Oliver Everling (publisher): Municipal rating: Securing financing of cities and communities, 2nd edition Cologne 2015, Bank-Verlag, http://www.bank-verlag.de/, 414 pages, Art. 22.489-1500, ISBN 978-3-86556-445-0.
The number of municipalities under emergency budget law raises the question of when banks could also be affected by defaults at municipal loans. Due to the minimum requirements for risk management, credit institutions are required to make risk classifications for each borrower, including municipalities and the companies they support. The political decision to weight the risk of public debtors with “zero” for the purpose of owning capital of credit institutions does not make a municipal rating superfluous, even for economic reasons.
For the first time in Germany, the first edition of the book “Kommunalrating” dealt with the topic of municipal finances from the perspective of the rating. The book sparked a lively discussion that sought less theoretical modeling than practical solutions. In the second edition, new proposals are raised, especially from the perspective of those affected, the mayors and city treasurers, but also by scientists. Many municipalities gained experience with the status of their over-indebtedness. In the case of insolvency, there is still no municipal bankruptcy law, which would allow in a foreseeable process, the exemption from the burden of debt. The lack of legal title to enforce their claims in the event of payment difficulties with their municipal debtors forces banks such also every other creditor for the differentiated risk classification of the municipal rating. The new book not only pools assessment standards for the rating of municipalities, but also highlights current developments.
Oliver Everling (Herausgeber): Kommunalrating: Finanzierung von Städten und Gemeinden sichern, 2. Auflage Köln 2015, Bank-Verlag, http://www.bank-verlag.de/, 414 Seiten, Art.-Nr. 22.489-1500, ISBN 978-3-86556-445-0.
Oliver Everling and Michael Munsch (publisher): Municipal rating: securing financing of cities and communities, 1st edition Cologne 2013, Bank-Verlag, http://www.bank-verlag.de/, 383 pages, Art. 22.489-1300, ISBN 978-3-86556-285-2.
Whether in municipalities of “strengthening pact” or countries of “bailouts” is spoken, the underlying problems are similar: In any case, it is about imminent payment difficulties in formerly believed to be “absolutely safe” debtors.
The political decision to weight the risk of public debtors with “zero” for capital adequacy purposes makes a municipal rating in no way expendable for economic reasons.
The book deals for the first time with the topic of local finances from the perspective of the rating. Instead of theoretical modeling, practical solutions are discussed, especially from the perspective of those affected, the mayors and city treasurers.
Oliver Everling und Michael Munsch (Herausgeber): Kommunalrating: Finanzierung von Städten und Gemeinden sichern, 1. Auflage Köln 2013, Bank-Verlag, http://www.bank-verlag.de/, 383 Seiten, Art.-Nr. 22.489-1300, ISBN 978-3-86556-285-2.
What constitutes future-oriented residential areas? The answer is complex and can not be answered in a general or even complete manner for all residential real estate between Norderney and Berchtesgaden. A recent study searched for similarities that characterize future-proof and long-term profitable housing, and examines these success criteria more closely.
Ten macro-location and nine micro-location criteria with a particularly large impact on the future viability of residential real estate were identified. These macro and micro factors were evaluated.
This scoring does not just consider the macro criteria that determine the future viability of an entire city. For the first time, the scoring combines these insights with microcriteria that refer to a single location, a self-contained neighborhood or borough. The particular challenge lies in the selection of the set of criteria on the micro level. Living is very individual, the requirements of people vary depending on their life model, age and preferences.
The quantitative basis for the analysis is provided by the scoring, which combines macro and micro aspects using a standardized, specially developed tool for the initial assessment of residential areas. For the analysis, data from 30 German cities (“macro locations”) and 30 city districts according to KGS 12 (“micro locations”) were collected, examined and evaluated. In doing so, attention was paid to a balanced geographical distribution and the inclusion of residential locations from all clusters of cities in order to achieve the most realistic possible representation of the overall market. With regard to residential locations, the approach distinguishes between macro-location and micro-location criteria.
Some of the criteria show an inventory, such as security or affordability. Others are strongly forward-looking, such as forecasts of population growth and sustainable housing demand. Each of the criteria is then evaluated by means of defined value classes on a scale of one to five, one representing the lowest value and five the highest value.
The individual results are aggregated and add up to a score for the selected macro and micro-situation. The microvariable “Attractiveness of the residential area” is overweighted in the model because it consists of different subcriteria. All other variables are included equally in the scoring.
The study may offer helpful pointers and landmarks. From the perspective of long-term oriented investors, approaches for own investment strategies can be derived.