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Littlefield, Texas, GOs Raised to BB by S&P

Standard & Poor's Ratings Services said it raised its long-term and underlying rating on Littlefield, Texas' general obligation debt from B to BB.

The outlook is stable.

"The upgrade reflects the city's implementation of several revenue enhancement measures and expenditure cuts that have improved its financial position and ability to meet its long-term debt obligations," explained Standard & Poor's credit analyst Omar Tabani.

The rating reflects the city's: revenue enhancement measures to handle the fiscal stress arising from the vacancy of the Bill Clayton Detention Center (BCDC); historically weak, albeit improving, general fund reserves; and limited local economy and property tax base.

In 2000 and 2001, Littlefield issued roughly $10 million in certificates of obligation to finance the construction of the BCDC. The city intended to repay the certificates with revenues generated by the facility, which has been vacant since 2009 after the expiration and nonrenewal of several contracts.

"The detention center's vacancy and subsequent lack of revenue placed fiscal stress on the city," added Tabani, "resulting in a depletion of available cash in its BCDC fund to make debt service payments, and culminating in a draw on its debt service reserve fund to make its August 2010 debt service payment."

Littlefield, with a population estimate of 6,372, is the seat of Lamb County, 35 miles northwest of Lubbock.

"The stable outlook reflects our opinion that the revenue enhancement measures and expenditure cuts Littlefield enacted will likely allow it maintain its financial position and pay debt service on BCDC-related debt while the facility remains vacant," said Tabani.

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