City of Erie’s credit rating upgraded

Sept. 12--Seven years ago, the city of Erie's credit rating was at junk bond status -- which meant that if Mayor Joe Sinnott's administration wanted to borrow money, it would cost more.

Today, Standard & Poor's Rating Services gives an "A" grade to the city's creditworthiness -- in large part because tens of millions in long-term debt has been paid off since Sinnott took office in 2006.

Sinnott on Thursday announced that Standard & Poor's has upgraded the city's bond rating to "A stable" from "A- stable," which indicates an increased level of confidence in the city's financial status.

A ratings mean that the city can borrow or refinance existing debt at favorable interest rates, sometimes as low as 3 percent. The city learned about the upgrade Wednesday, Sinnott said.

"This upgrade reflects (Standard & Poor's) increased confidence in the city's creditworthiness," Sinnott said at a City Hall news conference. This is the fourth credit upgrade since Sinnott became mayor.

"The 'stable' part of the designation indicates that the agency feels that Erie's finances are well managed," Sinnott said, "and our financial future is positive."

A high credit rating also allows the city to obtain insurance at a lower cost. The city's efforts to improve its credit rating and pay down its roughly $107 million in long-term debt, including principal and interest, was the subject of an in-depth report in the Erie Times-News on March 23.

Paul Lichtenwalter, the city's finance director, said the principal amount of the city's long-term debt, which does not include interest, is currently $56 million.

When Sinnott took office in January 2006, that number exceeded $93 million, Lichtenwalter said.

That principal debt has been reduced by roughly 40 percent, he said.

Erie's long-term debt, including principal and interest, exceeded $150 million when Sinnott took office, Lichtenwalter said.

"They're looking at our (financial) performance. They're looking at our budget. They're looking at what steps you've taken to make sure things go well," Lichtenwalter said. "Long-term debt and contingent liabilities are just a portion of it."

The city's other credit upgrades since Sinnott took office came in May 2009, July 2011 and February 2012.

KEVIN FLOWERS can be reached at 870-1693 or by e-mail. Follow him on Twitter at twitter.com/ETNflowers.

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