Signaling a strong endorsement of the City’s financial management practices, Standard & Poor’s (S&P) Rating Service has upgraded the General Obligation (GO) ratings for the City and County of Denver to AAA from AA+ with a stable outlook. The credit upgrade will drive down the City of Denver’s cost of borrowing and elevate Denver into an elite group of the most credit-worthy cities in the country.
In its report, S&P cited Denver’s role as the economic center for the Colorado Front Range with a large and diverse economy and resilient per capita property market values as a primary reason for the upgrade. Denver’s AAA rating upgrade was also due to consistently strong financial performance through the prudent management of city budgets and healthy fund balances. The City’s willingness to proactively implement mid-year budget cuts when necessary and commitment to maintaining unrestricted general fund reserves at 15 percent were additional factors in the upgrade.
“This rating upgrade is the direct benefit of tough choices we have made over the past several years to deliver balanced budgets and maintain general fund reserves, and to ultimately operate Denver city government more like a business,” said Claude Pumilia, the City of Denver’s chief financial officer. “Our new AAA rating will lower the City’s cost of capital, a tremendous benefit in this difficult economy.”
In 2009, the City plans to issue its first series of Better Denver infrastructure improvement GO bonds, which will benefit from the new rating. Denver voters authorized the issuance of $550 million in Better Denver GO bonds in November 2007.
Few cities enjoy the AAA rating from S&P: less than 5 percent of all of the cities covered by S&P carry the AAA rating. Additionally, Denver is the only municipality in Colorado to receive the AAA rating, and one of only 18 cities in the south and west regions that include California, Arizona, Texas, Washington, and Oregon. Other similar sized cities with AAA ratings from S&P include Seattle, Phoenix, Minneapolis, Indianapolis and Charlotte.