Moody's Investors Service has assigned an issuer rating of A1 to the City of
Fillmore, CA. The issuer rating is equivalent to the rating we would assign to bonds secured by the city's general obligation unlimited tax (GOULT) pledge. Moody's maintains an A3 rating on the city's sewer revenue bonds.
RATINGS RATIONALE
The A1 issuer rating reflects the currently strong financial position of the city's very small operation, which stands in contrast the city's financial condition during the Great Recession. The city's financial situation deteriorated significantly between 2008 and 2013 due to the combined impact of the recession, redevelopment dissolution, and a dispute over a tax sharing agreement that resulted in the Board of Equalization (BOE) withholding more than four years of sales tax revenue. With these revenue challenges addressed, the city's finances have improved significantly in the last four audited fiscal years with the city's available fund balances and cash balances now exceeding the medians for the A1 rating category. The A1 rating further reflects the city's small tax base relative to A1-rated cities in California, but which is larger than its ratings peers nationally. The A1 rating incorporates the city's extremely low level of outstanding debt and slightly elevated pension liability.
RATING OUTLOOK
Outlooks are not typically assigned to local governments with this amount of outstanding debt.
FACTORS THAT COULD LEAD TO AN UPGRADE
- Significant and sustained growth in the city's assessed valuation
- Material improvement in socioeconomic characteristics
FACTORS THAT COULD LEAD TO A DOWNGRADE
- Decline in the city's assessed valuation
- Significant deterioration of the city's financial position
LEGAL SECURITY
The issuer rating is equivalent to a rating that we would assign to a typical general obligation unlimited tax
(GOULT) debt issue and is used as a reference rating for other securities.
PROFILE
The city of Fillmore encompasses 2.5 square miles in the Santa Clara River Valley of Ventura County (Aaa stable) and has an estimated population of 15,650. The city was established in 1887 when the Southern Pacific railroad was built through this agricultural belt. A general law city, Fillmore has about 26 employees and provides basic municipal services.
METHODOLOGY
The principal methodology used in this rating was US Local Government General Obligation Debt published in December 2016. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on
www.moodys.com.
Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review. Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating. Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.
