NORFOLK, VA – Standard & Poor’s Global Ratings (S&P) reaffirmed the AAA credit rating on Norfolk’s existing long-term general obligation bonds in advance of its planned refinancing bond sale on Thursday, September 24th. Norfolk remains one of just sixteen municipalities in Virginia with this highest credit rating from S&P.
The AAA rating affirms Norfolk’s financial strength and management during the COVID-19 pandemic. It also reflects the city’s deep and diverse tax base, which continues to expand while providing significant job growth & diverse employment opportunities, as well as its consistent maintenance of structurally balanced operations, increased reserve levels in recent years, and its response to changes in revenue and expenditure assumptions in light of COVID-19.
S&P cited the City’s proactive management of ongoing environmental, social, and governance (ESG) risks and further applauded the resiliency efforts to address sustainability, climate change, storm preparedness and sea-level rise in their long-term financial and capital planning as reasons for the rating. S&P also highlighted the City’s commitment to improving the economic power of its residents through several programs that will strengthen economic metrics over time, including the allocation of $83 million towards the redevelopment of the St. Paul’s Neighborhood as part of its capital plan over the next five years and its efforts to receive a $30 million grant from the Housing and Urban Development to start transitioning current low-income housing to mixed-income housing as well as $14.4 million from the U.S. Department of Transportation.
While pointing out the strength and likely sustainability of the city’s financial policies and practices, S&P did note Norfolk’s weak but manageable debt and contingent liability profile which includes its $304.3 million five year CIP.
This AAA rating will continue to assist the City in receiving low cost of funds on its debt. The upcoming bond sale is intended to refinance existing bonds for debt service savings.