Moody’s Investors Service has reaffirmed its bond rating of A1 for the Sierra Vista Municipal Property Corporation and its Aa3 issuer rating for the City of Sierra Vista this week thanks to a history of stable budget reserves, a secure military presence, and a low debt burden with a rapid payout.
“The City’s financial position is overall satisfactory and management anticipates reserves will approximate historical levels in fiscal 2018 and fiscal 2019,” Moody’s Investors Service says in an August 27 credit opinion. Challenges to the City’s credit ratings include a somewhat limited local economy and, like other Arizona cities, a high dependence on sales tax revenues, which are sensitive to fluctuations in the economy.
While the City of Sierra Vista forecasts growth in sales tax revenues for the current budget year, it has managed tight annual budgets following the economic downturn in 2008. In the face of sluggish economic activity, the City has maintained its bond ratings in recent years due to its proactive approach to reducing personnel costs through attrition and its maintenance of a healthy level of debt service. These factors were cited by Fitch Ratings when it reaffirmed the City’s AA- rating last year.
The City of Sierra Vista has also seen increased costs associated with the Public Safety Personnel Retirement System, which is the case throughout the state. Even with these elevated costs, Moody’s Investment Service says the City’s debt, pension, and fixed cost burdens are manageable.
“Despite the challenges all Arizona municipalities face with rising public safety pension costs, Sierra Vista has been able to maintain outstanding bond ratings because we take a conservative approach to debt management and persistently seek opportunities to pay off bonds early,” Sierra Vista City Manager Chuck Potucek says.
“This bond rating demonstrates that the City is in a solid fiscal position that should only improve as we see signs that the local economy is starting to bounce back,” Potucek says.