MOODY'S LOWERS RATING ON CITY OF MIAMI GENERAL OBLIGATION BONDS TO 'A' FROM 'A1'
MOODY'S LOWERS RATING ON CITY OF MIAMI GENERAL OBLIGATION BONDS TO 'A' FROM 'A1' NEW YORK, July 15 /PRNewswire/ -- Moody's has lowered the general obligation bond rating on the City of Miami to "A" from "A1" in conjunction with the sale of $10 million general obligation bonds for bids on July 22. The rating revision is the result of increasing financial pressures caused by revenue constraints, a weakened economy and growing service demands. Comfort can still be derived from a conservative and sound city management which has kept the city's financial position balanced, albeit precariously, for several years by matching expenditures to anticipated revenues. Slowed revenue growth has necessitated several actions including the downsizing of certain government operations, provision of early retirement incentives, deferral of cost of living salary adjustments and increases in certain fees. The formation of labor-management relation committees with the city's unions, and neighborhood enhancement teams which better focuses public safety resources, are also unique and noteworthy accomplishments. The unfavorable outlook for future financial condition, however, lies in the fact that property taxes, which account for nearly half of General Fund revenues, are constrained by proximity to operating limits, slowed property tax collections and a recent decline in assessed value. Also, the city's very narrow cash position and expected reduction of about half of an already modest General Fund reserve further limit operating flexibility. It will be politically difficult to find additional revenue sources, aside from some minor enhancements. The city has undergone extraordinary social and economic changes over the past decade. Nearly one-third of the city's population is now below the poverty level and most recent per capita income is equivalent to only two-thirds that of the state. Recently released census data also show that the significant drop in wealth levels have positioned the city among the poorest mj?or urban centers in the country. These changes can be attributed in large part, to the significant immigration from Central and South America and the Caribbean. These rapid changes in the makeup of the population, which have also expanded the workforce, have contributed to a consistently above average level of unemployment most recently estimated at over 12 percent. Furthermore, at least part of the drop in taxable values is attributable to office vacancy rates, which are estimated to be over 28 percent. At this time, Moody's has also lowered the rating on the city's community redevelopment (tax increment) revenue bonds to "Baa" from "Baa1." The taxing district has experienced a large decline in incremental assessed value for fiscal 1993 making coverage of debt service dependent upon a fixed amount of additionally pledged guaranteed entitlement revenues. General Obligation Bonds outstanding: $196,805,000. -0- 7/15/92 /CONTACT: Jeffrey F. Rizzo, 212-553-0354, or Marcy Edwards, 212-553-0322, or John Incorvaia, 212-553-0501, all of Moody's/ CO: City of Miami ST: Florida IN: SU: RTG
SM-KW -- NY064 -- 9598 07/15/92 13:33 EDT
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|Date:||Jul 15, 1992|
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