Gainesville, Florida, bonds upgraded to AA by Fitch
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Fitch Ratings upgraded
The rating affects a total $256 million of debt, including Series 2020 special obligation revenue bonds, series 2014 capital improvement revenue bonds, and series 2003A and 2003B
The ratings carry stable outlooks.
The bonds are backed by the city’s “covenant to budget and appropriate, by amendment if necessary, non-ad valorem revenues in amounts sufficient to pay debt service.” Fitch published new local government rating criteria in April and the upgrade reflects its application.
“The city’s covenant to appropriate debt service combined with the broad pool of revenues available for appropriation by the city, support rating the capital improvement bonds on par with the issuer default rating,” Fitch said.
In a statement Gainesville said, “The positive move is evidence the city has continued to improve its financial position through collective and steady efforts.”
“This credit rating upgrade for the city of Gainesville is excellent news and reinforces we’re moving in the right direction,” said Mayor Harvey Ward.
Fitch said the city’s AA issuer default rating reflected financial resilience due to its healthy reserve levels, “high” ability to adjust tax rates, and “midrange” ability to adjust expenditures.
The city, which is home to the University of Florida’s main campus, exhibits “midrange” demographic and economic level metrics, Fitch said. Liability metrics are “moderately weak” but have improved in recent years.
The same non-ad-valorem type of Gainesville bonds are rated Aa3 with a stable outlook by Moody’s Ratings. In its last rating report in February 2023, for Gainesville’s credit strengths Moody’s cited an economy driven by University of Florida and a stable overall financial position. For credit challenges, Moody’s cited above-average leverage and fixed costs and capital needs within the business activities funds.
