During Town Council’s meeting Wednesday, Dec. 19 Deputy Town Manager Marianna Marysheva-Martinez broke the news that this week the Town of Mammoth Lakes received an upgrade to its bond rating by Standard & Poor’s (S&P), up from a “C” to a “BB+.”
The Town’s bond rating was downgraded by S&P to “C” in July 2012, when the Town declared bankruptcy. It was “BB” with a “developing” outlook in 2009.
MMM called upping the bond rating to “BB+” with a “stable” outlook “a major accomplishment of the Town.” S&P said it based the upgrade on the settlement between the Town and its largest creditor, Mammoth Lakes Land Acquisition (MLLA), as well as the withdrawal of its petition for bankruptcy last month.
MMM added that the Town will be working diligently in its efforts to convince the S&P, other rating agencies (Fitch and Moody’s) and investors of its abilities to live within its means.
Two factors will impact the Town’s rating going forward. 1) Increasing reserves, which MMM said would serve to offset the volatility of our revenue streams and 2) Not deviating from the approved budget reduction measures. “Should the town implement budget adjustments as planned to approach structural budgetary balance including the settlement payment, we could raise the rating in the next year,” S&P said. “The Town’s failure to maintain adequate reserves … as it absorbs the additional settlement costs into the budget and manages potential fluctuations in general fund revenue could lead to a downgrade.”