diverse tax base, our engaged community, and our prudent fiscal management, which have allowed us to maintain our strong financial position even in the difficult economic climate of the past few years,” Santa Monica’s Director of Finance Gigi Decavalles-Hughes told The Lookout Wednesday.
Santa Monica is one of eight California cities to earn the high rating, which is based on a number of factors, including a city’s history of repaying its debts, the range and scope of its tax base and the way a city manages its budget.
“City financial operations are very strong, supported by diverse and expanding revenue streams, prudent management practices, an impressive financial cushion, a supportive taxpayer environment, and structurally balanced financial operations,” according to an official statement issued by Fitch Wednesday.
Fitch called the City’s fiscal management “very strong,” citing the way officials handled a pending multi-million dollar deficit last year caused, in part, by the dissolution of Santa Monica’s former redevelopment agency (RDA).
After Governor Jerry Brown axed California’s 400 RDAs in an effort to balance the State’s budget, Santa Monica found itself locked in an ongoing battle with the State’s Department of Finance over how much of the redevelopment money the City could hold on to. (“Money Battles Loom Over Ambiguous RDA Law,” February 9, 2012)
As a result of the ongoing battle, in 2013, the City faced a multi-million dollar deficit. But, by cutting funding for “non-essential” projects -- like a $50 million overhaul of the City’s aging Civic Auditorium -- and settling with the DOF, the City was able to turn its financial situation around, according to Fitch’s statement.
“Per the city's settlement with DOF, the city will make an additional $42 million in payments by fiscal 2015 using funds that had been transferred in from the city's dissolved RDA in fiscal 2011,” the statement said.
“The loss of these funds will not impact the city's financial position as the payment will be made with former RDA funds that were earmarked for a non-essential capital improvement that has now been cancelled,” it said.
The Triple A rating comes at a time when the City will take out a bond to help pay for major infrastructural improvements that it originally had hoped to fund with RDA money.
“The AAA rating lays the groundwork for ensuring that the City will have access to lower cost financing for important projects such as the construction of Fire Station 1 and the seismic retrofitting of Fire Station 3, saving our taxpayers money now and in the future,” Decavalles-Hughes said. (“Santa Monica City Council to Weigh Funding Options for New $32 Million Fire Station,” December 17, 2013)
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