City Desk

District Gets AAA Bond Rating

Not a lot of folks are getting good news from Wall Street these days, but the District got a little something nice today.

The Office of the Chief Financial Officer is announcing this evening that Standard & Poor's, one of three outfits that rate municipal debt, has given the District a "AAA" rating on a recent bond issue. That's S&P's top mark.

In a statement, CFO Natwar Gandhi calls it "a gilt-edged rating."

Now it's not quite accurate to say that the new rating represents a rise in the District's credit rating, since S&P is passing judgment on a new type of debt instrument, something called income-tax-secured revenue bonds only recently authorized by the D.C. Council. But according to City Administrator Dan Tangherlini, this bond issue is "practically the same as" and "will do the same work of" general-obligation bonds—whose ratings are most commonly cited when referring to the District's creditworthiness.

The District's GO bond rating has been rated by S&P at the medium-investment-grade "A+" since November 2005. Tangherlini declined to say whether he thought corresponding rises would be in order for ratings on GO bonds and other city debt. A look at the bond rating history for GO issuances shows that S&P has been historically the first agency to grant the District ratings hikes in the post-control board era, with other players Fitch and Moodys following close behind.

So what's it all mean?

Most importantly, it means that the District will pay less in interest and related debt-service costs when it needs to borrow cash from Wall Street. Which is good, considering the hundreds of millions the District needs to cut from the fiscal 2010 budget—Gandhi estimates $4 million in savings in 2010 alone.

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  • SG

    People don't realize how fiscally healthy the District has been over the past 7 years. Far better than MD or VA, which had to slash their budgets even during the salad days. Meanwhile, the District had a $180 million surplus in fiscal 2008. The meme that the District government always sucks is getting tired and is often wrong. I can name a few departments off the top of my head that are better across the board than in other jurisdictions I've lived in (including MD, VA, and GA):
    DPW, OP, BZA, now DMV, and DOT.

    Of course, DCRA is probably the single worst department in the history of government. And the DCPS have been a debacle for years, though improving dramatically in terms of reigning in bureaucracy. And many others still suck, but it'll take a while to get rid of the Barry-era "lifers" and get some people with urgency and professionalism in there. Until then, DC gov is a work in progress, but not nearly as bad as many think (keeping in mind that most governments around the country suck).

    I have to admit, Arlington is extremely well-run.