Spokane’s financial position gets boost

Standard & Poor’s ratings agency on Monday upgraded the city of Spokane’s financial standing by removing a negative outlook from its bond rating analysis.

Robert Williams, analyst for Standard & Poor’s, said the city has been building its reserves after dealing with budget difficulties in 2003 and 2004.

“The outlook revision reflects a modest rebound in the city’s financial performance, specifically a healthy general fund surplus reported in fiscal 2005 and the anticipation of an additional surplus and boost to reserves in fiscal 2006,” Williams said in his report.

Mayor Dennis Hession announced the bond-rating upgrade to City Council members Monday night, noting that it is another indication that the city is in good fiscal health.

The city in 2005 reported a $3.2 million surplus as part of a pledge to build a cash reserve equal to 10 percent of the city’s general tax fund, according to Williams. The general fund is $127 million this year. The pledge was made by city officials in an effort to improve the city’s standing in financial markets.

The reserve is expected to increase to $6 million by the end of the year, and by $3 million more at the end of 2007. About $3.4 million of the surplus is held in a segregated reserve account, while the rest is held as cash in the general fund.

Williams said the city must seek to establish a $13.5 million segregated reserve by the end of 2008. Council members and city staff have discussed putting additional money in the segregated reserve.

The city’s bond rating was upgraded by Standard & Poor’s from BBB to AA- in 2005, a move that at the time was expected to save the city $200,000 on borrowing costs for a single bond issue for street improvements that year.

“This is not an easy thing to do to come out of a negative outlook,” Hession told council members.

In a prepared statement, Hession said he is committed to continuing a fiscally conservative approach to budgeting and intends to implement recommendations of a consultant hired to perform an efficiency study of city services. Those recommendations are expected in coming weeks.

In other business, the council approved a new land-use plan for the East Central Neighborhood that will expand mixed-use commercial areas along East Sprague Avenue a half block to the north and south. Under the change, the commercial area will include property between First and Riverside avenues from Perry to Fiske streets.

The proposal came after several years of work at the neighborhood level and is intended as the first step to creating what neighborhood leaders have named the Keystone International District Employment Center.

The idea is to create more business opportunities and revitalize the aging commercial area.

The council sided with neighborhood leaders in asking for more public scrutiny and environmental assessment, which would be needed to include land between First and Second avenues as part of the Keystone district.