Placer County’s credit rating was upgraded by two leading credit-research services recently, making it the highest-rated government agency in the county.
County Treasurer-Tax Collector Jenine Windeshausen congratulated the Board of Supervisors Tuesday as she reported the results of ratings reviews by Standard and Poor’s and Moody’s Investor Services.
Standard & Poor’s Rating Services upgraded the county’s overall credit rating to AA from AA- and upgraded the county’s lease debt rating from A+ to AA-. Moody’s gave an overall rating for the first time assigning the county a Aa2 and upgraded the county’s lease debt rating to Aa3 from A1.
"The county is the only government agency in the county with ratings this high," Windeshausen explained in a memo to the board. "In the Sacramento region, the city of Sacramento is the county’s only rating peer. On a statewide basis, the county is among a handful of counties with ratings in categories this high."
She told the board that Placer County has the highest rating given by Moody’s to counties in California. Only Santa Clara and Marin counties have higher ratings with Standard & Poor’s among the state’s 58 counties, she said.
She said Placer County received such high ratings from Standard & Poor’s and Moody’s largely because it has:
• A well-qualified, experienced senior management team, including leadership at the board level;
• A history of conservative fiscal management; and
• A robust, diverse economy fostered by well-planned communities and abundant natural and man-made resources.
Windeshausen told the board that the county has a long track record of sound financial management.
"We didn’t just suddenly get to this financial standing overnight. It’s the proven history that gets us there," she explained, noting that the county’s long-term debt is very low compared to many local governments.
In its analysis of Placer County, Standard & Poor’s said the county has good expenditure controls, a history of very strong financial performances and a track record of maintaining strong, stable fund balances and using one-time revenue for capital projects and other nonrecurring costs.
Moody’s cited the county’s small, but growing economy; high wealth levels, low debt burdens and very strong finances.
The credit-rating reviews were prompted partly by the county’s decision to refinance long-term debt it incurred in 1997 to finance construction of the Larry Oddo Finance Administration Building at the DeWitt Center in North Auburn.
Windeshausen, County Executive Officer Thomas M. Miller and Auditor-Controller Kathy Martinis met with both credit-rating services in San Francisco recently to brief them on the refinancing plans.
Windeshausen told the board that refinancing the debt will save the county more than $133,000 in debt-service costs annually.
She also reported on the results of the county’s effort to securitize additional revenue from the 1998 tobacco settlement, in which the tobacco industry agreed to pay billions of dollars if more than 40 states dropped lawsuits filed against the industry. Placer County receives a share of California's settlement money.
By securitizing its revenue, the county is able to take a lump-sum payment, rather than annual payments. The securitization redirects the tobacco settlement revenues to bondholders who put up the lump-sum. Therefore the securitization does not require debt service payments from the county.
In 2002, the county received more than $35 million by securitizing tobacco settlement revenue it otherwise would have received annually through 2036.
The money was used to help pay for several building projects, including two buildings now under construction: the Community Development Resource Center and Auburn Justice Center at DeWitt and for site acquisition for the new South Placer Justice Center in Roseville. Some of the money helped pay for expanding the county jail in Auburn and relocating a Public Works Department facility at North Lake Tahoe. The county has now refinanced the bonds issued for the 2002 securitization and has further securitized the settlement revenue it was projected to receive from 2036 to 2056.
Windeshausen said the refinancing of the 2002 securitization and the additional securitization raised more than $14 million for several construction projects, including the Auburn Justice Center, South Placer Justice center, a new Children’s Emergency Shelter and a new animal shelter.
Several board members thanked the county’s management team for keeping the county on a solid financial footing.
"It is really great to be part of a business that is doing so well and is so well managed," board Chairman Bill Santucci said.