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Long Beach credit rebuilding gets positive ratings outlook

Long Beach City Hall is shown in this

Long Beach City Hall is shown in this 2013 file photo. Credit: Tara Conry

Moody’s Investor Services gave Long Beach a positive outlook in its latest bond rating, reflecting the city’s credit-rebuilding efforts of the past several years, officials said.

The city maintained its bond rating of Baa1 on $113 million of general obligation debt, which was upgraded from Baa2 last year by Moody’s.

City officials said the financial outlook represents the ninth straight credit improvement for the city since it was nearly downgraded to junk bond status in December 2011.

Moody’s maintained the city’s bond rating, “reflecting the city’s satisfactory financial position” based on bonds issued in 2014. Long Beach was also credited for a “rebounding tax base with above average wealth levels and an elevated, but manageable debt burden.”

“The positive outlook also reflects our expectation that management will continue to build reserves over the near term. The outlook further reflects improved fiscal controls and policies implemented by the current management team,” Moody’s analysts wrote in their report.

Long Beach city officials are redeeming $6.9 million in bond anticipation notes, which were originally issued to finance capital improvements and employee separation payments.

Moody’s officials said the city’s bond rating could improve by passing balanced budgets and increasing reserves following deficit reduction bonds. The bond rating could face a downgrade if the city’s management depletes reserves.

City Council members passed a $90.1 million budget last year with a 6.2 percent tax increase, including a court-ordered 4 percent increase to cover $18.1 million owed to the previous owners of the undeveloped Superblock property along the boardwalk for undervalued assessments.

The council voted to reduce a planned $646,000 property tax increase last year by increasing beach fees, permits and other fines. Long Beach City Manager Jack Schnirman said last year that other taxes were raised to avoid $2.7 million in other program and budget cuts to meet a balanced budget.

The city’s bond rating was dropped five levels in 2011 to Baa3, a step above junk bond status, after what credit analysts said was excessive borrowing of reserves and spending by the previous City Council.

“While we still face a number of financial challenges, this positive outlook is another critical indicator of the hard-earned progress we continue to make,” Schnirman said in a statement.

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