BRADENTON, Fla. — Moody’s Investors Service Tuesday placed DeKalb County’s ratings under review for a downgrade, citing a strained liquidity position, doubts about achieving structural budgetary balance, and a larger-than-anticipated decline in taxable values.
The action affects the Georgia county’s Aa3 rating on $415 million of unlimited-tax general obligation bonds issued through various public authorities, and the A1 rating on $18.9 million of appropriation-backed debt.
DeKalb projects there will be a 10% decline in taxable values, compared to a decline that was originally estimated to be 4%, according to Moody’s. The decline is expected to create a $25 million shortfall by the Dec. 31 end of the fiscal year.
In a review over several weeks, Moody’s said it would focus on the county’s efforts to restore structural stability, including the possible adoption of a new tax rate in late June, and the reduction of expenses to address negative fund balance reserves and limited liquidity positions.
“We also anticipate that a possible downgrade would result in a rating in the A-range,” analysts said.
Moody’s downgraded the county’s GO rating to Aa3 from Aa1 in December, and to Aa1 from Aaa in 2009 because of its declining finances.
Bond market participants were stunned in late March when Standard & Poor’s suddenly dropped the county’s GO rating to BBB from AA-minus, and then withdrew its ratings.
Standard & Poor’s that in addition to multiple years of deficit operations DeKalb failed to provide timely, adequate information about cash flows and how overall liquidity was being managed in order to continue evaluating the county’s rating.
DeKalb is Georgia’s third-most populous county with nearly 700,000 people. It is located in the Atlanta metropolitan region.
