LOS ANGELES — Fitch Ratings on Jan. 23 upgraded Mendocino County, Calif.'s pension obligation bonds Series 2002 ratings to A from BBB-plus, affecting $74.2 million in debt.
The rating agency also upgraded the county's implied general obligation bond rating to A-plus from A-minus and revised its outlook to stable from positive.
Analysts cited the county's improved financial position resulting from cutbacks and management reforms as the reason for the upgrade. Management has raised fund balance targets and established policies to help meet these new goals, updated treasury practices, and produced its first capital improvement plan in seven years.
The POBs are an absolute and unconditional obligation of the county imposed by law, the payment of which is not limited to any special source of funds.
The county continues to face challenges from a long-term economic contraction that preceded the downturn, however, analysts wrote.
After falling for many years, analysts said that employment levels increased modestly in the past two years while population has stagnated.
Mendocino County is located in coastal northern California, approximately 115 miles north of San Francisco. The county's estimated population of 90,000 is little changed from the 1990s and is dispersed across 3,500 square miles - a land area larger than several states.
Overall debt levels are expected to remain moderate. The county has no plans for additional planned borrowing in the intermediate term. Pension funding requirements are considerable and rising, though total carrying costs are manageable.
The rating is likely limited to the current level due to the county's constrained revenue raising ability coupled with the inherent limitations of its economic base.
