A month after Moody's Investors Service hinted that Sunnyvale's AAA Issuer Credit Rating was in jeopardy of being downgraded, the city coordinated a meeting to address its concerns.

Sunnyvale is among 32 California cities on the list for a possible credit downgrade from ratings agency Moody's.

"We were pretty surprised to hear we were on their watch list, because usually something triggers that," city manager Gary Luebbers said. "Only eight cities within the state have a AAA rating, so the fact that we have that is quite an accomplishment."

It's the highest rating a city can get, and once it's lost it's hard to get back.


On Dec. 5, two representatives from the Moody's San Francisco office came down to Sunnyvale to meet with the city manager, director of finance, and assistant director of finance.

The agency's concerns included the health of assessed valuations of property after the downturn, pension obligations, cash/fund reserve position, and revenue growth potential.

"The city is in a strong position in all of these areas," Luebbers said. "In addition to the presentation, the Moody's representatives were also taken on a tour of the city, so they could see firsthand the development activity under way."

The city also provided a chart comparing Sunnyvale with the median AAA cities on a number of Moody's key ratings calculations.

Selected indicators for an AAA credit rating include the general fund balance as a percentage of revenues, the unassigned general fund balance as a percentage of revenues and the direct net debt as a percentage of full assessed value.

For 2011, Sunnyvale was at 81 percent, 36 percent and 0.10 percent, respectively, compared to AAA median cities of a similar size which averaged 25 percent, 17 percent, and 1.03 percent, respectively.

Sunnyvale expects to hear back from Moody's in January as to whether the city will maintain its AAA Issuer Credit Rating or be downgraded to a lower rating.