The city’s bond rating was downgraded by one category from Aa3 to A1. It is the fifth highest rating available and is considered to be a low credit risk. Moody’s cited the city’s limited flexibility to raise revenue due to its lack of home rule powers and its high debt and pension burden as the reasons for the downgrade. Home rule gives local governments greater autonomy to create laws, tax and incur debt.The effect of the Moody’s downgrade is a minimal increase in the cost of borrowing money, about 5- to 10-100ths of a percentage point on future bond issues, according to the city.It will not affect the interest the city is paying on current debt.The downgrade comes as the city is preparing to borrow for two major redevelopment initiatives. The city may issue a $10.7 million bond to pay for downtown parking improvements tied, in part, to a redevelopment deal to turn the former Amerock building, 416 S. Main St., into a downtown hotel and conference center. The city would pay about $16.6 million in principal and interest to repay the debt from that bond. The downgraded credit could cost the city approximately $7,200 more per year or $144,000 more over the 20-year life of the bond, according to estimates from Rockford Finance Director Chris Black.The city also plans to borrow approximately $10.9 million to help pay for rebuilding the Ingersoll building into a downtown sports complex.
Moody’s downgrades Rockford’s credit rating - News - Rockford Register Star - Rockford, IL
No comments:
Post a Comment