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The original item was published from 12/18/2019 12:51:23 PM to 1/1/2021 12:00:11 AM.
Posted on: December 18, 2019
[ARCHIVED] Petersburg Receives Bond Rating Upgrade
Petersburg Receives Bond Rating Upgrade; Outlook Remains ‘Positive’
Petersburg, Virginia: The City of Petersburg announces that S&P Global Ratings has raised its long-term rating and underlying rating (SPUR) on Petersburg’s general obligation (GO) bonds outstanding to 'BBB-' from 'BB+'. The outlook remains positive.
The raised rating reflects S&P’s view of Petersburg's commitment and continued progress toward restoring financial stability and rebuilding reserves. The City has taken numerous key steps toward financial recovery over the last two years, including fully repaying past-due obligations, assembling a new permanent management team, and strengthening budgetary flexibility and liquidity, supported by some recently adopted financial policies.
The positive outlook reflects S&P’s expectation that the new management team will continue to bolster liquidity and reserve levels, while maintaining structurally balanced budgets and making full and timely payment on all obligations.
“I am proud to end the 2019 calendar year with such positive news for the City of Petersburg,” said Petersburg Mayor, Sam Parham. “This is proof that we are certainly headed in the right direction and we can confidently move forward toward financial vitality in Petersburg.”
S&P notes that the City's budgetary performance has certainly improved over the last couple fiscal years as a result of improved internal controls, cost-cutting measures that included a significant reduction in employee staffing levels and reduced annual debt service payments in fiscal year 2018 following a debt restructuring. These actions resulted in operating surpluses in recent years as well as a balanced budget with conservative assumptions.
In fiscal year 2018, despite fully reinstating the 10% pay cut for all employees and repaying all previously unpaid obligations owed to various vendors, the city's school system, and the Virginia Retirement System, the city generated a $2.8 million operating surplus due to conservative budgeting, and decreased expenditures.
The fiscal year 2020 budget is structurally balanced with conservative revenue growth estimates. Included in the budget is a contribution of $1.0 million toward the replenishment of reserves as well as a $160,000 pay-go capital contribution. In addition, as a result of improved liquidity, the city’s cash flow borrowing decreased by $1.0 million to $5.5 million for the year.
“This upgrade to an investment grade credit rating is a testament to the hard work and commitment of City Council, the City Manager and her staff in turning the City finances around,” said Petersburg Investment Advisors, Davenport & Company LLC. “In addition, S&P’s positive outlook shows that they believe the City is going to continue on the right track in getting its finances in order.”