Miami’s credit rating is going up, thanks to the strong financial position that the city is now in:
City of Miami Bond Outlook Upgraded Four Notches from BBB to A+ (Miami, FL February 9, 2015) – Standard and Poor’s Ratings Services has upgraded the City of Miami’s primary bond rating four Rating Tiers from BBB to A+ due to the City’s improved management score reflecting adherence to robust policies and practices as well as improved budgetary flexibility.
The agency also revised its rating on the City’s general obligation, non ad valorem, and limited tax debt bonds from BBB- to A. Among the reasons given by Standard and Poor’s for the improved outlook are: a strong economy in the region, strong budgetary flexibility and performance with increasing reserves for the last few years, a structurally balanced 2015 Budget, very strong liquidity and very strong cash levels to cover both debt service and operating expenditures, and a strong institutional framework.
“This is outstanding news from S&P,” said Mayor Tomas Regalado. “The steps taken by the City Commission during the financial downturn and the City Management’s steps since are now having the effects for which we had hoped and expected.”
Miami has emerged from a period of severe distress, like many governments, associated with the housing and market crashes at the end of the last decade. After posting four consecutive years of dwindling reserves, Miami has added to those reserves in fiscal years 2011, 2012, and 2013 with preliminary reports of a surplus in 2014.
“We are very pleased about this ratings upgrade,” said City Manager Daniel J. Alfonso. “The ratings increase will reduce the City’s future costs by strengthening the City’s position on potential future financings, other financial contract negotiations, and future public private partnerships.”
S&P revised Miami’s management score to adequate from weak reflecting their view of the City’s conservative budgeting practices, robust planning documents, and progress toward meeting its three-pronged reserve policy. The agency further states that the professionals filling the top financial management roles have considerable experience and the City’s financial operations have improved in recent years.
Some concerns noted in the report are: turnover in key management and finance positions, weak debt and contingent liabilities (pension and other post-employment benefit liabilities), continuing labor negotiations, and legal proceedings against the City.