Moody's upgrades Long Beach's credit rating, citing city's growing tax base
In upgrading Long Beach's rating, Moody’s Investor Services noted the development of the Superblock, which will include residences and businesses. Above, work on the Superblock last year. Credit: Jim Staubitser
A major Wall Street credit agency has upgraded Long Beach’s credit rating, citing the city's large and growing tax base.
Moody’s Investor Services upgraded Long Beach's rating from Baa2 to Baa1, noting that a number of long-awaited projects are underway, including the development of the Superblock, which Moody’s said “will drive the city's economy moving forward.” The project will include a mix of residences and businesses, which developers expect to be ready for occupancy early next year.
Additional development projects, renovations and housing prices also will help grow the city's tax base, valued at $7.4 billion, Moody's projects. The report said “valuations have significantly improved following the impacts of Hurricanes Irene and Sandy in 2011 and 2012 to the point where the full value is now well above pre-recession highs."
Also, the city’s general fund is well positioned financially and is trending positively for the third consecutive year, Moody’s said in its June 29 credit opinion about Long Beach.
The city was just one step above junk bond status in July 2021 after receiving its lowest grade in a decade due to increased borrowing and the looming judgment with a developer. The city in April 2022 approved a $75 million settlement with apartment developer Sinclair Haberman. The first payment of nearly $5.5 million is due this year to pay back bonds.
Finances have since turned around, said acting city manager and police commissioner Ronald Walsh. Just last year, the city received its first upgrade in six years, from Baa3 to Baa2.
“The fact that they gave us a positive outlook, it gives an indication that again in the future, we're looking at another upgrade,” he said.
The upgrade will save the city about $600,000 in short-term borrowing interest, said city comptroller Inna Reznik.
Walsh credited the upgrade to the city’s work to right its finances after years of mismanagement. He said the city’s fund balance is approximately $10 million with no plans to tap the reserves over the next fiscal year.
Additionally, the creation of an essential spending committee, which was established during the pandemic, has been instrumental in judicious financial stewardship, Walsh said. The four-person committee scrutinizes purchases prior to spending and approves or rejects requests.
Reznik called the committee “very robust in managing the city’s expenditures.”
Brinley Hineman covers the Town of Hempstead and the City of Long Beach for Newsday. She previously was a reporter in Nashville, Tennessee, and is a West Virginia native.
