Skiers crowd the base Tuesday afternoon during a powder day at the Steamboat Ski Area. Standard & Poor's Ratings Services cited a ski area consistently rated in the top 10 as one reason for upgrading the city's bond rating.

Photo by Matt Stensland

Skiers crowd the base Tuesday afternoon during a powder day at the Steamboat Ski Area. Standard & Poor's Ratings Services cited a ski area consistently rated in the top 10 as one reason for upgrading the city's bond rating.

S&P upgrades bond ratings

Credit analyst cites resort, sales tax growth


By the numbers

New rating A/Stable

Old rating A-/Stable

Median household effective buying income (% of U.S.) 144

Market value per capita ($)


Unreserved general fund balance

(% of expenditures) 40

Debt service carrying charge (%)


S&P's Financial Management Asessment Qualitative Score 'good'

Source: Standard & Poor's

Ratings Services

Softening its stance on the negative credit impacts of slight populations and remote locations, Standard & Poor's Ratings Services has upgraded the ratings on general obligation bonds issued by Steamboat Springs and 15 other small, Western governments.

Citing factors such as a top-10 ski area, historically strong sales tax growth and high unreserved fund balances, S&P Credit Analyst Shannon Groff upgraded Steamboat's rating to A/Stable from its previous rating of A-/Stable in a report published Dec. 23.

Interim City Manager Wendy DuBord said S&P's action shows confidence in the city's financial position and the way it manages its finances.

"This is a big deal for the city's bond rating to be upgraded in this economic climate," DuBord said. "With all the negative financial news, this is actually some positive financial news at the local level."

In practice, the higher rating means nothing more than cheaper borrowing for Steamboat and the other upgraded communities.

"If we go out into the bond market right now, the higher the rating, the lower the interest rate," said interim Finance Director Bob Litzau, who said Groff spent months analyzing the city. "For it to be going up when the bond market is in such bad shape is pretty impressive."

Although the practical implications are limited, S&P's move speaks volumes about a shift in economic thinking about these communities. Although they do not enjoy some of the benefits of their large, urban counterparts, S&P's report states, they can in fact be as strong - or, in some cases, stronger - because of factors including "advantageous demographics, including young and well-educated labor forces." S&P thinks this and other factors can make up for smaller tax and population bases and will help these communities withstand current economic turmoil.

Ten of the upgraded communities are in Colorado. In addition to Steamboat, they are Aspen, Chaffee County, Foxfield, Glendale, La Plata County, Pitkin County, Snowmass Village, Summit County and Woodland Park. S&P also upgraded Cave Creek, Ariz.; Cedar Hills, Utah; Helena, Mont.; Sevier County, Utah; Show Low, Ariz.; and Valley County, Idaho. The communities boast differing economies, from tourist-based to working class. But, according to S&P, they share one vital characteristic: financial stability.

Uniquely situated

S&P thinks economic growth in the Rocky Mountain West has been driven since the 1990s by an influx of individuals from other parts of the country.

"As populations grew, so did the number of supporting service sector, government and retail jobs," the company's report states. "The commercial and residential construction sector offered well-paying jobs that further multiplied economic gains and related local government revenues."

S&P said the communities showed stability of economic base, strong financial performance and good management policies "despite a weakening economy, as well as disruptions in the financial markets."

"Historically, we have viewed small municipalities as having a weaker credit quality due to their smaller tax and population bases," S&P's report states. "Although these factors can limit some credits, we believe many municipalities still exhibit strong and stable credit quality despite their small size."

S&P similarly has changed its position on the credit impact of having limited access to a metropolitan area, which the company thinks can limit access to a strong base of employment.

"According to our analysis, the key to a higher rating, in our opinion, is achieving balance between location and economic opportunity that helps maintain financial stability," the report states.

For the city of Steamboat Springs, the upgraded rating comes at a time when some expect a shaken municipal bond market to calm. Alan Matlosz, senior vice president at investment bankers George K. Baum & Co. in Denver and the city's bond consultant, said municipal bonds were troubled last year because money-market funds ditched them having lost confidence in bond insurers. That doesn't, however, translate into a concern that the government borrowers themselves will fail to pay.

Although Bloomberg reported in the fall that the government bond market was "virtually frozen," The Wall Street Journal reported Monday that, "Many investors think the municipal bond market could be one of the best places to find bargains in 2009."

Litzau said the issue is essentially a "moot point at this stage" because the city isn't looking to issue any debt anytime soon. The city's urban redevelopment authority for the base of the Steamboat Ski Area is, but Litzau said the URA is not affected by the city's improved rating.

"The URA is actually a separate legal entity than the city," Litzau said.

- To reach Brandon Gee, call 871-4210

or e-mail


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