City of Gainesville receives ratings upgrade from Fitch
Published on July 12, 2024
The City of Gainesville’s credit rating has been upgraded by Fitch Ratings. Gainesville’s series 2020 special obligation revenue bonds, series 2014 capital improvement revenue bonds, and series 2003A and 2003B pension obligation bonds were upgraded to 'AA' from 'AA-'. In addition, Fitch has also affirmed the City's Issuer Default Rating (IDR) at 'AA'. The Rating Outlook is Stable and the IDR and bonds have been removed from Under Criteria Observation.
This positive move is evidence the City has continued to improve its financial position through collective and steady efforts. Credit ratings are a key factor in determining the interest rate the City pays on its infrastructure borrowing, and the upgrade signals that Fitch has confidence in Gainesville’s strong financial health.
“This credit rating upgrade for the City of Gainesville is excellent news and reinforces we’re moving in the right direction,” said Mayor Harvey Ward. “City Manager Cynthia W. Curry is leading dedicated teams in budget and finance who are making prudent decisions, reducing spending and maintaining a healthy fund balance to provide security and stability for all our neighbors.”
The Fitch review also addressed the financial uncertainty associated with the City’s separation from Gainesville Regional Utilities (GRU). The Government Services Contribution (GSC), transferred annually from the utility to help fund the City’s public services and programs, has declined steadily since 2021. The steepest drop, from $34 million in Fiscal Year 2023 to $15.3 million in Fiscal Year 2024, represented a 55-percent reduction.
Fitch praised the City’s swift implementation of a strategic hiring freeze and spending cuts to fill the budget gap and noted that the City has the tools to adjust as needed if the transfer continues to change.
“In the face of hurdle after hurdle, staff from every department have stepped forward with true professionalism,” said City Manager Curry. “We have economized together. We have worked together without pause. We have carried out critical decisions to streamline and improve City operations in the face of adversity, and this is a result of that determination.”
In announcing the upgrade, Fitch cited Gainesville’s financial resilience and healthy funding reserves. The review also noted the City’s broad pool of available revenue, diverse local economy, and high ability to adjust tax rates as factors that support financial wellbeing and minimize risk.
This is the City’s first rating under Fitch’s new U.S. Public Finance Local Government Rating Criteria.