KBRA Assigns AA Rating, Stable Outlook to City of Jacksonville, FL Special Revenue Bonds
KBRA assigns a long-term rating of AA to the City of Jacksonville, Florida Special Revenue and Refunding Bonds, Series 2026A, and Special Revenue Refunding Bonds, Series 2026B. Concurrently, KBRA affirms the AA rating on the City's outstanding Special Revenue Bonds and Special Revenue Bonds (Better Jacksonville Program). The Outlook is Stable.
The rating reflects continued strong coverage of Special Revenue Bond debt service from a basket of non-ad valorem tax revenues, defined as Covenant Revenues. Given the nexus between General Fund revenues and the sufficiency of Covenant Revenues to pay debt service, the rating also derives from the City’s overall financial condition, which is characterized by solid revenue performance, ample reserves and sound liquidity. Recent debt reduction measures have shown positive effect, although the City’s fixed cost burden remains high, reflecting its broad funding responsibilities as a combined City/County government.
Counterbalancing the abovementioned credit strengths is a material contingent risk to future ad valorem revenues from a pending statewide constitutional amendment to expand homestead property exemptions. Pension reforms implemented over the last decade are designed to reduce the net pension liability beginning in January 2031, but pension funding ratios are expected to remain weak in the interim.
