Fitch Lowers Tacoma Outlook

Citing operating pressures and money-losing city enterprise funds, Fitch Ratings revised the outlook on Tacoma’s general obligation bonds Wednesday to negative from stable, while downgrading its convention center and parking revenue bonds.

Tacoma’s unlimited-tax GO bonds retain their AA-plus rating, and its limited-tax GOs bonds remain at AA.

Fitch downgraded the city’s convention center and parking revenue bonds to A-plus from AA-minus.

The action comes in connection with plans later this month to sell about $81 million of new-money and refunding bonds.

“While this financing is structured to give near-term budget relief, it increases costs in the near future and slows amortization to below-average levels,” Fitch said in its report.

The rating agency also believes that the city’s convention center and parking enterprise funds could pressure its general fund over the long run.

“These enterprises are running sizeable deficits that are expected to deplete most of their reserves by fiscal year end 2012,” analysts said. “The general fund may have to support their operations at increased levels beginning in fiscal 2013.”

The city’s debt profile remains sound overall, according to Fitch, noting that Tacoma continues to benefit from diverse revenue sources, historically prudent management practices, and significant expenditure flexibility.

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