Agenda - Council - 08/24/1982 - Laserfiche WebLink

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,I I I I We will undertake continuous rating surv~illancc on the issues for an indefinite period or until the next bond sale, provided that we are asked to rate, and also provided that we are regularly furnished with annual financial and operating reports. It is understood that the issuer must send us annual audits and budgets and any other appropriate data as required. In the absence of the receipt of this necessary information, at least on an annual basis, the rating will be withdrawn. Standards & Poor's operates with no governmental mandate, subpoena powers, or any other official authority. We simply have a right as part of the media to express our opinion regarding credit quality in the form of letter symbols with which most of you are familiar. Our credit rating sectors of review include four broad areas of concern covering established sectors of credit. These include economic factors, debt factors, administra%ive factors, and fiscal factors. I I I I I ! i I I Economic diversity in the tax base and a diversity of and growth of employment opportunities in the area are important. The creation of jobs and income levels of the community are vital factors which u].timately generate the vital ingredient; namely ~the ability to repay debt. Debt factors will include the type of security being pledged to debt repayment, debt burden, debt history and trend. The debt burden must be really measured against the ability to repay which essentially means against income and against the municipality's total budget resources. The debt history as well as projected debt needs must also be considered. A community should also be able to show evidence of regular planning for capital improvements. Administrative factors will include an examination of the type of government involved and whether it appears to be geared up to the job it is supposed to be doing. Tax rate and levy limitations, debt limitations, and the current unused margin in each of these categories is important. Revenue requirements must be able to respond to the needs of the expenditure side. Management aspects include turnover of personnel, labor- management relations history, and legal and political constraints that are present in the structure and environment of the entity. Current account analysis will include an examination of fiscal performance versus the budget. The balance sheet for the main operating fund which is a reflection of financial position, will be examined to see that current assets of cash and investments exceed current liabilities. We look for the trends in these factors so that a current deficit which is wiped out in the next year will not be deemed too negative a score. On the other-hand, an accumulated deficit for three successive years would be a decidedly negative factor. Pension liabilities are also a significant element of burden and must be under control.