Standard & Poor’s cuts Arroyo Grande’s credit rating

August 30, 2012

Arroyo Grande’s credit rating outlook was cut by Standard & Poor’s because of the city’s failure to set aside sufficient funds to meet bond debt requirements.

S&P reduced its outlook on Arroyo Grande’s long-term and underlying rating on its Redevelopment Agency series 2007 taxable tax allocation bonds from A- to BBB, according to a statement today. At the same time, S&P placed the city’s long-term and underlying rating on “CreditWatch with negative implications.”

Following the elimination of its redevelopment agency, the city became the successor agency responsible for the debt.

“We base the downgrade on the successor agency’s failure to set aside sufficient pledged revenue to meet annual debt service before release for any lawful purpose, as described in the trust indenture and after the passage of Assembly Bill 1484, which disrupted agency cash flow,” said S&P’s credit analyst Sussan Corso

By not directing all available pledged property tax revenue to debt service and reserve replenishment first, as agreed to in the contract, the S&P said it believes the city could violate legal obligations. Should the city receive such a notice exposing the bonds to accelerated principal repayment, the S&P said they could lower the rating even further.

 


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26 Comments

  1. homework says:

    The elimination of Redevelopment so the State could take the money didn’t work for the State or local governments with agencies. The State’s action left bond holders with invalid agreements on offerings and payments. Bond companies are suing the State over this on the basis of contract law. This battle isn’t over and the impacted local governments may still see light at the end of the tunnel. Many elected officials, local and state, are trying to correct the unintended consequences of a poorly thought out attempt at “legal theft”. However, some cities, that have been fiscally conservative, have had their credit ratings raised. Last month Paso Robles had its credit rating set at “AA”, the highest rating given to any city in California. Wasn’t that due to sound fiscal management? How come we never hear about the “good news”?

    (2) 2 Total Votes - 2 up - 0 down
  2. srichison says:

    None of what any of you are saying is the real issue. The real issue is in the single line in the middle of the article:

    “Following the elimination of its redevelopment agency, the city became the successor agency responsible for the debt.”

    Thank you Governor Moonbeam and the Democratic legislature trying to manipulate another failed budget attempt with bogus cash flow numbers. Just another example of how these crooks and their cronies screw something up and leave others to pay the price (pun intended).

    The state and its governmental finances are completely dysfunctional.

    (6) 10 Total Votes - 8 up - 2 down
    • kettle says:

      “AB 1555 Chris Norby – (R) California

      “6)Establishes successor agencies to the RDAs that would, except in certain situations, such as those involving an RDA based on a joint powers authority, be the entity that created the RDA.
      If no local agency elects to be the successor agency, a designated local authority would be formed, made up of three members that would be appointed by the Governor.””

      “AB 695 Chris Norby – (R) California
      Vehicles: motorcycles: safety helmets: Exceptions:
      Existing law requires a driver and a passenger to wear a safety helmet meeting certain requirements when riding on a motorcycle, motor-driven cycle, or motorized bicycle.
      This bill would exempt from this requirement a person who is 21 years of age or older who has either completed a motorcyclist safety training program or has been authorized to operate a vehicle pursuant to a valid class M1 license or endorsement, or a comparable license from another jurisdiction, for 2 or more years.”

      “Democratic legislature” Norby is (R) California.

      Facts, not feelings or slogans.

      (-3) 3 Total Votes - 0 up - 3 down
      • srichison says:

        Facts – regardless of who an author is, the fact remains that the legislature is totally controlled by the Democratic Party, as is the Governorship. Nothing comes out without their approval and his signature – not a budget, not a law. The Democrats fought hard for this supermajority, earned it, and now must own it. If it becomes law (through legislative means), it is to the credit or discredit of the Democratic Party. No more blaming or finger pointing – just facts.

        (3) 3 Total Votes - 3 up - 0 down
        • kettle says:

          srichison says:” it is to the credit or discredit of the Democratic Party. No more blaming or finger pointing”

          You realise you were just finger pointing? /irony

          Also if it takes a Democratic super majority to keep donorcycle helmets on the heads of drivers and passengers good on them.

          (0) 0 Total Votes - 0 up - 0 down
  3. AZ CRAIG says:

    Mary if anyone needs a CLUE it’s you. A cnbc artical says this, the top 15 biggest welfare states 2008-2009 are this in % of population on some sort of goverment welfare.
    #15 Oregon 1.55%
    #14 Pennsylvania 1.6%
    #13 Michigan 1.65%
    #12 Rhode Island 1.79%
    #11 Indiana 1.83 %
    #10 New Mexico 1.83%
    #9 Washington 1.86 %
    #8 Minesota 1.88 %
    #7 New York 1.92 %
    #6 District of Columbia 1.99 %
    #5 Vermont 2.02%
    #4 Massachusetts 2.09 %
    #3 Tennessee 2.15%
    #2 Maine 2.37 %
    And last but not least, Who holds The # 1 spot on the list of states with the most people on welfare,
    YOU GUESSED IT
    CALIFORNIA WITH A WOPPING 3.30 %.
    Arizona didn’t even make their top 15 list. Next time do your homework and please tell me NOW which states are supporting who through our federal tax. Also note that most of the states listed are Democrat. Think about that when you vote !!!

    (11) 17 Total Votes - 14 up - 3 down
    • OnTheOtherHand says:

      Nice use of selective statistics. The ones you chose do not tell the whole story. What Mary was referring to is the OVERALL balance of what citizens of given states pay to the Federal Government vs. what they receive from it — not just individual welfare checks. The welfare many “conservative” states receive comes in other forms such as disproportionate Highway funds and other pork barrel spending. You don’t have to be poor to receive federal “Welfare.”

      From a practical point of view, the biggest beneficiaries of federal welfare are corporations. This includes not only things like direct subsidies to major agricultural industry players but also indirect subsidies. Examples range from maintaining obsolete or unneeded federal facilities to policies that protect industries from competition to the REALLY big one — ill-advised “wars” that profit the entire defense industry as well as the financial interests that supply the loans for “reconstruction.” (This includes such “wars” as the ones against drugs and, to a large degree, the one against “terrorism.”)

      (-3) 9 Total Votes - 3 up - 6 down
      • r0y says:

        While I am not a fan of “pork barrel spending” either, comparing population on welfare to states that get infrastructure improvements via pork barrel spending is a bit misleading. Seeing how you are particular about selective statistics, let’s also be selective of “welfare.”

        I wish there was as little welfare needed as possible, the whole “hand up vs. hand out” – whether it is an individual, a family, a city, or a state. That said, investing even pork dollars in a state’s infrastructure (“disproportionate Highway funds” or others) are often enjoyed by more citizenry than just sending a check to people who do not have to work (or really do anything but breath and vote for large nanny state politics).

        In the end, it is shameful that there are so many “hand outs” overall, but trying to compare something potentially used by all to something used by only one (or select few) is not genuine, either.

        (0) 0 Total Votes - 0 up - 0 down
    • kettle says:

      Talk about missing the mark with selective statistics indeed.

      (2) 4 Total Votes - 3 up - 1 down
  4. Disgusted says:

    What role has the new City Hall purchase played in this? The street alignment next to Rooster Creek, the parking lot paving? Who’s watching out for the citizens?

    (7) 9 Total Votes - 8 up - 1 down
    • photocal says:

      Question = Is FEMA still going after the City of Atascadero for re-imbursment of million of mis-spent federal dollars ?

      (0) 0 Total Votes - 0 up - 0 down
    • dogeatdog says:

      what about the parking structure behind the council chambers, and lets not forget the BIG ONE that Tony Ferrera has been pushing through for ten years no. The Halycon interchange that will cost 13 million next year alledgedly. And the police dept that they are determinded to build.How many feasibility surveys can they do for the new p.d.? They looked at the city yard last year and now they want to look at that again. They did a land swap for in front of St Pats, but that didn’t go thru, they did one by the womans regional center and now want to do another. Now they are thinking of buying the land that VCA used to be located on next to the P.D. and last but not least, NOW they are even looking at construction on the building they are in.
      \
      NO wonder I rating is going down and will continue until we get Tony Ferrera out of office.

      The street alignment the by rooster creek the city said would cost $50 K, it ended up costing us $197,000.00 how is that for not watching out of the citizens or is that the citizens not paying attention themselves?

      (0) 0 Total Votes - 0 up - 0 down
  5. The Gimlet Eye says:

    Maybe S & P ought to rate the federal government.

    (1) 9 Total Votes - 5 up - 4 down

Comments are closed.