LOS ANGELES -- Berkeley, Calif. is planning to sell $15 million of general obligation bonds in January to improve street conditions throughout the city.
A competitive offering is set for Jan. 7. NHA Advisors is serving as the city's financial advisor and Jones Hall is bond counsel.
The bonds will be secured by revenues from voter-approved unlimited ad valorem taxes levied on taxable property in Berkeley. The city has the power to levy these taxes to meet debt service without limitation as to rate or amount.
Berkeley, located on the east shore of the San Francisco Bay, scored double-A-category ratings from both Moody's Investors Service and Standard & Poor's. The ratings agencies noted the city's large tax base, which benefits from the proximity to San Francisco, as well as its strengthening economic position.
"Berkeley's economy has continued to recover from the downturn with solid growth of a large assessed valuation that will likely continue," Moody's analysts said in a credit report. The agency assigned the bonds a Aa2 rating.
Analysts also noted the economic benefits from its participation in the Bay Area regional economy, which they called the largest, most diverse and fastest growing in the nation.
Standard & Poor's, which assigned a slightly higher AA-plus rating, also noted the city's strong budgetary flexibility, strong liquidity, and strong management conditions.
Weaknesses include a weak debt and contingent liability, burdened by what analysts consider high pension and other postemployment benefit obligations.
Combined pension and OPEB expenditures in 2012 were 17% of adjusted total governmental funds expenditures, according to Standard & Poor's.
Moody's also called the city's pension costs "sizeable," but not yet sufficient enough to weaken credit quality.
The bonds were authorized as part of the Berkeley Streets and Watershed bond Measure M in November 2012.
The measure authorizes the city to borrow $30 million for street repaving and rehabilitation and related green infrastructure.