Standard & Poor’s upgraded its issuer credit rating for San Ramon to AAA from AA Wednesday, citing the city’s “sustained, strong” financial performance and “strong, diverse” economy.
The city is a bedroom community in Contra Costa County, 20 miles east of San Francisco. Contra Costa County has suffered the brunt of a severe downturn in the region’s housing market. But San Ramon has enough reserves to weather the storm and enough commercial development to offset some of the weakness in housing, Standard & Poor’s analyst Li Yang in San Francisco said in an interview.
“The thing that stood out the most for me was their very high unreserved fund balance,” Yang said.
At 108% of fiscal 2007 general fund expenditures, the suburb’s $35 million of reserves should be enough to weather any downturn in the housing market, he said. The city aims to maintain reserves of at least 50% of its general fund expenditures.
San Ramon is also home to corporate headquarters for Chevron Corp., the second-largest U.S. oil company. The company is reporting record earnings with oil prices approaching $140 a barrel. It employs 4,600 workers at a San Ramon office park that is home to 30,000 jobs. The city’s unemployment rate was 1.8% in 2007, and median household income is 195% of the California average.
Standard & Poor’s said the city’s debt burden is high at $5,781 per capita, but low when viewed as a percentage of the market value of its property tax base. San Romon has $19.7 million of general-fund backed debt and no plans to issue more.
Moody’s Investors Service assigns its Aa2 issuer long-term rating for the city. Fitch Ratings does not have an underlying rating for the credit.
