Letterhead

City Manager

FOR IMMEDIATE RELEASE
June 1, 2005

CONTACT:   Gina Lew
(619) 236-6851

City Manager Lamont Ewell Responds to Fitch Downgrade

SAN DIEGO - "While I am extremely disappointed that Fitch has downgraded the City of San Diego's credit rating to triple "B" status, I'm not surprised. I anticipate there could be similar action by the other rating agency.

I have the best insight to their concerns since I speak to the rating agencies on a regular basis. Each time they have raised questions about several members of our community who, without informational access to the City's cash flow, are citing the potential for bankruptcy. During our discussions, I have tried to assure them that only the Mayor and City Council can make that determination. Other concerns have centered on the lack of political cohesiveness. The rating agencies are worried that our elected leaders are not acting as a collective whole, which is critical in moving the City forward.

For example, next week the Mayor and City Council will consider a Salary Ordinance, followed by an Appropriations Ordinance. Passage of these ordinances are essential in operating the day-to-day activities of City government for Fiscal Year 2006, effective July 1, 2005. The elected City Attorney has said he will sign neither.

This sends the message to Wall Street that our City leaders are moving in different directions and that there is no coordinated strategy to resolving our fiscal challenges.

Last week the Retirement Board took no action in deciding whether to waive attorney-client privilege. That sent another negative message to the financial community. The City needs access to certain documents, held by the Retirement Board, before it can complete its Fiscal Year 2003 audit. Now there is a delay in finishing the audit. Completing that audit is critical in regaining confidence from the financial market and moving the City forward.

In the interest of the City, it is time to put aside any political differences and put the citizens of San Diego first."

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