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San Francisco Upgraded by Moody’s as Tax Base Expands

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Feb. 5 (Bloomberg) -- Moody’s Investors Service upgraded $2.2 billion of San Francisco debt, citing a rebound in the municipal tax base after the longest recession since the 1930s.

The city and county of San Francisco had its general-obligation grade raised one level to Aa1, second-highest, New York-based Moody’s said in a statement today.

“The rating action recognizes the quality of the city’s tax base and economy, which have exhibited notable strengths through the recession and are solidly accelerating from the downturn,” Moody’s said. The upgrade reflects “sound prospects for continued economic improvement at a rate superior to the likely state and national growth rates.”

The municipality of about 813,000 is the fourth-most-populous city in California, trailing Los Angeles, San Diego and San Jose. The San Francisco Bay Area, home to Internet companies such as Facebook Inc. and Google Inc., led the state in job growth last year as the technology industry workforce rose, according to Stephen Levy, director of the Center for Continuing Study of the California Economy in Palo Alto.

Unemployment in San Francisco fell to 6.5 percent in December, according to the California Employment Development Department. That compares with a U.S. rate of 7.8 percent and 9.8 percent for the state.

Moody’s raised Los Angeles’s general-obligation rating one level on Jan. 23 to Aa2, the third-best grade and the city’s first upgrade in more than 20 years. The company cited a property-tax base that “has proven quite stable and is now on an upward track.”

S&P Boost

California was upgraded by Standard & Poor’s last month for the first time since 2006, as tax increases championed by Governor Jerry Brown bolstered the state’s fiscal outlook.

Moody’s said in a report this week that Brown’s proposed budget “reflects a significant improvement in the state’s finances.” The company affirmed its A1 rating on California, second-lowest among U.S. states.

“The state’s improving economy, combined with recent tax increases and spending controls, has put the state on a path to large surpluses, although one that is typical of the boom-and-bust revenue and economic cycles of California,” Moody’s said.

To contact the reporter on this story: Brian Chappatta in New York at

To contact the editor responsible for this story: Stephen Merelman at

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