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City May Face Downgraded Credit Rating

Moody's is considering downgrading the bond ratings of a number of California cities, including Martinez.

The news today that Moody’s Investor Service is considering a downgrade to Martinez’s credit rating is not sending alarm bells through city hall.

The rating service released a list of cities today that it is reviewing for a possible downgrade, and Martinez is on that list. In question is the city’s 2003 Certificate of Participation bond, first issued in 1992 for $2.2 million to pay for the renovation of City Hall, which was damaged by the 1989 Loma Prieta earthquake.

"Many cities' assessed valuations for the property taxes that support their general obligation bonds have declined only modestly in recent years, but their general funds have come under significantly more pressure," said Moody's senior vice president Eric Hoffmann. "Since the adoption of Proposition 13 in the late 1970's, the cities' inability to access their local property tax bases for increased operating funds led to diversification into even more economically- sensitive revenue sources, such as sales, business and hotel taxes."

But even if Moody’s downgrades the city’s rating, it won’t have much of an effect on the city, said Assistant City Manager Alan Shear.

“Moody’s is looking at all of the cities in which they’ve issued a rating for bond indebtedness that have a general fund component to it,” Shear said Wednesday. “From what we’ve been told, it’s just in the review stage. We’re included because the 2003 bond has a small general fund component, which will be paid off next year.”

The bond, which was refinanced in 2003 to take advantage of a lower interest rate, is primary tied to the city’s Water Fund, but a portion is tied to the general fund. It’s that portion that Moody’s is concerned about, Shear said.

But that portion of the debt will be paid off next year, and the remainder of the bond is scheduled to be paid off in 2018, said Kathy Spinella, the city’s finance director.

“The rates are already set,” Shear said. So even if Moody’s downgrades the city’s rating, it won’t effect Measure H or other bonds already in place.

“The greatest impact would be if we were going to go out to issue other bonds,” he said. “We’re not looking to do that for a number of years.” 

Gary Etscheid October 11, 2012 at 02:15 PM
Can you get any dumber than spending more money than you have? I know, let's annex more people so we can waste their money too. Half the people in North Pacheco almost voted that for themselves. You can't fix stupid.......
MIKE ALFORD October 11, 2012 at 07:04 PM
There It Is ! When are You people the Voters Going to Stop ,Look & Listen to WHAT is Going on in MARTINEZ ??? look at Who Is Puting So Much Money Behind The candidates ! And Why Would Gus Kramer,Lara Delaney,And the Dunivens Be So Involved with putting a candidate in office ---- Well ?? --- NOW DO YOU SEE HOW AND WHO Has Run This City ! Look At Who These People Have Put Into POWER In The Last Decade !!! Look At How Many Times that THE CITIZENS Have Said NO at City Counsel Meetings And THE PEOPLE THAT THEY HAVE PUT INTO OFFICE HAVE SAID YES ! AND WE ARE GOING TO VOTE OUR WAY ! NEVER LISTENING TO WHAT OUR CITIZENS ! AND They Do It THEIR WAY !!!! After All They Are Have Been Paid To Do Their Jobs ( Oh Not by the Citizens) BUT BY The SPECIAL intrest That PAID For Them ! Do And CAN YOU SEE WHATS GOING ON RIGHT IN FRONT OF YOUR EYES ! the question is ---- DO YOU EVEN CARE ??????
Jim Caroompas (Editor) October 11, 2012 at 09:06 PM
Please stop yelling, Mike. Thanks.
abnerrichards December 04, 2012 at 12:05 PM
Credit rating is really so important for individuals as well as the city. Credit rating should be always above average. This is true that If the credit rating go down then cities' assessed valuations for the property taxes that support their general obligation bonds have declined only modestly in recent years, but their general funds have come under significantly more pressure. www.cash-in-1-hour.com.au

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