Moody's Investors Services has assigned a Aaa credit rating, the highest credit rating issued, to the city of Coronado for its exceptionally strong financial position evidenced by ample reserves and the absence of any outstanding debt.
Coronado joins just eight other California cities – including Beverly Hills, Newport Beach, and Palo Alto – and has become the only city in San Diego County to hold the Aaa rating.
In a review of Coronado conducted earlier this year, the credit rating company issued a report April 30 citing the City's stable and moderately sized tax base, above average wealth levels, and favorable debt position as the basis for issuing its initial Aaa rating.
According to Moody's, Coronado “maintains a healthy financial position with conservative budgeting and the setting aside of various reserves to address ongoing capital expenditures, unforeseen economic emergencies and downturns as well as the additional funding of ongoing pension liabilities.”
“This rare rating demonstrates Coronado's financial stability and high standing among hundreds of municipalities in California, particularly for a city of our size,” said City Manager Blair King. “We have been monitoring and implementing best financial practices, such as advanced pension payments, creation of a post-employment benefits trust, designated reserves, and starting a major facilities replacement fund. This is validation from a respected source.”
Moody's noted that Coronado has “grown its General Fund position to $68 million or an exceptional 149.5 percent of General Fund revenues as of fiscal year 2013, in addition to the various additional reserves demonstrating significant financial flexibility.”
The report pointed out the city's consistent operating surpluses over the past five consecutive years through conservative budgeting practices, as well as a $5 million payment to CalPERS in addition to its annual required contribution toward its unfunded pension liability.
Moody's said Coronado benefits from its close proximity to downtown San Diego and the greater San Diego region. It added that while much of the city's economy is tied to tourism, “the local tax base gains incredible stability from the residential nature of the city as well as the stabilizing presence that the Coronado Navy Base provides.”
Moody's noted Coronado's $6.9 billion tax base was “a relatively limited overall tax base, given the median level for Aaa rated cities in California is $22.5 billion.” However, the report noted that Coronado falls in line with the median $6.6 billion tax base for Aaa cities nationally. Moody's said "impressively, the city tax base never contracted through the economic downturn and the five year average annual growth rate for the city is 2.7 percent.”
Coronado underwent Moody's highly critical, intense analysis of its financial records to obtain an independent analysis of its current fiscal condition. Moody's follows a set of rigid standards when ranking an agency's creditworthiness.
The complete Moody's Ratings Update is available online to subscribers at Moodys.com or to journalists by contacting Moody's at (212) 553-0376.
—City of Coronado