San Francisco is one of only two cities in California that could have its bond rating improved — a step that might make it less expensive for The City to borrow funds for infrastructure projects.

Moody’s Investors Services announced Tuesday that dozens of cities across the state will be reviewed for possible bond rating downgrades amid concerns about bankruptcies and defaults on bonds.

“California cities operate under more rigid revenue-raising constraints than cities in many other parts of the country,” Eric Hoffmann, who heads the Moody’s California local government ratings team, said in a statement.

“Combined with steeply rising costs, these constraints mean that these cities will likely recover more slowly than their peers nationally, even if the state’s economic recovery tracks the nation’s.”

But San Francisco and Los Angeles are bucking the statewide trend and could see their ratings upgraded.

Bob Kurtter, a managing director at Moody’s, said Wednesday that the two cities have both weathered the recession better than others.

“They have, from a tax-base perspective, proved resilient during the downturn,” he said.

Kurtter said a large factor in the strength of the tax base is the steady property values in Los Angeles and San Francisco, since both cities did not experience the boom and bust in housing seen in many other parts of the state.

An improved bond rating could result in lower borrowing costs for San Francisco, according to Nadia Sesay, director of the City Controller’s Office of Public Finance.

The City has many capital bond projects, including hospital bonds, which have already been approved by voters, and a parks bond on the November ballot, to name a few.

The increased scrutiny by Moody’s comes after an August report in which the rating agency said there could be more municipal bankruptcies and defaults in California, which is the largest issuer of municipal bonds.

Already, three cities in California have filed for bankruptcy this year — Stockton, San Bernardino and Mammoth Lakes. Last week, Atwater, an agricultural city just north of Merced, declared a fiscal emergency.

The last time Moody’s changed the bond rating of San Francisco was in 2010, when it downgraded it from an Aa1 to an Aa2 — the rating The City still has. At that time, a concern in San Francisco was rising pension costs for city employees, a problem that was partially brought under control through a voter-approved ballot measure.

mbillings@sfexaminer.com

The Associated Press contributed to this report.