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  #371  
Old 01-16-2017, 03:37 PM
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Mary Pat Campbell
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http://www.manhattan-institute.org/h...ptcy-9894.html

Quote:
REPORT
When Cities Are at the Financial Brink: The Case for "Intervention Bankruptcy"
Daniel DiSalvo Stephen Eide
January 12, 2017
Urban PolicyTax & BudgetPublic SectorReinventing Government

Many local governments today are on the verge of insolvency. Prominent examples include Atlantic City, New Jersey; the Chicago Board of Education; and Hartford, Connecticut.
For various structural reasons, including entrenched poverty and near-historical debt levels, many more cities are likely to suffer fiscal distress in the coming years. The risk of insolvency for large cities is now higher than at any point since the federal government first passed a municipal bankruptcy law in the 1930s.
But the recent experience of some bankrupt cities, as well as much legal scholarship, casts doubt on the effectiveness of municipal bankruptcy. To strengthen government’s ability to address municipal insolvency, this report argues that federal bankruptcy and state intervention, which are often posed as alternative approaches, should be combined. We call this approach “intervention bankruptcy.”
Crucially, state governments, whose consent is legally required for any locality to file for bankruptcy, should intervene at the outset and appoint a receiver before allowing a city or other local government entity to petition for bankruptcy in federal court. No municipal bankruptcy should be authorized if local officials will direct it.
KEY FINDINGS

Cities’ debt levels are near all-time highs, and the risk of municipal insolvency is greater than at any time since the Great Depression.
Recent experience with municipal bankruptcies indicates that when local officials manage the process, they often fail to propose the changes necessary to stabilize their city’s future finances.
Suggested legal changes to grant federal judges more power in municipal bankruptcies are, at best, uncertain to be enacted and are, in any event, ill-suited to this nation’s federalist structure.
Many fiscally distressed cities need operational reforms, in addition to less debt and a balanced budget. Stateappointed experts are best positioned to implement such restructuring programs.
http://www.manhattan-institute.org/s...-DDSE-0117.pdf
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  #372  
Old 02-01-2017, 05:31 PM
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http://www.thefiscaltimes.com/2017/0...-Cities-Ranked

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How Strong Are Your City's Finances? 116 US Cities Ranked


To compile this Fiscal Health Index, we looked at 116 U.S. cities with populations greater than 200,000, using data from 2015 financial reports issued by the cities themselves. Our scoring system is described in a new working paper. It uses five factors:

1. the ratio of a city’s general fund balance to its expenditures (40 percent weighting)

2. the ratio of its long term obligations (including OPEB but excluding pensions) to total government-wide revenues (30 percent weighting)

3. the ratio of actuarially determined pension contributions to total government-wide revenues (10 percent weighting)

4. change in local unemployment rate (10 percent weighting)

5. change in property values (10 percent weighting).

Related: Chicago, New York in Worst Financial Shape Among Large US Cities

Read the full methodology here. Click the table headers below to sort by ranking, city name, state or fiscal strength score. Click each city's name to get more details about its score.


top 10:

Quote:
1 Irvine California 100
2 Fontana California 99
3 Moreno Valley California 97
4 Huntington Beach California 94
5 Santa Ana California 94
6 Glendale California 93
7 Boston Massachusetts 92
8 Fayetteville North Carolina 89
9 Washington District of Columbia 88
10 Boise Idaho 88
bottom 10:

Quote:
116 Chicago Illinois 25
115 New York New York 26
114 Toledo Ohio 36
113 Reno Nevada 36
112 St. Louis Missouri 37
111 Philadelphia Pennsylvania 41
110 Fort Wayne Indiana 42
109 El Paso Texas 42
108 Montgomery Alabama 48
107 Columbus Ohio 49

http://www.thefiscaltimes.com/2017/0...arge-US-Cities

Quote:
EXCLUSIVE: Chicago, New York in Worst Financial Shape Among Large US Cities

Chicago and New York rank at the bottom of a new analysis of fiscal strength based primarily on data from 2015 financial reports issued by the cities themselves. The analysis includes 116 U.S. cities with populations greater than 200,000. See the full rankings here.

Chicago’s position at the bottom of the ranking is no surprise to anyone who follows municipal finance. The Windy City has become a poster child for financial mismanagement, having suffered a series of ratings downgrades in recent years. Aside from having thin reserves and large volumes of outstanding debt, Chicago is notorious for its underfunded pension plans.

For example, the city’s Municipal Employees' Annuity and Benefit Fund (MEABF) reported $4.7 billion in assets and $14.7 billion of actuarially accrued liabilities at the end of 2015, representing a funded ratio of just 33 percent. The actuarial calculations rely on a controversial practice of discounting future benefits at a rate of 7.5 percent, which is the assumed return on the fund’s portfolio return. If a more conservative assumption was employed, MEABF’s liabilities would be higher and its funded ratio lower.

Because the ranking is based on 2015 financial audits — you can see the full data behind the scores here — it does not take into account more recent news. Last summer, Mayor Rahm Emmanuel announced a plan to resolve MEABF underfunding by raising water and sewer rates and increasing employee contributions to the system. Because these changes don’t take effect until this year, it will take some time for them to impact Chicago’s audited financial statements and their fiscal health scores.

While Chicago’s place at the bottom of the list is unsurprising, New York City’s position — just one step above — was unexpected. An extended bull market and soaring real estate prices have pumped money into the Big Apple’s coffers. Total municipal revenues rose from $60 billion in 2009 to $81 billion in 2015. But the city has been spending the money almost as quickly as it has been coming in.

At the end of its 2015 fiscal year, the city’s general fund reserves amounted to just 0.67 percent of expenditures — well below the Government Finance Officers Association recommendation of 16.67 percent (equivalent to two months of spending). A city’s general fund is roughly analogous to an individual’s checking account.

New York City also carries a very heavy debt burden. According to a report issued by City Comptroller Scott Stringer, New York’s per capita debt greatly exceeds that of all other large U.S. cities, and is even 50 percent higher than that of Chicago. But the comptroller’s report only focuses on bonded debt. Government financial accounting standards require cities to report other long-term obligations such as pensions, compensated absences for municipal employees (accrued sick and vacation leave payable at retirement) and “other post-employment benefits” (or OPEB).

It is New York’s OPEB obligation that really sets the Big Apple apart. In 2015, the city’s OPEB liability was $85 billion — roughly equivalent to its bonded debt.

The large OPEB liability is driven by the size of the city’s workforce and the relatively high cost of health care in New York. According to its most recent OPEB Actuarial Report, the city is providing retiree health benefits to 222,000 retirees, while another 315,000 current and separated employees are potentially eligible for future benefits. In 2015, benefits per retiree ranged as high as $17,000 a year (for workers who were not yet Medicare-eligible and who had eligible dependents).

High debt burdens and insufficient general fund reserves are associated with episodes of fiscal distress, which are marked by employee furloughs, layoffs and, in extreme cases, bond defaults and bankruptcy filings. Still, if New York City continues to record strong revenue growth, it can shoulder its sizeable obligations. With the stock market perking up in the aftermath of Donald Trump’s election victory, the odds of a fiscal crisis in the near term appear long — but a bear market could place the city in jeopardy.

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  #373  
Old 02-14-2017, 05:16 PM
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Mary Pat Campbell
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SAN BERNARDINO, CALIFORNIA

http://www.ocregister.com/articles/b...san-judge.html

Quote:
San Bernardino’s hard-earned exit from bankruptcy
The city of San Bernardino’s over four-year-long bankruptcy is nearing its end. On Friday, U.S. Bankruptcy Judge Meredith Jury agreed to issue a written confirmation order formally paving the way to the city’s exit from bankruptcy.

“The last words I will say is congratulations to the city,” Jury said in court. “I look forward to the order and I look forward to the city having a prosperous future.”

City officials expect the city’s plan to take effect in March or April. It’s a momentous occasion for San Bernardino, which has experienced significant tumult over the past several years. Being free from the confines and stigma of bankruptcy is sure to provide a boost to economic development efforts.

It is difficult to overstate the magnitude and breadth of the city’s problems at the time of its August 2012 filing for bankruptcy protections.

A lagging economy, inadequate financial planning, rapidly growing pension obligations and a fundamental breakdown of the integrity of city government contributed to a dire situation, forcing San Bernardino to become one of the largest municipalities in history to file for bankruptcy.

....

Though difficult, the city also took the step of closing its long-held fire department in favor of receiving services through the county, alleviating the city from responsibility over one of its largest budget items.

More controversially, however, has been the city’s decision not to impair its obligations to the California Public Employees’ Retirement System. The state pension giant had intimated the prospect of costly legal action against the city, were it to pursue cuts to pensions.

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  #374  
Old 03-20-2017, 04:01 PM
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Mary Pat Campbell
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FRESNO, CALIFORNIA

https://www.fresno.gov/news/standard...esnos-ratings/

Quote:
Standard and Poor’s, Moody’s Upgrade Fresno’s Ratings

Mayor Lee Brand today announced that both Standard and Poor’s Global Ratings and Moody’s Investors Service have significantly upgraded the City of Fresno’s investment ratings, a decision which was based on strong leadership in combination with strong fiscal policies and budgetary performance over the past few years. The improved ratings mean better interest rates on the city’s upcoming bond refinancing, which is anticipated to result in over $35 million in savings over the next 22 years, with a savings of $26.4 million for the General Fund alone.

In the most dramatic news, S&P Global Ratings raised Fresno’s issuer credit rating (ICR) to ‘A+’ from ‘BBB-‘, a five level increase. At the same time, S&P raised its long-term rating and underlying rating (SPUR) to ‘A’ from ‘BB+’ on the city’s existing lease revenue bonds and pension obligation bonds (POBs), and assigned its ‘A’ long-term rating to the Fresno Joint Powers Financing Authority, Calif.’s series 2017A and taxable series 2017B lease revenue refunding bonds, issued on behalf of the city of Fresno.

“It’s a testament to the work that former Mayor Swearengin, City Manager Bruce Rudd and I did to pass legislation that addressed short- and long-term budget challenges and facilitate citywide economic expansion,” said Fresno Mayor Lee Brand. “The experts have seen our improved financial performance and they’ve just given us a standing ovation.”

According to Standard and Poor’s, the rating upgrades reflect substantial improvements in the city’s financial management practices and policies, elimination of its structural operating deficits in the general fund, restoration of its available general fund to strong levels, and maintenance of a clean auditor opinion without any going concern in the city’s comprehensive annual financial reports in each of the past three fiscal years.

Mayor Brand added, “This news will have a tremendous impact for Fresno taxpayers and ratepayers. It lowers rates for city services and frees up millions of dollars for priorities like hiring more police officers.”

In related news, Moody’s assigned a Baa1 rating to the City of Fresno (CA) $89 million Series 2017A (tax-exempt) and $31.6 million Series 2017B (taxable) lease revenue refunding bonds for Master Lease Projects. They also upgraded the city’s outstanding master lease revenue bonds and lease-backed Series 2004 A & C bonds to Baa1 from Baa2, upgraded to Baa2 from Baa3 the rating on the city’s 2006A Convention Center bonds, and upgraded to Baa2 from Ba1 the rating on the 2002 Pension Obligation Bonds.

According to Moody’s, the upgrades reflect continued, meaningful improvement in the city’s fundamental economic profile, with ongoing growth in taxable property values, sales tax collections and employment.
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  #375  
Old 03-22-2017, 01:22 PM
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Mary Pat Campbell
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https://www.bloomberg.com/news/artic...n-stanley-says

Quote:
Rising Pension Debts Checking Muni Supply, Morgan Stanley Says

Muni market sees low new money issuance compared to mid-2000s
Government credit not facing ‘imminent deterioration’

A drop in the sale of state and local government debt this year may have a culprit other than rising interest rates.

Analysts at Morgan Stanley, led by Michael Zezas, said the rising retirement-system costs has made government more leery of running up new debts. State and local revenues have not kept pace with growth in total liabilities that now amount to $4.97 trillion, the analysts say.

Despite January seeing a year-over-year rebound in tax revenues, the unfunded pension liabilities pressures “would make this a hollow victory if they aren’t sustained,” the analysts added. Unfunded pension obligations have risen to $1.9 trillion from $292 billion since 2007, according to data compiled by Bloomberg.

The drop-off in muni new money issuance comes as unfunded pension liabilities continue to pressure many municipalities’ budgets, ranging from Chicago Public Schools to the Dallas Police and Fire Pension.

Escalating pension bills for the city of Chicago triggered Moody’s Investors Service to downgrade its credit to junk. S&P Global Ratings has warned Dallas and Houston could have their ratings lowered if they don’t shore up their pension funds while New Jersey’s rating has been cut repeatedly due to underfunded pension obligations.

As state tax collection growth is slowly decelerating, the analysts say investors should limit their exposure. Investors should note that this trend won’t add more pressure to the municipalities than they’re already facing.

“None of this is to suggest a crisis or imminent deterioration in general government credit,” the analysts said in a note.

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