Standard & Poor's Issues AAA Credit Rating to the City of Simi Valley
CONTACT: James Purtee
Assistant City Manager
The City of Simi Valley is pleased to announce that Standard & Poor’s Investors Services has assigned an AAA credit rating, the highest credit rating issued, to the City of Simi Valley for its exceptionally strong financial position evidenced by ample reserves and minimal outstanding debt. The upgraded rating will be used in conjunction with the City’s upcoming issuance of approximately $18 million in Lease Revenue Bonds to refinance the City’s 2004 Certificates of Participation, which received an AA+ rating.
Standard & Poor’s follows a set of rigid standards when ranking an agency's creditworthiness. Simi Valley joins approximately twenty-seven other California cities (including Beverly Hills, Newport Beach, Santa Clarita, and Camarillo) to hold the AAA rating from Standard & Poor’s. The credit rating company issued a report on August 4, 2014, citing the following rating factors for the City’s AAA rating:
• Very strong economy,
• Very strong budgetary flexibility,
• Adequate budgetary performance,
• Very strong liquidity,
• Strong management practices, and
• Strong debt and contingent liabilities profile.
“It’s great to see the financial stewardship of the City Council reflected in this positive rating,” said Mayor Bob Huber. “We’ve had to make some tough decisions over the past several years, but this acknowledgement by the premiere organization in the financial community indicates that Simi Valley is on the right fiscal track, protecting the assets of its residents.”
Standard & Poor’s rated Simi Valley's management conditions as strong with "good" financial practices. “Supporting the city's finances is liquidity we consider very strong, with total government available cash greater than 100% of both total governmental fund expenditures and debt service.”
“This rare rating demonstrates Simi Valley's financial stability and high standing among hundreds of municipalities in California, particularly for a city of our size,” said City Manager Eric Levitt. “We have been monitoring and implementing best financial practices, such as creation and funding of post-employment benefits trusts, setting aside designated reserves, and maintaining very low debt. This is validation from a respected source.”
Standard & Poor’s noted that Simi Valley's “budgetary flexibility remains very strong, with available general fund balances above 30% of expenditures for the past three audited years. Audited fiscal 2013 reserves were $22.4 million, or 34.5% of general fund expenditures.”
Standard & Poor’s indicated Simi Valley benefits from its close proximity to Los Angeles and its access to the broad and diverse economies in Ventura County. The report noted that the stable outlook on the AAA rating reflects its expectation that Simi Valley will continue to monitor its budget and forecasts to maintain very strong reserve levels, within its policies.
The complete Standard & Poor’s Ratings Update is available online to subscribers at www.standardandpoors.com, or to journalists by contacting Standard & Poor’s at (415) 371-5035.