MOODY'S DOWNGRADES FLINT, MICH., GENERAL OBLIGATION UNLIMITED TAX BOND RATING FROM 'Baa1' TO 'Baa'
NEW YORK, March 30 /PRNewswire/ -- Effective yesterday, Moody's Investors Service downgraded Flint, Mich., general obligation unlimited tax bond rating from 'Baa1' to 'Baa'. Moody's cited the city's recent financial deterioration, in large part the result of the city's long- term economic decline, continued economic difficulties and the vulnerability of financial position as reasons in taking the rating action. In the last several years city financial position has deteriorated significantly, and only through an unusual one-time cash infusion did the city avoid an accumulated general fund deficit approximating 7.5 percent of operations at the end of fiscal 1992. The city's economic difficulties, dependence upon General Motors (GM), and vulnerability to economic cycles and GM actions have had and continue to have a significant adverse effect upon the city, including consistently high unemployment and tax base stagnation. While the city is pursuing several economic initiatives, the prospects for success remain largely dependent upon an influx of federal funding. Officials are optimistic about economic development plans but realities may preclude the availability of large sums while the effects of any level of investment may be questionable and take some time to evidence themselves. In the past year the city has taken actions to reverse the recent trend of operating deficits, including privatization of services, and officials reportedly plan to seek state legislation to enable the city to increase the city's income tax rate. Moody's went on to say that despite actions to address recent fiscal imbalance, and apparent success in the current year, the city's financial prospects are uncertain. Much of the city's revenue base remains vulnerable to economic cycles, and given the critical nature of key credit fundamentals, such restructuring of financial operations will be important to the city in its efforts to maintain fiscal balance and investment grade credit standing in the future. Moody's also reviewed and confirmed the Baa rating on the general obligation limited tax bonds issued by the city's Tax Increment Finance Authority. The maintenance of the rating reflects the sufficiency of incremental tax revenues from which debt service is paid and the ability to utilize taxing authority currently earmarked for public improvements. The city has $13,675,000 of general obligation unlimited tax debt outstanding and approximately $15.3 million of outstanding Tax Increment Finance Authority general obligation limited tax bonds. -0- 3/30/93 /CONTACT: Charles A. Kishpaugh, assistant vice president of Moody's Public Finance Department, 212-553-0350/
CO: Flint, Michigan ST: Michigan IN: SU: RTG
AH-PS -- NY044 -- 1007 03/30/93 11:36 EST
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|Date:||Mar 30, 1993|
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