Costa Mesa, California, received an impressive credit rating during the most recent fiscal year, despite challenges brought on by the ongoing COVID-19 pandemic.
The city received an AA+ rating from Standard and Poor’s (S&P) for the 2019–20 fiscal year, which ended June 30, for its 2017 Lions Park Project bonds.
The Lions Park Project is a series of improvements in the city’s infrastructure that includes building the new Donald Dungan Library and event space for public use.
Costa Mesa issued bonds for the Lions Park Project from the state, and repaid them with revenue generated from the project, to receive the rating.
“This is great news that despite the financial setbacks from the COVID-19 pandemic, we are able to maintain our strong AA+ rating for the 2017 lease revenue bond,” Mayor Katrina Foley said in a Dec. 14 press release. “This is a testament to our talented finance team and city staff.”
S&P is the largest credit rating agency in the country. Its report considered Costa Mesa’s governance risk better than the sector standard due to its strong management profile, financial practices, and economic developments.
The report rated Costa Mesa as “very strong” in its sectors of economy, management, budgetary flexibility, and liquidity. The city also merited a “strong” rating in debt and contingent liability positions, and institutional framework.
“This reaffirmation from Standard & Poor’s demonstrates the city’s strength and commitment to long-term fiscal health,” Costa Mesa Finance Director Carol Molina said in the release.
“It’s an outstanding accomplishment that is achieved through strong leadership and dedicated staff.”
The higher the letter grade a bond receives, the lower the interest rate on the bond, because it’s not as risky of an investment. In exchange for a less risky investment, investors will settle for smaller returns.
City manager Lori Ann Farrell Harrison said: “We were very proactive and this outstanding credit rating is a direct result of that. This is a great moment for our entire Costa Mesa team and Finance Director Carol Molina.”
