NEW YORK--(BUSINESS WIRE)--Fitch Ratings assigns a 'BBB' rating to the city of Utica, NY's (the city) $3,450,000 taxable pension obligation (serial) bonds, series 2008 A. The bonds are scheduled to sell competitively on August 26 and mature serially Sept. 1, 2009-2018. At this time, Fitch also upgrades the city's outstanding $52 million general obligation (GO) bonds to 'BBB' from 'BBB-'. The Rating Outlook is Stable.The bonds are general obligations of the city, backed by a pledge of its full faith and credit and its unlimited taxing power on all taxable real property. The proceeds will be paid to the State of New York (state) to retire its pension obligation for firemen employed by the city. The required payment was part of the city's agreement with fire employees in the most recent contract negotiations.
The upgrade to 'BBB' reflects the city's success in maintaining its adequate financial position despite its relatively flat tax base and continuing reliance on external revenue sources. While dependence on state and federal aid remains significant, the city has reduced the amount of support the general fund receives from a water trust fund established upon the sale of the city's water system. Although a degree of financial cushion is provided by the city's maintenance of reserves above its internal target, liquidity remains strained. However, the city has not borrowed for cash flow management since 2000.
Officials' demonstrated willingness to raise the property tax levy and newly identified recurring revenue sources should help provide a modest degree of budgetary stability over the near term. Other credit considerations include the city's below-average economic indicators, low market value per capita, moderate net debt levels, and above-average debt amortization.
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