Standard and Poor's upgrades Toledo's bond rating

Standard and Poor’s has raised the city of Toledo’s bond rating, the first upgrade in more than 14 years.

The bond rating went from A- to A with a stable outlook. In addition, Moody’s has affirmed the city’s A2 rating and improved its outlook from stable to positive.

With the last upgrade in 2010, Moody’s raised Toledo’s rating from Baa1 to A2. However, S&P simultaneously downgraded the city from A to A-. For more than a decade, Toledo’s bond ratings remained unchanged.

“It is normal to have no change in the bond rating,” Mayor Wade Kapszukiewicz said. “So this is an historic moment for the city. It means taxpayers of Toledo will save millions of dollars when we pay back the debt we owe on some of our major projects.”

The mayor cited strong fiscal management and responsible financial stewardship as reasons for the improved bond rating.

“It’s an important part of solid, thoughtful leadership. These are the things successful cities do that benefit their taxpayers. Toledo got an early Christmas present this year from the bonding agencies,” he said.

Councilman George Sarantou, chairman of the city’s Finance, Debt and Budget Oversight Committee, said it was welcome news.

“It’s significant because it has been 14 years since the last time the city received an upgrade. Clearly, the rating reflects Wall Street’s confidence in the management of the city’s finances, and the future of Toledo,” Mr. Sarantou said.

He said he believes it has taken so long to get an upgrade due to recessions in 2001 and in 2008.

“Those were very challenging years for the city because of recessions, which meant lower tax revenue and more belt tightening in various departments,” Mr. Sarantou said.

A strong local economy and fiscal management are important factors in the upgrade, he added.

“We need to keep the momentum going in terms of very strong fiscal management and making sure we have a strong economy. Those things are absolutely critical for a good bond rating,” he said. “Clearly, that is what the rating agencies look at. Certainly, we have our challenges economically. But we’re in much better shape than we have been in many, many years.”

Fiscal management includes managing debt, and making sure there is enough money in the budget stabilization fund, he said.

“That’s important so we can cope with times when they are challenging, and we have enough cash to pay our bills,” Mr. Sarantou said.

Councilman Adam Martinez, who is also on the city’s Finance, Debt and Budget Oversight committee, was pleased by the news.

“I’m elated it’s been increased and I commend the mayor along with previous mayors Michael Bell and D. Michael Collins for doing the hard work for keeping our city up and running, and continuing to move forward,” he said.

In 2009, Toledo was facing bankruptcy with a $12.5 million deficit, Mr. Martinez said. Budgetary challenges between 2009 and 2014 included millions of dollars cut from the local government fund, and the elimination of the estate tax that had brought in millions each year.

“I was on council at the time when we were on the verge of bankruptcy,” Mr. Martinez said. “We were in dire financial straights. In the Great Recession of 2008, people left Toledo, some were losing their homes, and we were in the midst of contract negotiations for police and fire operations.”

Mayors Bell and Collins had to make tough decisions and cut programs and services, he added. “So this bond upgrade is something to be celebrated. There was a lot of sacrifices by residents, labor unions, administrators, who made tough budget cuts that got us to this point. It has been a long time coming.”