Bexar County, Tex., Earns Rare S&P Upgrade to AA-Plus

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DALLAS Bexar County, Tex., which includes San Antonio, has won its first Standard & Poor's upgrade in 12 years, rising to AA-plus from AA.

The upgrade follows a boost from Moody's Investors Service last year that lifted the county from Aa2 to Aa1. Fitch Ratings maintains a rating of AA-plus.

"It's been a while since any rating action," noted Standard & Poor's analyst Horacio Aldrete-Sanchez. "Over the course of these 12 years, the Bexar County of today is much different than it was back then."

Bexar County's population of about 1.5 million makes it the state's third-most populous county. Although military and tourism have long been the local economy's anchors, medical and biomedical companies are now the leading force, contributing an estimated $11.9 billion to the area economy. In 2006 the Toyota Motor Corp. opened a new truck manufacturing facility in San Antonio, bringing nearly 2,100 new jobs to the area.

The upgrade coincided with the county's pricing yesterday of $70.7 million of Series 2008 combination flood control tax and revenue certificates of obligation, $56.4 million of general obligation certificates of obligation, and $15.2 million of unlimited-tax road bonds.

Yesterday's issues were part of a $600 million, 10-year flood control and capital improvement program.

"Obviously, the upgrade will mean a benefit to the taxpayers through lower borrowing costs," said David Smith, chief investment and budget officer for the county. "It couldn't have come at a better time."

In addition to the flood control and capital program, the county is preparing to issue its first debt backed by a venue tax that voters agreed to extend last May. The $415 million in additional revenue from the tax will support debt for the southern extension of the San Antonio River Walk, creation of athletic fields and other civic projects, along with improvements to the AT&T Arena where the National Basketball Association's San Antonio Spurs play. The tax, levied on rental cars and hotel stays, was originally approved to build the AT&T Arena.

"Our first issue this summer will be a refunding," Smith said of the venue tax bonds.

Bexar shares a Standard & Poor's AA-plus rating with only one other Texas county, Brazos County, Aldrete-Sanchez said. The agency's AAA-rated counties are Dallas, Tarrant, Collin, Travis, and Harris counties, he said.

Counties sometimes have an easier time achieving top ratings because they are not required to provide as many services as cities or school districts, and their budgeting faces less pressure from changing trends, Aldrete-Sanchez said.

The analyst noted that Bexar County has managed to nearly double its fund balance to 18% from 9.8% at the end of 2003 when it faced demands for more jail space.

"Bexar County's financial performance remains very strong," Aldrete-Sanchez wrote. "The county has posted operating surpluses during the past four fiscal years. In fiscal 2007, a $5 million operating surplus increased the unreserved general fund balance to $53.2 million, or a very strong 19.1% of expenditures. For fiscal 2008, management projects continued positive results."

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