Auditor clears city fiscal reports

The city, sanctioned by the U.S. Securities and Exchange Commission for hiding a pension-fund shortfall from investors, said its 2006 financial statement was approved by its auditor.

The clearance from Macias, Gini & O’Connell LLP concludes a delay in San Diego’s financial statements that caused Standard & Poor’s to withdraw its rating of the city’s bonds and kept it from funding projects through bond sales.

Mayor Jerry Sanders, a Republican who won office after the pension fund’s woes caused his predecessor to resign, said he plans to sell debt for city projects once the credit rating is reinstated.

Until then, San Diego will rely on private financing, as it has since the discovery of financial statement errors prompted a review of accounting practices more than four years ago.

“The city is making great strides toward regaining the confidence of the financial markets and the public,” Sanders said in a statement.

In November 2006, San Diego settled charges with the SEC that it committed fraud by failing to adequately disclose to investors in 2002 and 2003 the condition of its pension fund, which developed a deficit because officials failed to set aside enough money to pay retiree benefits.

San Diego has a bond rating of A3 from Moody’s Investors Service, the fourth lowest of the credit rating company’s 10 investment-grade ranks, according to Bloomberg.