Walter Mencken 9:15 a.m., March 28
Prop A Could "Adversely Impact" State Funding For San Diego, According to Fitch Ratings
The outlook in San Diego for lease revenue bonds is stable, finds global rating agency Fitch Ratings in a May 30 article. The ratings vary from A+ on a $71 million bond held by the San Diego Public Facilities Financing Authority to a AA- rating on general obligations bonds.
Not a bad report card for a City struggling to climb out of a massive structural deficit.
And while the City's economic footing in terms of revenues from bonds appears to be stable, the rating agency does have some concerns and they mostly rest with the passage of Prop A, a proposition which would prohibit project labor agreements in San Diego.
The problem, according to Fitch and included in analyses from the City Attorney's Office and Independent Budget Analyst, is that if Prop A passes then the City may not be eligible for state funding or financial assistance on City-funded projects, per a new state law.
That would be a big hit for a city which has benefited from state-funded grants and loans in recent years. According to the Independent Budget Analyst, the City has received $194.2 million from the state for City-funded projects since Fiscal Year 2010.
According to Fitch Ratings, the City could be forced to reach into its General Fund.
"Fitch believes the capital plan is manageable...However, in terms of overall funding for the city's capital needs, Fitch notes that voter approval of a June 5, 2012 ballot measure to prohibit project labor agreements could adversely impact the city's receipt of capital grant funding from the state, thereby creating more need for general fund support of capital projects."
Former Councilmember Donna Frye, an outspoken critic of Prop A, says the City wouldn't just be losing out on potential grants, but would be paying higher interest rates for some capital projects if the city is unable to continue receiving the State Revolving Fund low-interest loans.
"If Prop A passes, it could have a direct impact on the city's General Fund and Enterprise Funds," says Frye. "The entire measure is just a "a 'solution' looking for a problem."
I sent a message to proponents of Prop A at thetruthaboutplas.com, a site sponsored by the Associated Builders and Contractors Inc. and am waiting to hear back.
More like this:
- Fitch gives SD lease revenue bonds A+ rating — June 13, 2013
- County bonds serving disabled get BBB-minus rating — May 10, 2013
- Prop A Responds to Report From Fitch Ratings — June 1, 2012
- Post-Crash Summation and the San Diego City Council Session on Debt Servicing — Oct. 9, 2010
- Fitch Warns of Tax Increases — June 8, 2010