LOS ANGELES — The 6.0-magnitude earthquake that struck California's Napa Valley Aug. 24 will not impact any municipal credits that Moody's Investors Service rates.
Analysts in the Aug. 28 Weekly Credit Outlook said the earthquake appears to have resulted in relatively contained damage and caused no material financial impact to the credits, which are well-positioned for recovery.
The affected local governments include Napa and Sonoma counties, which Moody's doesn't rate, and Solano county, which Moody's rates Aa2 with a stable outlook.
According to Moody's, the counties have comprehensive emergency plans that correspond with state requirements, enabling sufficient preparedness to handle the response.
"Roads and bridges are safe for travel, all power outages were restored relatively quickly and damaged water lines are undergoing repairs," according to the report.
While officials continue to assess damage, the state has declared a state of emergency for Napa, Solano and Sonoma counties and is providing assistance upon request to local governments in the area.
There is no evidence the earthquake will meaningfully affect Napa Valley's tourism industry, Moody's analyst said.
The cities of Napa and Vallejo suffered the most property damage. According to the report, Napa offered an initial estimate of $300 million in gross damage to privately owned residential and commercial property. Vallejo officials offered an initial estimate of $5.2 million in damage. The tax base of both cities is large enough that even if each lost the full amount in property value, the impact would not be significant, analysts said.
Officials at multiple local governments have begun the process of applying for federal reimbursement for expenses associated with the natural disaster. The Federal Highway Administration announced $2 million in relief to help the California Department of Transportation and local agencies cover infrastructure repair costs estimated at $10 million-plus, according to the report.
Solano County estimates it suffered $900,000 in damage to its facilities in Vallejo, which would have a very limited impact on the county's financial position, analysts said. Local governments are likely to benefit from sales tax collections due to property repair and reconstruction-related expenditures.
Standard & Poor's issued a report on Aug. 27 saying that the earthquake did not impact its ratings of Napa's water and sewer utilities.