The underlying rating for Pasadena’s general obligation debt was raised last week by Standard & Poor’s to AA-minus from A-plus based on consistently strong financial management practices. The action affects $118 million GO bonds and $17 million of certificates of obligation.
The city’s GOs are rated Aa3 by Moody’s Investors Service and AA-minus by Fitch Ratings.
Pasadena was expected to take bids yesterday for $21.6 million of GOs. Southwest Securities is the city’s financial adviser. Andrews Kurth LLP is bond counsel.
Proceeds will fund a new fire station, as well as upgrades and expansions to streets, parks, and drainage facilities.
Pasadena is located about 15 miles southeast of downtown Houston at the entry of the Houston Ship Channel, and has a population estimated at slightly below 150,000. It ended fiscal 2007 with an unreserved general fund balance of $17.4 million, or a very strong 23% of expenditures, and is projecting to end fiscal 2008 with another surplus of $3.6 million.
Standard & Poor’s analysts said Pasadena stabilized the general fund in fiscal 2007 with a new health care plan that required city employees to pay a $1,000 deductible. Management also eliminated 35 positions through attrition and raised utility fees by 35%, along with increases in solid-waste fees.
The preliminary budget for fiscal 2009 budget includes a $3.6 million general fund balance drawdown for onetime capital expenditures and to fund a portion of the city’s accrued liability to the retirement system. Management expects to end fiscal 2009 with a $17 million unreserved general fund balance.