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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.

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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.

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4S Ranch Allied Gardens Alpine Baja Balboa Park Bankers Hill Barrio Logan Bay Ho Bay Park Black Mountain Ranch Blossom Valley Bonita Bonsall Borrego Springs Boulevard Campo Cardiff-by-the-Sea Carlsbad Carmel Mountain Carmel Valley Chollas View Chula Vista City College City Heights Clairemont College Area Coronado CSU San Marcos Cuyamaca College Del Cerro Del Mar Descanso Downtown San Diego Eastlake East Village El Cajon Emerald Hills Encanto Encinitas Escondido Fallbrook Fletcher Hills Golden Hill Grant Hill Grantville Grossmont College Guatay Harbor Island Hillcrest Imperial Beach Imperial Valley Jacumba Jamacha-Lomita Jamul Julian Kearny Mesa Kensington La Jolla Lakeside La Mesa Lemon Grove Leucadia Liberty Station Lincoln Acres Lincoln Park Linda Vista Little Italy Logan Heights Mesa College Midway District MiraCosta College Miramar Miramar College Mira Mesa Mission Beach Mission Hills Mission Valley Mountain View Mount Hope Mount Laguna National City Nestor Normal Heights North Park Oak Park Ocean Beach Oceanside Old Town Otay Mesa Pacific Beach Pala Palomar College Palomar Mountain Paradise Hills Pauma Valley Pine Valley Point Loma Point Loma Nazarene Potrero Poway Rainbow Ramona Rancho Bernardo Rancho Penasquitos Rancho San Diego Rancho Santa Fe Rolando San Carlos San Marcos San Onofre Santa Ysabel Santee San Ysidro Scripps Ranch SDSU Serra Mesa Shelltown Shelter Island Sherman Heights Skyline Solana Beach Sorrento Valley Southcrest South Park Southwestern College Spring Valley Stockton Talmadge Temecula Tierrasanta Tijuana UCSD University City University Heights USD Valencia Park Valley Center Vista Warner Springs
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