LOS ANGELES — Fitch Ratings upgraded Vista, Calif.'s implied unlimited tax general obligation rating to AA-plus from AA and $111 million certificates of participation series 2007 to AA from AA-minus.

The rating outlook is stable.

Fitch cited the city's strong financial flexibility resulting from balanced operations, expenditure flexibility and very high reserves for the upgrade.

Vista, in northern San Diego County, has a population of more than 97,000.

"The city's strong financial position has enabled it to pursue a range of prudent actions including the prepayment of outstanding debt, regular pay-go funding of capital needs, and the recent elimination of a $4.6 million side-fund liability for its California Public Employees' Retirement System safety plan," Fitch analysts said.

The city also demonstrated its ability to control expenditures during the last recession through the use of furloughs and attrition, and has maintained total city employment at levels well below pre-recession peaks, according to the report.

Overall debt levels are moderate at $3,554 per capita and 3.9% of assessed value, according to the report.

Capital needs are limited, analysts said, offsetting concerns about slow amortization, and the city funds most ongoing capital requirements from its operating budget.

The 2007 COPs account for the bulk of the city's outstanding debt and are supported on a budgetary basis by a 30-year, voter-approved half-cent sales tax. Measure L proceeds have been sufficient to fund all COPs payments to date.

"Rising debt service for the COPs may require additional general fund support in future years, but the city appears well-positioned to address this challenge," analysts said.

The COPs are payable from lease payments made by the city in a typical lease transaction including a city covenant to annually budget and appropriate lease payments and a cash-funded debt service reserve. Projects funded with COP proceeds have been completed on time and within budget.

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