Lauderhill, Fla., GOs Downgraded to A1 by Moody's

Moody's Investors Service has assigned a A1 rating to the city of Lauderhill, Fla.'s $10.9 million capital improvement revenue bonds, Series 2013.

The bonds are secured by a prior lien on the city's electric utility tax revenues, and to the extent there is a deficiency in the debt service fund, by the city's covenant to budget and appropriate legally available non-ad valorem revenues (by amendment if necessary) to cure such a deficiency.

Concurrently, Moody's has downgraded the ratings for the city's $28.2 million general obligation bonds (Series 2005) to A1 from Aa3 and $11.3 million COPs (City Hall Project, Series 2007) to A2 from A1, and affirmed the city's $6 million half-cent sales tax revenue bonds (Series 2003, Series 2005) at A1.

The A1 rating for this offering reflects the solid coverage of maximum annual debt service (MADS) afforded by the pledged revenues; the favorable trend and low volatility of the pledged revenues; and the satisfactory legal provisions which include no debt service reserve fund and conditions by which the city can lower the electric utility tax rate, mitigated by a 1.5 times MADS additional bonds test (ABT) and the city's covenant to budget and appropriate legally available non-ad valorem revenues to cure a deficiency in the debt service fund (deposit to the principal and interest account) prior to any interest payment date.

The downgrade of the general obligation rating to A1 from Aa3 reflects the city's weakened economic profile; modest financial position that Moody's believes will remain pressured by substantial fixed costs and reduced flexibility with which to control expenditures and revenues; and moderately elevated direct debt burden.

The A2 COP rating reflects the essential nature of the leased asset secured by the city's annually appropriated lease payments to the Lauderhill Finance Corporation.

Affirmation of the sales tax revenue bonds at A1 reflects the sound coverage of MADS, as well as the continued recovery of pledged revenues and satisfactory legal provisions that include a 1.4 times MADS ABT and series debt service reserve accounts each funded in cash at MADS.

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