BRADENTON, Fla. - Standard & Poor's upgraded Miami's general obligation bond ratings four notches to A-plus from BBB citing the city's improved financial management practices and budget flexibility.
S&P also raised its ratings on the city's non-ad valorem and limited-tax debt to A from BBB-minus late Monday. The outlook is stable for all ratings.
The city had $229 million in outstanding general obligation bonds and $443.8 million in outstanding revenue bonds and loans as of Sept. 30, 2013.
"The stable outlook reflects our view of Miami's recent general fund surpluses leading to significantly improved budgetary flexibility, with indications of continued strength for fiscal years 2014 and 2015," said analyst Hilary Sutton. "This reflects a marked improvement in operations."
S&P said the rating upgrades represent its assessment of the metropolitan area economy, the city's "very strong" budgetary flexibility and liquidity, and adequate budget and management performance as well as "very weak" debt and contingent liabilities.
Miami has emerged from a period of severe distress partly because of declaring a financial urgency in fiscal 2010, 2011, and 2012. Authorized by Florida law, the declaration allowed the city to modify collective bargaining agreements and cut wages and benefits for budget relief.
While the declaration is still being litigated, Miami added to reserves in 2011, 2012, and 2013 and preliminary results for fiscal 2014 show a $28.4 million surplus, S&P said.
The rating upgrades are the result of efforts to strengthen the city's finances, said Mayor Tomas Regalado.
"The steps taken by the City Commission during the financial downturn, and the city management's steps since, are now having the effects for which we had hoped and expected," he said in a statement.
The rating upgrades are also expected to reduce the city's future costs on potential financings as well as other financial contract negotiations and public private partnerships, according to City Manager Daniel Alfonso.
S&P said Miami's management is adequate and reflects conservative budgeting practices and progress toward meeting its reserve policy. A recent turnover in top management positions is a credit concern that will continue to be monitored.
The city's weak debt and contingent liability relates to sizeable pension and other post-employment benefit obligations, and ongoing litigation with the Securities and Exchange Commission, S&P said.
The SEC filed suit against the Miami and former budget director Michael Boudreaux in July 2013, and is seeking financial penalties.
The suit charged the city and Boudreaux with securities fraud for making faulty disclosures in connection with three bond offerings in 2009, by making "materially false and misleading statements and omissions" about a growing general fund deficit.
The SEC also charged Miami with violating a cease-and-desist order that was imposed on the city in 2003 for similar misconduct, making it the first municipality to allegedly violate such an order.
The suit has been delayed while Boudreaux has appealed rulings that denied his bid to be considered immune from individual prosecution by virtue of being a former city official.
The SEC also is continuing to investigate bonds that were issued by Miami and Miami-Dade County to build a Major League Baseball stadium and parking garages for the Marlins.
In November, Fitch Ratings upgraded Miami's GO bonds to A-plus from A-minus.
Fitch also raised the city's revenue bonds to A from BBB-plus, the limited ad valorem tax bonds to A-minus from BBB-plus, and special obligation street and sidewalk program bonds to A-plus from A-minus.
