DALLAS - With upgrades from two rating agencies - including a triple-A from Standard & Poor's - Albuquerque will accept bids on $43 million of general obligation bonds in a competitive deal next week.

The issue includes $39 million of bonds for a variety of city improvements and $4 million for sewer projects.

RBC Capital Markets is financial adviser. Brownstein Hyatt Farber& Schreck PC is bond counsel.

Albuquerque last week won a coveted AAA rating from Standard & Poor's on the upcoming issue, while Moody's Investors Service boosted the city to Aa2 from Aa3. Fitch Ratings maintained its AA rating.

The upgrade announced last week affects nearly $213 million of outstanding GOs and is based onthe city's "strong financial management, consistent maintenance of strong fund balances, and central role in the state economy."

"We believe that Albuquerque's deep and diverse tax base, low debt burden, rapid amortization, and strong financial management policies will support stable future reserve levels," said Standard & Poor's analyst Horacio Aldrete Sanchez.

Moody's analysts acknowledged the city's need to cut its budget amid falling revenues but praised its efforts.

"Moody's believes the city has demonstrated a willingness and ability to address revenue and expenditure pressures," wrote analyst Kristin Button. "In recent years, the fund balance has increased to a healthy level in excess of 15% of general fund revenues."

With a population of 500,661, Albuquerque is New Mexico's largest city and has 25% of the state's population. Per-capita income is estimated at $20,884, which is slightly below the national average.

"Over the last five fiscal years, the tax base has grown at a healthy 8.1% average rate annually," Moody's noted. "In fiscal 2008, the full valuation grew 11%, reaching a substantial $39.6 billion which resulted in a $10.9 billion assessed valuation."

Because Albuquerque did not really experience much of a housing bubble, prices have not fallen as sharply as they have in Arizona cities. However, building permits in 2007 fell 21%.

The city's reliance on gross receipt tax on goods and services has proven a handicap in 2008 as revenues have declined. The city closed a $65 million budget gap in order to balance its proposed fiscal 2009 budget. Mayor Martin Chavez cut $11 million by leaving 200 city jobs vacant.

"We expect the projected year-end fiscal 2008 general fund balance to remain above the city's goal to maintain reserves of at least 8.33% of expenditures," Standard & Poor's said. "The fiscal 2009 proposed budget is balanced and reflects further cost containment measures that result in the same expenditure levels achieved at the end of fiscal 2007, and the maintenance of reserves at the policy-required levels."

 

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