The City of Alexandria’s Financial Situation Remains Sound

FROM THE CITY OF ALEXANDRIA:  News Highlights: ·      Moody’s has announced that, in light of the potential downgrading of the federal government’s credit rating, they are reviewing credit ratings of 162 Aaa-rated local governments, including the City’s Aaa rating. ·      Earlier this month, Standard & Poor’s and Moody’s Investors Service reaffirmed the City of Alexandria’s bond ratings of AAA and Aaa, respectively. ·      The City’s economy and financial management and debt strategies remain sound. On July 28, Moody’s Investors Service announced that the City of Alexandria, along with the other Northern Virginia jurisdictions, is among the 162 Aaa-rated local governments across the United States under review for possible credit rating downgrades.  This announcement follows Standard & Poor’s and Moody’s decisions to review the U.S. government’s credit rating due to the impasse in federal debt ceiling deliberations.  Although concerned about the ratings agencies’ review of the City of Alexandria’s credit rating, Mayor William D. Euille has expressed confidence in the City’s outlook.  “The potential downgrade of the City’s credit rating is based on federal inaction, not any weakness on the part of the City,” stated Mayor Euille. “Nothing has changed about the strong, flexible economy and sound financial and debt-management policies that have built the City’s solid financial reputation on Wall Street.” Earlier this month, Standard & Poor’s and Moody’s reaffirmed the City of Alexandria’s bond ratings of AAA and Aaa, respectively. The City has maintained these top grades from the major bond rating agencies since 1986 (Moody’s) and 1992 (S&P).  In reaffirming the City’s AAA bond rating earlier this month, S&P cited the City’s “strong and diverse local economy,” “strong financial management,” and “moderate-to-low debt burden.” S&P also rated the City’s financial management practices “strong,” which is the highest rating given in the financial management category.  In reaffirming the City’s Aaa bond rating, Moody’s Investors Service stated that “this Aaa quality rating reflects the city’s strong and vibrant tax base, above average socioeconomic profile,” and cited Alexandria’s “sound financial condition, conservative budgeting,” and “favorable debt profile.”  On July 14, the City of Alexandria competitively bid and sold $69.95 million in AAA/Aaa-rated general obligation bonds at a favorable overall 3.18 percent true interest cost over the 20-year life of these serial bonds, which is one of the lowest rates ever achieved by the City.  The City does not anticipate issuing general obligation bonds again until summer 2012; however, a downgrade of the City’s credit rating could increase the City’s future borrowing costs. The City has begun an immediate review of the effects that credit rating downgrades, federal default and federal budget cuts may have on the City’s economy, budget, and financial condition.  Based on that review, City staff will develop an immediate plan to react promptly and effectively to address any and all problems that may arise.