Standard & Poor’s Global Ratings (“S&P”) boosted Norfolk’s ratings outlook from stable to positive and joined Fitch Ratings (“Fitch”) and Moody’s Investors Service (“Moody’s”) in affirming the strong credit rating on the City’s existing long-term ratings.

• S&P highlighted Norfolk’s “strong economy,” its “very strong budgetary flexibility and strong budgetary performance” and “very strong management, with strong financial policies and practices, as well as very strong liquidity.”  S&P noted Norfolk’s weak debt and contingent liability position.  S&P states in its analysis that the City’s outlook revision from stable to positive reflects “a trend of growth in the economic base and income indicators for the city while maintaining strong-to-very strong financial metrics.” The positive outlook reflects S&P’s view that there is a one-in-two chance of raising the City’s credit rating to AAA within two years.

• Fitch praised Norfolk’s “strong revenue flexibility as well as its high level of fundamental financial flexibility through economic cycles based on its expenditure and revenue flexibility,” “moderate overall debt and pension liability, with manageable future debt needs” and “healthy reserves and broad budgetary tools.”

• Moody’s noted Norfolk’s “regionally important local economy anchored by military presence, and proactive and conservative long-range planning and strategic and comprehensive approach to resiliency” and the City’s “sound, proactive management”.  Additionally, Moody’s lauded “expectation of continued growth and diversification in the local economy and sound financial performance.”  Moody’s did note Norfolk’s elevated debt burden, but highlighted the significant portion of debt paid by dedicated fees and revenues outside of General Fund and their opinion that the City’s debt service costs remained manageable.

Strong ratings continue to assist the City in achieving low cost of funds to finance key capital projects throughout the City and use tax dollars as effectively as possible.  But perhaps more importantly, strong ratings are a representation of the City’s financial strength.

These ratings are reflective of the accomplishments our City Council and management have made over the years to strengthen our strong financial position, as well as the strategic capital and economic development investments in our community that have continued to pay off.  These ratings affirm that our financial operations are sound and well-managed.

These ratings come in advance of next week’s sale of approximately $124 million in general obligation bonds to finance various capital projects throughout the City, including the construction of several new schools, and the construction of the new conference center that is fully funded by the City’s self-supporting Public Amenities Fund.  It additionally funds Wastewater, Storm Water, Waste Management and Parking projects that are fully self-supporting.  The City refunds bonds when it can achieve lower interest rates.  This sale will additionally include an approximately $52 million refunding to reduce future debt service costs and use tax dollars as effectively as possible.

Each time the City sells securities to the public, the City’s creditworthiness is analyzed and rated by the bond rating agencies.  Much like a consumer credit rating, a credit rating is a measure which helps determine the cost of borrowing.