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6 <br />THE CITY OF <br />- ~ ° -~- CITY COUNCIL AGENDA REPORT <br />~L£~S~4NTONo <br />May 20, 2008 <br />Finance Department <br />TITLE: ADOPT A RESOLUTION SUPPORTING REFORM OF THE BOND <br />RATING SYSTEM TO ELIMINATE DISCRIMINATION AGAINST <br />MUNICIPAL BONDS <br />SUMMARY <br />The board of directors of the League of California Cities has unanimously endorsed a <br />call for reform in the municipal bond rating system to end the historic discrimination <br />against municipal issuers that has cost taxpayers billions of dollars in higher interest <br />and bond insurance costs over the years. If adopted, a copy of this resolution will be <br />sent to the major rating agencies supporting the call for reform. <br />RECOMMENDATION <br />Staff recommends adoption of the attached resolution calling upon the major rating <br />agencies to reform their rating system and to register the City as a member of the <br />coalition of public agencies supporting the nationwide effort to reform how bond rating <br />agencies grade state and local bonds. <br />FINANCIAL STATEMENT <br />There is no significant fiscal impact to the City as a result of this action. However, <br />reform of the bond rating system may result in lower borrowing costs in the future. An <br />upgrade to the City's bond rating would result in lower interest rates and diminish the <br />need for costly bond insurance. The City's General Obligation bond rating is Aa. <br />