DALLAS - Just two years after an auditor declared the city insolvent, Floresville, Texas, has rebounded to Standard & Poor's A ratings tier.
S&P awarded a three-notch upgrade on May 11, citing a positive fund balance and projected surplus after the city launched its insolvency turnaround plan. The previous rating was BBB.
"We could raise the rating further if Floresville were to build available fund balance to $500,000 or if the city were to maintain available fund balance consistently at levels we consider strong," said Standard & Poor's credit analyst Jim Tchou.
On Jan. 18, 2013, Auditor Patricia K. Wagner told the city council that it was running a general fund deficit of $355,419.
"The city is insolvent," she said, according to a report in the Wilson County News. "I think the decisions that are going to have to be made are going to have to be practical decisions, not political decisions."
To deal with the issue, the Floresville City Council created an audit committee and
"The task of the Insolvency Turnaround Plan will require changes in long-held standards of accountability, and an absolute commitment to the community to provide a level of service that is unmatched by other municipalities," the report said. "It will require the support of many change agents within the Citizens, City Council and City Staff."
In June 2013 Standard & Poor's lowered its underlying rating two notches to BBB but kept the outlook stable.
On April 24, 2014, Wagner, of San Antonio-based accounting firm ABIP, reported that the turnaround plan was working.
"Progress is being made through budgetary decisions to eliminate the fund balance deficit," read Wagner's report.
Floresville issued $5.7 million of general obligation bonds in 2010 with final maturity in 2028. With overlapping debt from the Floresville Independent School District, per capita debt in the town of 7,744 was $3,606, according to S&P, which considered the overall debt burden high.
Floresville, seat of Wilson County, is about 25 miles south of San Antonio. Sitting on the edge of Eagle Ford Shale area of South Texas, Floresville has seen demand for housing grow sharply during the shale boom. The local economy is based largely in agriculture, as the city has numerous facilities for receiving, drying, storing, and shipping peanuts.
