FOR IMMEDIATE RELEASE: Feb. 11, 2013
Fitch Ratings (“Fitch”) has affirmed the ratings for the City of Kansas City, Mo.’s outstanding general obligation bonds at “AA” and revised its outlook from “negative” to “stable.” At the same time, Fitch affirmed the ratings on the City’s appropriation-backed debt at “A+,” also with a stable outlook.
In March 2012, Fitch placed the City on a negative credit outlook citing concerns related to a sizable future capital improvement and infrastructure plan, which contemplated issuance of $1 billion of additional general obligation bonds over a 10-year period and another $100 million for the upcoming streetcar project. The general obligation bond portion of the plan never came to fruition, as the City instead focused on tax reform and sewer bonds at its August 2012 election.
Another major credit issue from Fitch’s 2012 report was the “City’s inability or unwillingness to initiate a plan to increase aggregate funding for its annual pension liability.” Internal requirements at Fitch mandate annual reviews of credits on negative outlook. Over the last several weeks, City staff provided information in connection with the annual review and, as a result, Fitch released its credit ratings report with the revised outlook of stable on Feb. 11, 2013.
The report indicates that the change in outlook “reflects the City’s revised capital plans, which are much more modest in scope than previously contemplated, as well as progress made towards improved pension funding.”
Mayor Sly James is extremely pleased with the change in Fitch’s credit outlook and recognizes the combined efforts of City staff, labor leaders and members of the Mayor’s Blue Ribbon Pension Task Force, especially its chairman, Herb Kohn, with creating a path forward toward affordable and sustainable pensions for all City employees.
“It hasn’t been an easy road but the compromises and sacrifices that have been made thus far toward pension reform are significant and measurable,” said Mayor James.
“Fitch continues to recognize the City’s position as an economic engine in the region. The rating affirmation is reflective of the fact that this City continues to be on firm financial footing despite the recent economic downturn,” said City Manager Troy Schulte.
Media inquiries and requests for information can be addressed to Tammy Queen, City Treasurer, Finance Department, at 816-513-1019.