S&P Rates San Francisco Cty & Cnty Fin Corp.,CA Revs
NY -- Standard & Poor's CreditWire 10/5/98 – Standard &
Poor's today assigned its provisional single-'A' rating to
San Francisco City & County Finance Corp., Calif.'s lease revenue
bonds series 1998A dated Oct. 15, 1998 due April 1, 2005, issued for San
Francisco. The bonds are scheduled to sell Oct. 21, 1998.
The rating reflects the city's strong general creditworthiness,
a legal structure that includes the city's covenant to budget and
appropriate lease payments, and good project essentiality. The rating is
provisional pending acquisition of the project scheduled for Aug. 30,
1999. The project involves the acquisition of various equipment items for
several departments, including vehicles for the police and fire
departments and computer network equipment. As in prior city equipment
lease issues, the debt associated with the equipment is being amortized
over a three-to-five year period depending on the useful life of the
individual pieces of equipment. Lease legal provisions are identical to
those of earlier series with each series separately secured by the
equipment financed by that series.
The city's general credit characteristics include:
-- A diversified economic base,
-- Strong wealth and income indicators,
-- An increasing but manageable debt burden, and
-- Continued strong financial performance aided by renewed strong
economic growth.
San Francisco (population 778,000) is the major business and service
center of Northern California and continues to benefit from an improving
economy. The city is home to headquarters facilities of several major
Fortune 500 corporations and has a diverse employment base. Property
values, after three years of declines or sluggish growth, appear to be
turning around and increased 3.3% in 1998 to $61.6 billion.
Aided by renewed solid growth in the economic base, the city's
revenue sources continue to perform well. The city ended fiscal 1997 with
an unreserved general fund balance, adjusted for charter reserves, of
$98.6 million, or 7.1% of expenditures. The city's March 1998
nine-month budget report indicated that fiscal 1998 revenues would be
$61.1 million higher than the revised budget and 5.3% over the prior
year's actual revenues. The city projects a fiscal 1998 budgetary
ending fund balance of $101.9 million, up from $80.2 million in the prior
year.
For fiscal 1999, overall revenue estimates reflect the strong growth
experienced in the current year, including a nearly 6% increase in
property tax receipts over the prior year revised budget, a 1% increase in
sales tax receipts, and a 16% increase in hotel tax receipts.
Nevertheless, over the longer term, the city continues to face operating
spending pressures, including the potential backfilling of welfare reform.
The city is working on a proposed city health insurance system, which San
Francisco expects would be funded without encroaching on the general
fund.
San Francisco's debt burden is manageable at about $2,345 per
capita and 3.3% of true value. The city has significant additional capital
needs, including potential bonding for schools and the community college
district, a lease for a parking garage, and the second phase of San
Francisco's 800-megahertz communications project.
OUTLOOK: STABLE
While benefiting from improved revenue performance, the city
continues to face capital and operating spending pressures, including the
backfilling of welfare reform. The outlook expects the city to
successfully choose among competing capital and operating priorities to
keep burdens moderate and to maintain prudent financial reserves, Standard
& Poor's said. -- CreditWire
| Credit Analyst: |
Daniel Stone, San Francisco (1) 415-765-5016 Jeffrey Thiemann, San Francisco (1) 415-765-5006 |
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