Standard & Poor's Ratings Services said it has lowered its long-term rating on Griffin Lakes Community Development District, Fla.'s series 2008 special assessment revenue refunding bonds to BBB-plus from A-minus.
The outlook is stable.
"We base the downgrade on the district's weakened financial ratios, including higher taxpayer concentration and lower value-to-lien ratios," said Standard & Poor's credit analyst Apple Lo.
The rating reflects the assessment of the following factors for the district: increased top-10 taxpayer concentration to 11% of assessed value (AV) from 7% in 2011; weak cash flows that are only able to withstand the permanent loss of assessments from the 10 leading taxpayers for four years over the life of the bonds, down from six years in 2011; a reduction of value-to-lien to 11:1 in 2014 from 23:1 in 2008; and continued weakness in the housing market, resulting in a 43% decrease in the district's AV since 2008; however, market indicators are improving in Broward County.
Factors offsetting these credit weaknesses include: maintenance of adequate special annual debt service assessment collection rates sufficient to pay debt service, with a history of successful annual tax-lien certificate sales through fiscal 2013 (Sept. 30, 2013), despite overall weak housing conditions; and the district's mature status of development.
The bonds will be secured by a first lien on special assessments levied and collected against district lands benefited by the bonds.
The stable outlook reflects the expectation that the special assessment collection rates will remain sufficient to pay bond debt service and the strong bond structure will ensure timely payment of such. Credit improvement depends on the growth in AV as well as a decline in taxpayer concentration, resulting in stronger cash flow. S&P could lower the rating further if delinquency increases significantly, coupled with a continued decline in the tax base and an increase in taxpayer concentration.
Griffin Lakes Community Development District is a gated waterfront townhouse residential community in the City of Dania Beach, in the southeast portion of Broward County. The development is composed of 427 single-family residential units on 33.6 acres.
