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Research Update:
Redondo Beach, CA Series 2026 GO Bonds Assigned
'AA+' Rating; Outlook Stable
October 8, 2026
Overview
• S&P Global Ratings assigned its 'AA+' long-term rating to Redondo Beach, California’s anticipated $95.35 million series 2026 general obligation (GO) bonds. • At the same time, we affirmed our 'AA+' issuer credit rating on the city and our 'AA' long-term rating on the city’s lease-appropriation debt outstanding. • The outlook is stable.
Rationale
Security
Revenue from an unlimited ad valorem tax levied on all taxable property in the district secures the series 2026 bonds. Proceeds will be used to replace two fire stations and rebuild the police headquarters and police annex.
The lease-revenue bonds outstanding represent an interest in base rental payments made by the city, as lessee, to the Redondo Beach Community Financing Authority, as lessor. The base rental payments are subject to annual appropriation and we rate these obligations one notch lower than the city's general creditworthiness to account for the appropriation risk.
Credit highlights
The rating reflects our view of Redondo Beach’s robust, high-income economy in the greater Los Angeles area, conservative fiscal management evidenced in its formalized financial practices, and a reserve position that has been maintained above its formal policy despite recent draws.
Tempering these strengths is the elevated long-term liability burden reflective of the city’s unfunded liabilities. However, the city is reducing its liabilities with the goal of eliminating them.
The city posted a deficit in fiscal 2025, driven by one-time transfers to capital projects and its self-insurance fund. Although a 2% deficit is projected for fiscal 2026 based on the estimated budget report due to rising operating costs, management has taken steps to mitigate these pressures, including implementing hiring freezes, maintaining vacancies, and adjusting its budget to account for inflationary pressures. In addition, the city has adopted a conservative forecast regarding the moderation of its transient occupancy tax (TOT) revenues as it continues to return Primary Contact
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Primary Contact
Brenea Gordon
Chicago
312-233-7048
brenea.gordon
@spglobal.com
Secondary Contact
Krystal Tena
New York
+ 1 (212) 438-1628
krystal.tena
@spglobal.com
Redondo Beach, CA Series 2026 GO Bonds Assigned 'AA+' Rating; Outlook Stable spglobal.com/ratings October 8, 2026 2
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to previous levels of economic activity. The fiscal 2027 budget is balanced and there are no material draws planned for reserves. The city maintains a notable nominal reserve and liquidity position, with a projected fiscal 2026 year-end balance of roughly $23 million or 18% of revenues.
However, available reserves as a percent of revenues are below those of most similarly rated peers, which provides slim cushion for further financial deterioration at the current rating level.
The rating further reflects our view of the following credit fundamentals:
• The local economy is anchored by incomes and wealth metrics that are above average compared with county and national benchmarks. The tax base is predominantly residential and benefits from access to the greater Los Angeles economic area with employment opportunities in aerospace and healthcare. We believe that along with the robust economic output metrics, the tax base will remain stable.
• The city is adjusting its budget to return to at least balanced operating results. The affluent tax base is supported by stable property tax revenue that accounted for 61% of fiscal 2025 revenues, followed by sales taxes at 13%, and TOT revenues at 11%. Although TOT revenues have softened, current collections exceed forecast numbers. To bolster its financial position, the city is also seeking two ballot measures in its March 2027 election to increase the TOT rate to 15% from 12% and to broaden the 4.75% utility user tax on streaming services. • The city’s available fund balance has moderated due to planned drawdowns; however, we expect reserves will remain near current levels. In addition, the city maintains a dedicated contingency fund within its available fund balance of $8.6 million, which it has not drawn upon in recent years. This unused contingency provides additional financial flexibility and a buffer against unforeseen expenditures, which we view positively in the context of the city’s overall liquidity position.
• Financial practices and policies include quarterly budget reporting, formal capital planning spanning five years, and formal policies for investment, debt management, and reserves (8.33% for contingencies). We view the issuer’s cyber risk mitigation measures as consistent with its credit fundamentals.
• Although the city continues to face pressures from its unfunded liabilities, its reserves and $4.5 million in CalPERS reserves help to manage unexpected costs. In addition, the city does not have any additional near-term borrowing plans.
• Redondo Beach’s elevated geography and location within the southern Santa Monica Bay mitigate exposure to sea-level rise, tropical storms, and El Niño-related storm surges.
However, the city remains exposed to regional hazards like seismic risk and water stress. The city is mitigating environmental risk exposures by maintaining flood insurance to manage residual localized flooding risks and an annually updated CIP that identifies drainage, sewer, and waterfront assets. We believe seismic risk is somewhat mitigated by strong state building codes.
• The institutional framework is in line with that of state peers. For more information on our institutional framework assessment for California municipalities, see "Institutional Framework Assessment: California Local Governments," Sept. 9, 2024.
Outlook
The stable outlook reflects our view that Redondo Beach will maintain a sound operating profile supported by its robust tax base and prudent management amid long-term cost and inflationary pressures.
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Downside scenario
We could lower the rating if reserves were to deteriorate further due to one-time spending or a weakening of financial performance. In addition, further increases of the city's long-term liabilities could lead to a negative rating action.
Upside scenario
We could raise the rating if the debt burden moderated to a level comparable with that of higherrated peers while the city also maintained larger reserves in line with those of higher-rated peers.
Redondo Beach, California‑‑credit summary
Institutional framework (IF) 2
Individual credit profile (ICP) 1.84
Economy 1.0
Financial performance 2
Reserves and liquidity 1
Management 1.70
Debt and liabilities 3.50
Redondo Beach, California‑‑key credit metrics
Most recent 2025 2024 2023
Economy
Real GCP per capita % of U.S. 122 ‑‑ 122 122
County PCPI % of U.S. 115 ‑‑ 115 113
Market value ($000s) 23,626,608 22,800,512 21,628,721 20,512,491 Market value per capita ($) 340,731 328,817 310,561 290,525 Top 10 taxpayers % of taxable value 6.8 7.6 7.1 7.1
County unemployment rate (%) 4.9 5.7 5.8 5.1
Local median household EBI % of U.S. 158 158 162 160
Local per capita EBI % of U.S. 175 175 181 179
Local population 69,341 69,341 69,644 70,605
Financial performance
Operating fund revenues ($000s) ‑‑ 110,625 103,019 105,851 Operating fund expenditures ($000s) ‑‑ 101,489 86,599 89,754 Net transfers and other adjustments ($000s) ‑‑ (19,327) (11,702) (12,277) Operating result ($000s) ‑‑ (10,191) 4,718 3,820
Operating result % of revenues ‑‑ (9.2) 4.6 3.6
Operating result three‑year average % ‑‑ (0.3) 6.3 5.0
Reserves and liquidity
Available reserves % of operating revenues ‑‑ 23.4 35.0 31.2 Available reserves ($000s) ‑‑ 25,883 36,099 33,019
Debt and liabilities
Debt service cost % of revenues ‑‑ 9.5 10.0 9.9
Net direct debt per capita ($) 4,682 3,225 3,346 3,431
Redondo Beach, CA Series 2026 GO Bonds Assigned 'AA+' Rating; Outlook Stable spglobal.com/ratings October 8, 2026 4
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Redondo Beach, California‑‑key credit metrics
Most recent 2025 2024 2023
Net direct debt ($000s) 324,685 223,632 233,056 242,221 Direct debt 10‑year amortization (%) 31 4 4 37
Pension and OPEB cost % of revenues ‑‑ 9.0 7.0 6.0
NPLs per capita ($) ‑‑ 524 521 599
Combined NPLs ($000s) ‑‑ 36,306 36,306 42,305
Financial data may reflect analytical adjustments and are sourced from issuer audit reports or other annual disclosures. Economic data is generally sourced from S&P Global Market Intelligence, the Bureau of Labor Statistics, Claritas, and issuer audits and other disclosures. Local population is sourced from Claritas. Claritas estimates are point in time and not meant to show year‑over‑year trends. GCP‑‑Gross county product. PCPI‑‑Per capita personal income. EBI‑‑Effective buying income. OPEB‑‑Other postemployment benefits. NPLs‑‑Net pension liabilities.
Ratings List
New Issue Ratings
US$95,350,000 Redondo Beach, California, General Obligation Bonds, Series 2026, dated: Date of Delivery, due:
September 1, 2056
Long Term Rating AA+/Stable
Ratings Affirmed
Redondo Beach, CA Issuer Credit Rating AA+/Stable
Local Government
Redondo Beach, CA Lease Revenues AA/Stable
Redondo Beach, CA Unlimited Tax General Obligation AA+/Stable The ratings appearing below the new issues represent an aggregation of debt issues (ASID) associated with related maturities. The maturities similarly reflect our opinion about the creditworthiness of the U.S. Public Finance obligor's legal pledge for payment of the financial obligation. Nevertheless, these maturities may have different credit ratings than the rating presented next to the ASID depending on whether or not additional legal pledge(s) support the specific maturity's payment obligation, such as credit enhancement, as a result of defeasance, or other factors.
Certain terms used in this report, particularly certain adjectives used to express our view on rating relevant factors, have specific meanings ascribed to them in our criteria, and should therefore be read in conjunction with such criteria. Please see Ratings Criteria at https://disclosure.spglobal.com/ratings/en/regulatory/ratings-criteria for further information. A description of each of S&P Global Ratings' rating categories is contained in "S&P Global Ratings Definitions" at https://disclosure.spglobal.com/ratings/en/regulatory/article/-/view/sourceId/504352. Complete ratings information is available to RatingsDirect subscribers at www.capitaliq.com. All ratings referenced herein can be found on S&P Global Ratings' public website at www.spglobal.com/ratings.
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