"Yesterday, we received notification from the Moody’s Investors Service that the City of St. Louis’s credit rating was downgraded for the third year in a row. Per the Ratings Rationale on Moody’s report, the primary reason why Moody downgraded our credit rating was due to the dangerously low amount in our reserve fund. They also downgraded our rating because of our dependence on economically sensitive revenue streams. Until we can grow our overall revenue and increase our reserves, we should expect to see a decline in our credit rating.
The City of St. Louis has approximately $1.7 billion in debt, which comes from a multitude of sources, not one particular project or agreement. With $1.7 billion in debt, the renovation of the city-owned property, Scottrade Center, comprises a minuscule portion of the City’s debt portfolio, less than 4 percent over 30 years. Pursuant to Ordinance 70473, the City of St. Louis authorized the issuance of approximately $69 million in bonds, to be repaid over 30 years, for the renovations. The City decided to make a long-term investment to strengthen the revenue stream from Scottrade Center coming into the City.
We have already put in place several measures to bring us closer to our pre-recession reserve balance of $26 Million. First, the Board of E&A adopted a policy to automatically dedicate 1.5 percent of salaries to go into the reserve fund each year, which equates to an additional $3.4 million in fiscal year 2019. Secondly, the proceeds from the sale of the Municipal Court Building has been programmed to go directly into the emergency reserve fund. Third, I introduced a bill to direct the St. Louis Development Corporation (SLDC) to complete an annual City Economic Growth Strategy Report, Ordinance 70748. The strategic plan will layout a path for the City to position itself competitively to meet the rapidly changing marketplace and establish a plan to diversify and incrementally grow our revenue streams. With these items and more, the City’s reserves should see an increase in fiscal year 2019 moving us closer to our goal.
The City must capitalize on opportunities to increase our overall revenue. We must adopt a plan which allows us to successfully compete in today’s market, manage our debt effectively and most importantly, maintain a minimum of $26 million dollars in the City’s emergency reserve fund balance."
Board of Aldermen