San Francisco bond rating might rise despite downgrades in other cities

Getty Images File PhotoSan Francisco and Los Angeles are the only two cities in California that could have its bond rating improved.

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.

#link_box { width: 150px; height: auto; margin: 0; padding: 0; margin: 10px 20px 10px 0px; padding: 10px; background-color: #fbfade; /* ecru – light yellow */ border: 1px solid #343a25; /* green – for summer arts */ float: left; font-family: arial, sans serif; font-size: 11px; } #link_box img, #link_box a { border 0px; border-style: none; outline: none; } #link_box h1 { margin: 0; padding: 5px; border-bottom: 1px solid #ddd; text-transform: none; color: #8A0808; font-family: arial, sans serif; font-weight: bold; font-size: 12px; text-align: left; } #link_box h2 { margin: 0; padding: 5px; border-bottom: 1px solid #ddd; text-transform: none; color: #000; font-family: arial, sans serif; font-weight: bold; font-size: 10px; text-align: center; } #link_box ul { list-style: none; margin: 0; padding: 0; border: none; } #link_box li { margin: 0px padding: 0px; border-bottom: 1px solid #ddd; border-bottom-width: 1px; } #link_box li a { display: block; padding: 5px 5px 5px 15px; /* Padding for bullet */ /* border-bottom: 1px solid #ddd; border-bottom-width: 1px; */ color: #000; width: 100%; width: auto; /* height: auto; */ /* border: 1px solid blue; */ margin: 0px; font-family: arial, sans serif; font-size: 11px; line-height: 14px; text-decoration: none; } #link_box li a: before { /* background-position: top left; */ } #link_box li a:hover { background-color: #ddd; color: #000; }

“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.

Bay Area NewsGovernment & PoliticsLocalLos AngelesPoliticsSan Francisco

If you find our journalism valuable and relevant, please consider joining our Examiner membership program.
Find out more at www.sfexaminer.com/join/

Just Posted

Police release an image a cracked windshield on a Prius that Cesar Vargas allegedly tried to carjack. Vargas, who was shot by police a short time later, can be seen in videos jumping on the windshield and pushing a Muni passenger who disembarked from a bus. (Courtesy SFPD
SFPD releases videos of deadly police shooting

Cesar Vargas killed after reports of carjacking with knife

New legislation would make sure supportive housing tenants don’t pay more than 30 percent of their income for rent.. (Kevin N. Hume/S.F. Examiner))
Supportive housing tenants could get more help paying the rent

Supportive housing tenants struggling to pay rent could soon see their payments… Continue reading

Organizers of the San Francisco International Arts Festival had planned to use parts of Fort Mason including the Parade Ground, Eucalyptus Grove and Black Point Battery to host performances by about a dozen Bay Area arts groups. (Kevin N. Hume/S.F. Examiner)
Arts festival sues city over permit denial

Organizer says outdoor performances should be treated like demonstrations, religious gatherings

An oversight body for San Francisco’s mental health programs may be restructured after questions were raised about its management and lack of effectiveness. (Kevin N. Hume/S.F. Examiner)
Behavioral health oversight body looks for new start — and staff — after mismanagement

Members of an oversight body for San Francisco’s behavioral health programs said… Continue reading

The City requires the recycling or reuse of debris material removed from a construction project site. <ins>(Emma Chiang/Special to S.F. Examiner)</ins>
<ins></ins>
Permits proposed for haulers of construction debris to achieve zero-waste

San Francisco plans to tighten regulations on the disposal of construction and… Continue reading

Most Read