Subject: Informational Report On Ratings For GO Bonds, Series 2025 From: Finance Department Recommendation: Receive An Informational Report On The Ratings For The General Obligation Bonds Series 2025 (Measure U) From Moody’s Investor Service And Standard And Poor’s Ratings

This report provides an informational update on the credit ratings for the City of Oakland's General Obligation Bonds, Series 2025 (Measure U). The city's long-term credit ratings from Moody's Investors Service (Aa2), S&P Global Ratings (AA-), and Fitch Ratings (A) have been affirmed, but all carry a negative outlook. This negative outlook is primarily due to ongoing structural budget challenges and diminished financial flexibility, driven by expenditure growth outpacing revenue growth, particularly in public safety costs. The city recently priced $334 million in Series 2025 Bonds, comprising $285 million in new money for projects like affordable housing, infrastructure, and public facilities, and $49 million for refunding existing debt. The bond sale was oversubscribed, resulting in a true interest cost of 3.99% and approximately $4.7 million in savings on the refunded bonds. The report also outlines steps the city may take to improve its credit ratings and return to a stable outlook, including demonstrating positive operating performance, restoring structural balance, and rebuilding reserves.

While this is an informational report, the city's credit ratings directly impact borrowing costs. Higher credit ratings generally lead to lower interest rates on bonds issued for public projects, potentially saving taxpayers money in the long run. The negative outlook signals potential future financial challenges for the city.

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