S&P upgrades Petersburg’s bond rating to AA-, reflecting financial resurgence • Virginia Mercury

S&P Global Ratings has upgraded the city of Petersburg’s general obligation (GO) bond rating to AA- from A+, a move that highlights the city’s strengthened financial health and steady progress toward fiscal stability. The upgrade underscores Petersburg’s success in building reserves, improving liquidity, and achieving a secure financial position after years of turmoil.

Petersburg’s GO bonds are backed by the city’s full faith and credit pledge, affirming its reliability to meet debt obligations. The proceeds from the city’s 2024 GO bond issuance are set to fund several critical projects, including a new courthouse facility, the renovation of a police station, the construction of an animal care center and $1.3 million to refinance older bonds for net savings.

City Manager March Altman said in a statement that the upgraded bond rating reflects continued growth and economic recovery.

“Petersburg has a fund balance of approximately $50 million, which gives it the flexibility to move forward with needed capital projects,” Altman said. “I commend the city council and Petersburg’s Department of Finance for making decisions based on sound fiscal management and best practices.” 

The enhanced credit rating not only reflects Petersburg’s financial stability but also unlocks key advantages, including lower interest rates, greater borrowing capacity for vital projects, expanded economic development opportunities, and increased appeal to potential investors.

It further signals to investors that the city’s creditworthiness has improved, potentially reducing borrowing costs for future projects. It also highlights the city’s steady recovery from a financial crisis that left it on the brink of insolvency less than a decade ago.

Petersburg’s financial woes reached a breaking point in 2016, when the city faced a staggering $7.7 million deficit, unpaid bills piling up to $18 million, and critical services at risk of interruption. Poor fiscal oversight, structural deficits and mismanagement led to the crisis, which garnered statewide attention. At the time, the city teetered on the verge of state intervention.

To address the dire situation, Petersburg implemented aggressive reforms, including staff reductions, tighter spending controls and measures to increase revenue. The city also partnered with outside financial advisors to help restore fiscal discipline.

By 2019, Petersburg reported a budget surplus for the first time in years and began rebuilding its financial reserves. The turnaround has since been bolstered by sustained economic growth, improved tax collection efforts, and successful community partnerships.

Mayor Sam Parham said that the city’s goal is to achieve a firm AAA rating.

“With the growth of the Pharmaceutical Campus, the recent approval of the Destination Resort Casino, and the many other economic development and tourism projects, the city is positioned to continue to grow its tax base and fund balance while addressing much-needed capital projects,” Parham said.