Disclaimer: The comments in this blog are my personal opinion and may or may not reflect an adopted position of the city of Glendale and its city council.

It’s easy for many in the media to find something unpleasant about Glendale to write about but a good news story is often not reported or under reported. Two rating agencies, Standard & Poor’s Rating Agency and Fitch Ratings Agency, independently and objectively, increased their ratings for the City of Glendale in February. Standard & Poor’s increased its rating for the city’s General Obligation debt to AA with a stable outlook. Fitch granted the city its highest rating of AAA with a stable outlook.

What does all of this really mean to you and me? Let’s use a simple example. You want to do some remodeling on your home. Your budget is $10,000 and you assume that you are going to have to pay 10% in interest on the loan. One bank is willing to lend you $10,000 at a 10% interest rate meaning you would pay $1,000 APR. Another bank is willing to lend you $10,000 at a 5% interest rate meaning you would pay $500 APR. Obviously you will use the bank that is charging you 5%. It poses an interesting dilemma. You had planned to pay an interest rate of 10% and now that has dropped to 5%. You could, if you chose, increase the amount of the loan to $20,000 while still paying what you had planned to pay in interest on the $10,000 loan or you can plan to pay less for your loan over time freeing up $500 that you expected as part of the interest payment on other things or just bank the extra interest you would have been paying.

It’s the same with the city. Higher (better) credit ratings means the city pays less to borrow exactly the same amount of money or the city can afford to issue additional debt and still be paying what it had anticipated if the debt had been issued at a higher rate of interest. If the city chooses, it can do more with a reduced interest rate.

Who is responsible for this good news? Kudos to City Manager Kevin Phelps and his finance team of former Assistant City Manager Tom Duensing (just recently having left Glendale) and our Budget & Finance Director Vicki Rios. Your city council deserves some credit as well for its ability to remain disciplined in working toward the goal of growing the city’s fund balance to $50 million and its repeated approval of senior management’s strategies to maintain strong financial management policies.

Other reasons for Glendale’s ratings increases include council’s direction to encourage commercial development (and jobs) west of 115th Avenue in the city as well as its plan to continue to develop a strong, diversified taxpayer base. Senior staff has contributed to this success by its continued emphasis on sustainable and strong management practices.

Senior management and the City Council are both committed to reducing city debt over the long term. It’s a goal to which we don’t pay a lot of attention but it has resulted in a good news story for the taxpayers of Glendale.

© Joyce Clark, 2019         


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