LOS ANGELES — Standard & Poor's June 2 raised its long-term and underlying rating to AA-plus from AA on San Bruno, Calif.'s existing pension obligation bonds and series 2000 certificates of participation, impacting nearly $23 million in debt.
The outlook is stable.
"The raised ratings reflect the application of our local GO criteria released Sept. 12, 2013," said Standard & Poor's credit analyst Jean Lee. "Further supporting the rating is our view of the city's very strong economy and budgetary flexibility."
The city is one of several small, built-out cities located just south of San Francisco, and its position nearly adjacent to the San Francisco International Airport makes it in demand for office and logistics land uses, according to the report.
It also is well connected regionally, with stations on regional rail transit and regional commuter rail systems, and a location along freeways connecting San Francisco and Silicon Valley.
The rating upgrade impacted $13 million in POBs issued by the city in January 2013 that have maturities extending through 2023. The city used the proceeds of the series 2013 POBs to retire the portion of its unfunded actuarial accrued pension liability that is accounted for in a California Public Employees' Retirement System "side fund" created in fiscal 2004 when CalPERS pooled the pension plans of cities with fewer than 100 employees.
The city has covenanted to budget and appropriate debt service payments during the life of the obligations, but has not directly pledged a specific revenue stream and has no dedicated reserve fund associated with the series 2013 obligations.
The rating change also affected $9.6 million in 2000 Series COPs that "represent an interest in lease payments made by the city, as lessee, to the San Bruno Public Financing Authority, as lessor, for the use of a police facility.
