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3rd Wall St. Credit Rater Gives City an A

3rd Wall St. credit rater gives city an A
A+ in Fitch's first score puts Buffalo's finances, with large surplus, on best footing in decades

Buffalo has received its first A+ credit rating in decades, making it the first time in memory that three major Wall Street agencies have placed the city in the A tier, City Comptroller Andrew A. SanFilippo said Tuesday.

The comptroller is announcing todaywed that Fitch Ratings has assigned Buffalo its first-ever credit score. It has placed the city in the A+ category with a "stable" outlook, four steps below Fitch's highest rating. Analysts cited Buffalo's large surplus, the continued presence of a state fiscal control board and other factors.

The city learned three weeks ago that a recalibration by Moody's Investors Service resulted in an upgrade of its credit score to an A2, up three notches from Baa2. Standard & Poor's, the third major rating agency, has placed Buffalo in the A- category.

This is the first time since the mid-1970s — and probably longer — that Buffalo's credit score is now in the A tier among all major Wall Street ratings agencies, SanFilippo said. The better the credit rating, the cheaper it is for municipalities to borrow money.

The comptroller said that despite "storm warnings," including a state fiscal crisis that could cause more pain for cities, Buffalo's credit scores demonstrate that the city's finances have improved.

"I think this shows that we're better equipped to handle the fiscal crisis than most other cities in this state and across the country," SanFilippo said.

Listen to SanFilippo discuss the city's new A+ credit rating:

Despite difficult financial times, he added, Buffalo is "alive and well."

J. Chester Johnson, chairman of Government Finance Associates, the city's fiscal consultant, said that one would have to go back at least 35 years — prior to a fiscal crisis the city experienced in the 1970s — to find an A+ credit rating.

Because this is Fitch's first credit score for Buffalo, SanFilippo said, it's difficult to gauge how a recent industrywide change in rating calculations affected the picture.
Agencies went to a system that essentially compares municipal borrowers with those in the private sector. In many cases, the recalibration resulted in ratings upgrades for local governments.

SanFilippo compared Buffalo's A+ rating with an A score that Fitch recently assigned to Erie County as a result of the recalibration, moving the county up two notches.

In rating Buffalo's credit standing, Fitch said the city "maintains strong fiscal reserves."

Buffalo has about $82 million in reserves that have not been earmarked for anticipated costs. However, $34 million has been set aside in a fund that can be used only for emergencies. What's more, the city plans to use $12.2 million in reserves to balance its budget in the coming year and help erase a $24 million gap.

Fitch analysts said the continued oversight by a state fiscal control board is another positive factor, even though the panel is expected to move into an advisory-only capacity by the end of the year or early next year.

Buffalo has a "diverse" economic base that has continued to experience commercial and residential development despite the economic downturn, Fitch said.

"However, the city's demographic profile is weak," Fitch added in its assessment of Buffalo's outlook, "reflected in significantly below-average income levels and a notable high poverty rate."

By Brian Meyer
The Buffalo News
NEWS STAFF REPORTER