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New Bond Ratings Signal Continuing Strength of the District's Economy

Thursday, August 13, 2015

The continuing strength of the District’s economy was confirmed once again when Standard & Poor’s and Fitch upgraded several outstanding Tax Increment Financing bonds and, along with Moody’s,  assigned strong ratings for the new $143 million bond issue for The Southwest Waterfront Wharf project.

The Tax Increment Financing bonds for the City Market at O Street, Gallery Place, and the Mandarin Oriental Hotel were upgraded by S&P.  Fitch Ratings also upgraded the City Market at O Street and Gallery Place and both firms maintained Stable outlooks for the outstanding bonds. 

The ratings for the Tax Increment Financing bonds for The Southwest Waterfront Wharf project are:

  • Fitch --  AA-
  • Standard & Poor’s -- the senior lien rating is AA- and the junior lien rating is A+. 
  • Moody’s -- Aa3.

Chief Financial Officer Jeffrey DeWitt said, “The new ratings reflect the recognition by the rating agencies of the economic strength of the District’s downtown core that is used as a backstop for important economic development projects. This type of a municipal bond credit is relatively unique and helps the District provide the lowest cost financing possible for the public infrastructure for development projects.”

Mayor Muriel Bowser stated, “This is yet another indicator that the District is strong and getting stronger. The financial market recognizes that DC has a diverse and vibrant economy, and our city is a smart investment.  The upgraded rating will help us continue to attract and retain businesses, strengthen neighborhoods and build more pathways to the middle class.”

Council Chairman Mendelson noted, “Economic development is important to the continued growth and health of the District. These upgrades enable us in our role as the District Government to assist with development projects and keep them as economically efficient as possible.”

Finance and Revenue Committee Chair Jack Evans said, “The concept of a tax increment financing district to backstop development financing was put into place in the mid-1990s and was crucial to the financing of Gallery Place which is an undisputed success.  The growth of the downtown core in terms of economic value to the District makes this tool even more valuable in the future and it is further enhanced by this upgrade.”

Fitch wrote, “The 'AA-' rating reflects the demonstrated resilience of the District's economy through federal contraction, strong debt service coverage provided by available Downtown tax increment financing (TIF) increment revenues, and limitations on future leveraging.”

Standard & Poor’s commented, “Key strengths of the Downtown TIF Area include:

  • “Primarily commercial 2,500-acre project area centrally located in the D.C.'s downtown area;
  • “Low property taxpayer concentration, with the 10 largest property taxpayers representing only 9.7% of fiscal 2014 incremental assessed value ( AV);
  • “Very strong coverage of combined projected junior and senior maximum annual debt service (MADS) at 31.6 x”

Moody’s stated, “The Aa3 rating reflects the breadth and strength of the pledged real property increment and sales tax increment revenues collected in the “Downtown TIF”, effectively the entirety of Washington, DC’s central business district.”

The complete ratings reports can be found at, and www.STANDARDANDPOORS.COM/RATINGSDIRECT.

Subject to market conditions, the bonds will be priced on August 18.