LONG BEACH — A national bond-rating service has lowered the credit rating of the wealthy Port of Long Beach, noting that its sizable reserves could be siphoned off in the future as the financially strapped State of California seeks to balance its books.
Standard & Poor's Corp. has dropped the rating on the port's $310 million in outstanding bonds from AA to AA-.
The port's new rating is still high, an indication that the agency is strong financially and that its outstanding bonds are secure, said Peter A. Bianchini, a director in the bond rating firm's municipal finance department. Standard & Poor's highest rating is AAA.
The lower rating reflects the port's "reduced autonomy as a result of actions taken by the state," the firm said in a press release.
State government last year took revenue from local governments, including Long Beach. To make up for some of the losses, state lawmakers passed legislation allowing Long Beach to tap into the reserves of its independently governed port for two years.
Long Beach used $7.9 million from the port's reserve to help balance its books this fiscal year, which ends June 30. Port officials fear they will have to give the city $11 million to $20 million of the agency's $305-million reserve next year, said Paul E. Brown, the port's assistant executive director.
The legislation is to expire after two years, but port officials said they fear their reserves could be raided again.
The port usually uses its reserves to pay for expansion and other improvements to attract business. Port officials, for example, recently approved spending $405 million to buy 725 acres of waterfront land to accommodate at least one new cargo terminal.
The port would spend about $150 million of its reserves under the purchase agreement, which must be finalized by the sellers, Union Pacific Corp. The port, which generates more than $60 million a year in profit, would use future revenues to pay the balance.
The port does not have immediate plans to issue bonds, Brown said. But it probably will issue some in the next several years to finance the new terminal.
The lower credit rating probably will force the port to pay higher interest rates on any bonds it issues. The port has held an AA rating since 1991, when it was raised from AA-, based on the agency's profits and its large reserve, officials said.