CHICAGO -- Standard & Poor's Corp. yesterday upgraded Cleveland's rating to A from A-minus with a stable outlook, citing the city's improved financial performance.

Cleveland "has been able to do a lot more with limited budget resources and has also been able to improve its financial results," said Joe O'Keefe, a director at Standard & Poor's.

The upgrade affects $22.7 million of the city's unenhanced general obligation debt. Standard & Poor's affirmed a AAA rating for $234 million of Cleveland's outstanding insured GO debt and assigned an SP-1 rating to $25 million of bond anticipation notes the city plans to sell soon.

"The city's financial position remains modest, but the prospect of economic growth and strong budgetary controls suggest continued improvement," Standard & Poor's wrote in a press release.

Kathryn Buffer Hyer, Cleveland's finance director, said the upgrade gives the city two single--A ratings. In April 1993 Moody's upgraded the city's GO rating to A from Baa1, she said.

Hyer said the upgrades were due to improvements in the city's finances, which saw the balance for the $350 million general fund grow to $3 million at the end of fiscal 1993 -- double the balance amount at the end of fiscal 1992.

"We had probably the highest income tax receipts ever, reflecting a strong economy," she said, referring to fiscal 1993.

Standard & Poor's said the increase in income tax revenues helped the city eliminate its deficit, which stood at about $7 million in fiscal 1990.

"This obviously recognizes what the city has done to get its fiscal house in order," said Paul Komlosi, a senior vice president at McDonald & Company Securities Inc.

He pointed to improvements in areas such as management control, labor negotiations, and the creation of a rainy-day fund as reasons why he believes Cleveland earned the higher rating.

The city's push to revitalize housing was another factor. Standard & Poor's said that while Cleveland has lost population to its suburbs over a long period of time, the number of city residents has stabilized at about 5 10,000, contributing to a rebound in the housing market. The rating agency said city's property tax base has grown an average of 3.6% a year between 1984 and 1994.

Hyer said the city has embarked on a major effort to assemble land for housing as well as for business and industrial projects.

The rating agency also pointed to major projects in the city like the Gateway sports complex, which the city expects will attract even more development. The mostly bond-financed complex, located in downtown Cleveland, includes a baseball stadium for the Cleveland, Indians and a basketball arena for the Cleveland Cavaliers. The bond-financed Rock and Roll Hall of Fame is also under construction in the city.

"Gateway is a major psychological boost to the spirit of Cleveland, and it's probably going to help with the revitalization of the downtown," said Richard Ciccarone, an executive vice president and director of tax-exempt fixed-income research at Kemper Securities Inc.

O'Keefe said Cleveland's debt level is relatively low at $809 per capita. The city's five-year capital spending plan totals $1.6 billion, but O'Keefe said most of that would be issued as revenue bonds for an expansion of the city's airport and improvements to its water and electric utilities.

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