The City of West Hollywood is supported by “strong financial management practices” according to Fitch Ratings, which recently reviewed the City’s 2009, 2013, and 2016 Lease Revenue Bonds (LRBs), as well as the City’s overall financial operations. Fitch rated the City’s LRBs at ‘AA+’ (the highest possible rating for LRBs). These ratings allow the City to access some of the lowest interest rates available in the market and these ratings also make the City’s bonds very popular with investors.
“The City of West Hollywood is known as a progressive and creative city, but we’re also very proud of our extremely sound fiscal management policies,” said West Hollywood Mayor Lauren Meister. “I’m thrilled that Fitch has reaffirmed our high ratings — congratulations to City staff, who work hard so that West Hollywood can consistently achieve this standard of excellence!”West Hollywood City Hall – Photo: Jon Viscott – Courtesy of the City of West Hollywood
According to the recent Fitch Ratings report, key rating drivers include the City’s:
- “Economic Resource Base — The city serves over 35,000 residents in a 1.9 square mile area of Los Angeles County located nine miles northwest of downtown Los Angeles. The city benefits from its position between Beverly Hills and Hollywood and within the highly diversified Los Angeles region;
- “Revenue Framework — General fund revenue growth has outpaced inflation and national economic performance;
- “Expenditure Framework — Based on the city’s current spending practices and recurring operating surpluses, Fitch expects the natural pace of expenditure growth to be below revenue growth;
- “Long-Term Liability Burden — The city’s long-term debt and pension liabilities are moderate relative to its economic resource base; and
- “Operating Performance — Strong revenue performance and expenditure control, along with high reserves, contribute to an exceptionally strong gap-closing capacity.”
The City’s 2009 LRBs ($11 million) and 2013 LRBs ($18 million) are used for Capital Improvement Projects, as well as improvements at the City-owned Werle Building. The City’s 2016 LRBs are used for three purposes:
1) $63 million for implementation of Phase II of the West Hollywood Park Master Plan (the remainder of the $95-million project will come primarily from City capital project reserves);
2) $34 million to refinance the City’s 2009B LRBs (which will provide approximately $500,000 per year in savings); and
3) Just under $1 million for the City-owned Werle Building.
The total proceeds from 2016 LRBs will be approximately $98 million, including $85 million in bond principal and $14 million in premium.
The City of West Hollywood has consistently received high marks for sound general and fiscal management policies. The City, with its diverse revenue base, recovered more quickly from the 2008 recession than most cities in the nation and receives top ratings from agencies.
During the past several years, the City’s revenues have steadily increased and have now surpassed pre-recession revenue levels. The fiscal year 2016-2017 General Fund budget is approximately $93 million, which includes $4.5 million in capital project expenditures.
For more than two decades, the City has consistently been awarded with a Certificate of Achievement for Excellence in Financial Reporting and an Award of Financial Reporting Achievement by the Government Finance Officers Association (GFOA) for its Comprehensive Annual Financial Report (CAFR), which is a set of detailed financial statements accompanied by a thorough presentation of the City’s financial condition.
The full Fitch Rating for the City of West Hollywood can be accessed by visiting: www.fitchratings.com/site/pr/1020827