WASHINGTON, DC - In a show of increased confidence in the strength of the District's financial recovery, the second of three major rating agencies raised its credit rating for the city yesterday to investment grade status. Citing the District's "accelerated financial improvement over the past year," Moody's Investors Service upgraded the city's general obligation bond rating to Baa3 from Ba1. The agency also gave the District a positive rating outlook, which means the city may expect a further upgrade in six to eight months.
"This upgrade reflects a growing confidence in our city's financial stability and I'm very, very pleased," said DC Mayor Anthony A. Williams. "The upgrade will save us money as we strive to expand our economy, improve services and increase investments in children and youth. The District has come farther and faster in its financial recovery than any other municipality coming out of a financial crisis."
Moody's noted the District's conservative revenue estimates, tax collection and compliance efforts, and tight spending controls all contributed to the city's improved financial performance. The city's successive operating surpluses in FY 1997 and FY 1998 were attributed by Moody's to "improved financial management, structural benefits from the federal Revitalization Act and the steadfast adherence to the goal of recording four consecutive years of operating surplus [mandated under the Control Act]." Benefits of the stronger-than-expected economic and financial markets performance were also cited.
"Confidence in the District government's management and financial responsibility continues to grow," said DC Council Chairman Linda Cropp. "The city is establishing a track record of balancing its budget, while improving service delivery and providing tax relief."
"I am pleased to begin my tenure as Chief Financial Officer at a time of increasing confidence in the District's financial stability," said new Chief Financial Officer Valerie Holt. "The District's financial management team will continue to work to improve the city's long-term financial position."
According to Deputy CFO and Treasurer Thomas F. Huestis, the upgrade will save the city millions of dollars. "The rating will reduce interest costs, lower bond insurance costs and lower underwriting fees when the District issues bonds for new capital projects and refinancing, scheduled for late July," he said.