Standard & Poors downgrades Oxnard (again)

By George Miller

Rating agency Standard & Poors downgraded Oxnard’s General Fund from A to A-. They cited a number of factors which impelled them to do this, but also pointed out some positive developments.

Part of S&P summary:

S&P Global Ratings lowered its long-term rating to ‘A-‘ from ‘A’ on the Oxnard Financing Authority, Calif.’s lease revenue project and refunding bonds issued for the City of Oxnard. In addition, S&P Global Ratings lowered its ‘A’ issuer credit rating (ICR) on the city. Finally, S&P Global Ratings lowered its joint support rating to ‘AA/A-1’ from ‘AA+/A-1’ on the city’s variable-rate demand lease revenue bonds (LRBs), series 2003B and 2006. At the same time, S&P Global Ratings removed these ratings, where applicable, from CreditWatch with negative implications, where they had been placed on Nov. 22, 2016. The outlook, where applicable, is now stable

Full S&P rating report: RatingsDirect_SummaryOxnardFinanceAuthorityCaliforniaOnxardAppropriationsGeneralObligationJointCriteria_37251619_Sep-18-2017 (2)

This downgrade should not be confused with two previous ones for utility bonds.

At the 9-19-17 Council meeting, some Council members were quick to assign blame and make it all about Measure M (Wastewater rate rollback passed with 73% of the vote) and the recall initiate now underway against Mayor Tim Flynn, Mayor Pro-Tem Carmen Ramirez, Councilmen Bert Perello and Oscar Madrigal.

Mayor Flynn said: “The greatest irony to all this is that Mr. Starr, instead of saving the city money, is costing the city money both in terms of higher borrowing costs and the costs of a special election.”

Councilman Bert Perello had some choice comments on the downgrade and associated issues. He also handed out this written statement summarizing his points highlighted from the report, which were NOT Measure M or recall-oriented:

1. “Weak management, with standard financial policies and practices under our
Financial Management Assessment (FMA) methodology, coupled with
political challenges that we believe have adversely affected management’s
ability to make decisions that support its long-term stability.”

2. “Very weak debt and contingent liability position, with debt service carrying
capacity charges at 6.1% of expenditure and net direct debt that is 77.5% of
total governmental fund revenue, as well as exposure to speculative
contingent liabilities and a large pension and other postemployment benefit
(OPEB) obligation and the lack of a plan to sufficiently address the obligation.”

Full  Perello Statement on S&P Credit Downgrade Announcement (9-19-17)

Perello also called for a special Council meeting to address the  downgrade reasons and what to do about them. He got no support from the Council on this, so it died  a quick death. Flynn (and others) opposed it and Flynn also opined that his proposed committee system approach to vetting issues to come before Council later would better address the situation.

His reasons for this became more clear at the 9-267-17 meeting, where he stated his intention to instead address it at the more obscure and lightly-attended monthly morning meeting of the Fiscal Policy Task Force, which has only Flynn and Councilman Bryan MacDonald as members. Flynn had Perello removed from the task force a few moths ago and took over as Chair from Bryan MacDonald.

City Manager Greg Nyhoff delivered a summary of points he gathered from the S&P report (see video- link below):

Meeting video


It was interesting that S&P thought that the recall threat against several council members could be used to help justify a lower credit rating, yet those same Council members and their actions were used to justify lowering the credit rating previously.

If the utilities are so subject to the unpredictable forces of politics, would it be better to remove them from the influence of politics?

Reading the S&P report and reflecting on  the events of the past few years, it seems that there is far more to justify a credit downgrade than than the Wastewater rate situation. This includes: a structural deficit, extensive borrowing from Measure O, other funds and new debt, failure to stem enormous losses of the golf course and Performing Arts Center (which has subsequently improved), runaway pension costs (partially resolved), legal expenses and future liabilities, deferred maintenance of roads and utilities (including under present Council members), horrible financial systems (improving now), the possibly illegal infrastructure fees, credit card management, expenditure control and more.


Most public speakers sided with the Council and against the Council recall.

A number of public speakers blamed the utility rate dispute, Measure and the recall for the downgrade, but some cited other problems as well.

Measure M and recall initiator Aaron Starr pointed out that if Flynn thinks his lawsuit against the City would affect its interest rates, then he must also believe that the suit has merit and that S&P wouldn’t have listed it as a justification for the lower rating.


City press release:

Standard and Poor’s Downgrades City of Oxnard General Fund

Standard and Poor’s Downgrades City of Oxnard General Fund

Oxnard, California. Standard and Poor’s (S&P) Global Rating has downgraded the City of Oxnard’s General Fund credit rating from “A to A-” along with the general fund supported debt. “We are disappointed with this downgrade. The City Council, community and staff have all had to make difficult decisions to return this City to fiscal health. […]

Star article

Oxnard United anti-recall brochure: Oxnard United Opposition Measure M Flyer

Oxnard Recall Facebook page

Other info:

Oxnard City Council recall threatened | Citizens Journal | Citizens …

2017 Recall Campaign Disclosures

Facing Oxnard recall, four make their case to stay – Ventura County Star

OXNARD CITY COUNCIL HITS NERVE | Four officials being recalled …

Oxnard Council Recall? | Citizens Journal |

Oxnard City Council recall threatened | Citizens Journal |

Recall Video


George Miller is Publisher/Co-Founder of and a “retired” operations management consultant residing in Oxnard.

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One Response to Standard & Poors downgrades Oxnard (again)

  1. Eileen Tracy October 2, 2017 at 5:47 pm

    I couldn’t agree more. I think it’s time to examine contributions to campaign funds from employee unions.

    It is so boring to hear the mayor try to redirect public attention from your factual statements to his own selfish desire to end or shorten public comments during meetings that he attends.


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