Moody’s Investors Service last week downgraded Coralville to A1 from Aa3 ahead of its upcoming $6.3 million taxable general obligation urban renewal bond sale.
The deal includes $5.1 million of notes and $1.2 million of longer-term bonds. The downgrade affects $43 million of debt.
The new issue pricing later this month is secured by the city’s GO pledge, and will finance improvement projects within one of its urban renewal districts and the purchase of property within two other districts that will be redeveloped.
The current rating reflects the city’s high debt burden, healthy tax base growth that benefits from its location near the University of Iowa and Cedar Rapids, and a historical trend of well-managed financial operations supported by ample general fund reserves.
While the June floods in the region significantly affected most governments along the Iowa River, Coralville did not suffer as much damage as others. The current cost estimate for the city’s personnel expenses is $1.1 million. The city is expected to receive full reimbursement from federal and state authorities.
A minimal portion of the city’s housing stock is currently considering a buyout plan with federal emergency management officials. Any devaluation in the tax base would affect the 2010-2011 fiscal year, although it is expected to be minimal.
