Los Angeles Series 2025 Tax And Revenue Anticipation Notes Assigned 'SP-1+' Rating
- S&P Global Ratings assigned its 'SP-1+' short-term rating to the City of Los Angeles' proposed $1.51 billion 2025 tax and revenue anticipation notes (TRANs).
DALLAS (S&P Global Ratings) June 12, 2025-- S&P Global Ratings today took the rating actions listed above.
We view physical risk factors as elevated given the recent wildfires in Los Angeles County and the increasing frequency and severity of such events, with spread into more urban areas introducing heightened potential credit risk for the city tied to negative tax base impacts or litigation from the ongoing wildfires. We understand that the city has somewhat reduced exposure to delays in wildfire reimbursement payments as the state of California has agreed to outlay the funds as it interfaces directly with FEMA on behalf of local governments. Notably, the city projects a loss of about $9 million (0.3% of estimated collections for the current fiscal year) from properties directly affected by the January 2025 wildfire and windstorm event, an amount that could be recouped from state recovery funds. In total, properties located within the Pacific Palisades area are estimated to generate about $30 million per year in aggregate property tax revenues. Consistent with entities across the state, the city is also exposed to additional physical environmental risks in the form of extreme rain events, earthquakes, and drought.
Social capital risks remain relevant to the city's credit profile, given past instances of policing protests and large-scale demonstrations requiring an increased public safety presence, as well as a significant population experiencing homelessness that requires higher levels of supportive services. In addition, human capital factors associated with labor unions remain a key budget input for the city; however, we understand that multiyear labor agreements are in place for various employee groups.
We view governance factors as neutral in our analysis of the city.
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