Standard & Poor's Ratings Services said it lowered its underlying rating on Eastland, Texas' series 2010 and 2012 general obligation refunding bonds four notches to BBB from A-plus.
The outlook is stable.
"This action reflects the city's structural imbalance caused by the use of general fund balance to support the operations of a golf course the city assumed in fiscal 2013," said Standard & Poor's credit analyst Alexander Laufer. "The downgrade also reflects a decline in fund balance to a level we consider nominally low. At this time, the city expects to continue its reliance on the general fund to support the golf course, and officials have no lans to significantly increase the tax rate, utility rates, or golf course
fees to offset the maintenance costs. We therefore anticipate a further decline in general fund reserves because the city has no credible plan in place to address ongoing golf course expenses."
The rating reflects Standard & Poor's assessment of the city's: very weak economy, adequate budgetary flexibility, weak budgetary performance, weak management, very strong liquidity, very strong debt and contingent liabilities, and strong institutional framework.
