Three major rating agencies – Standard & Poor’s, Fitch, and Moody’s – have affirmed the City of San Antonio’s AAA general obligation bond rating for the eighth straight year.
San Antonio is the only major city with a population of more than 1 million to have a AAA bond rating from any one of the major rating agencies. The rating not only allows the City to pay the lowest possible interest rates in the market, but also spend more on street construction and other capital improvements.
“The AAA bond rating is one way San Antonio residents can clearly see local government working for them,” Mayor Ron Nirenberg stated. “For the past eight years, our city manager and her financial team have worked with City Council to attain this rating, which provides millions of dollars in savings. It’s no overstatement to say that the City of San Antonio is a shining example when it comes to managing taxpayer dollars.”
Taking immediate advantage of the highest possible credit rating, the City is selling $203.3 million in bonds, certificates of obligations, and tax notes next week. The sale includes $100 million in bonds, which is the first issuance of the voter-approved 2017-2022 Bond Program.
“Earlier this year, our residents showed their confidence in City government by voting to approve the largest municipal bond program in San Antonio’s history,” City Manager Sheryl Sculley stated. “Receiving the AAA general obligation bond rating year over year allows us to continue delivering much needed capital projects without increasing the property tax rate.”
In a statement released July 25, Standard & Poor’s credit analyst Sarah
Smaardyk noted the City’s “very strong budgetary flexibility and liquidity, which is supported by very strong management” in their assessment of the AAA bond rating. Fitch said in a July 28 statement, among the factors contributing to San Antonio’s AAA bond rating are its “strong revenue flexibility and growth prospects, minimal revenue volatility, and superior financial resilience.”
Moody’s Lead Analyst Sarah Jensen cited “the strong and vibrant economy, anchored by diverse sectors and stabilized financial operations with significant revenue raising flexibility.” S&P added that they “do not expect to change the rating during the two-year outlook period because they believe the City will maintain very strong reserves.”
Although the credit rating agencies cite San Antonio’s revenue flexibility, the Texas Legislature continues to advance proposals that could cap the City’s ability to generate future revenues and maintain financial stability. The current cap on property tax revenues is 8%. A bill recently passed by the Senate would decrease the cap to 4% and a House bill would lower it to 6%. Any revenue beyond those caps would have to be approved by voters.
Other proposals include Senate Bill 6, which would allow residents of areas being considered for annexation to hold a referendum on whether the annexation can go through, and the “bathroom bill,” which could seriously impact San Antonio’s tourism industry.
