DALLAS — Standard & Poor's removed the negative outlook on Glendale, Ariz.'s BBB-plus general obligation credit rating as the host city of the 2015 Super Bowl prepares to refund $294 million of bonds.
"The stable outlook reflects our view of the city posting an operational surplus for the second consecutive year after several years of operational imbalances," said Standard & Poor's analyst Kate Burroughs.
S&P in March had downgraded Glendale's general obligation bond rating to BBB-plus from A-minus based on the agency's new criteria, while retaining a negative outlook.
Moody's Investors Service lifted its negative outlook on the city's A3 GO rating on Sept. 30.
With a population of more than 230,000, the northwestern suburb of Phoenix has a diversified economy, but city officials committed $388 million of debt to sports facilities before the 2008 recession devastated the region's economy. The largest investment was $180 million into a hockey arena for the National Hockey League's Arizona Coyotes. To keep the Coyotes playing in the arena, the city has been forced to provide subsidies to the team's owners in the form of arena management fees.
The largest sports facility in Glendale is the University of Phoenix football stadium that will host the NFL Super Bowl Feb. 1. That project was completed in 2006 with bonds issued by the Arizona Sports and Tourism Authority backed by hotel and car-rental fees in Maricopa County. The $277 million of outstanding bonds for that stadium reach final maturity in 2036. The bonds were approved by voters under Proposition 302 in 2000.
According to a study by Elliott D. Pollack & Co. in 2010, the 2008 Super Bowl in Glendale generated a total economic impact of $369.5 million.
Moody's still sees Glendale's exposure to sports facilities financings as a credit weakness that drives a net direct debt burden of 4.9% "which is significantly outsized for peers both in Arizona and nationally."
"Future debt plans include issuing already authorized GOULT [general obligation unlimited tax] bonds to finance a parking garage proximate to University of Phoenix Stadium with completion around 2017 to comply with agreements with the NFL's Cardinals for the city's responsibility to provide parking for football games," said Moody's analyst Patrick Liberatore.
In addition to four series of general obligation bonds, the city plans to issue $102.6 million of senior-lien water and sewer refunding bonds backed by the city's sales tax. Those bonds carry higher ratings of A1 from Moody's and AA-plus from Standard & Poor's.
