Standard & Poor's Ratings Services said it revised its rating on Belle Creek Metropolitan District No. 1, Colo.'s general obligation bonds to BBB-minus from BBB-plus.
The outlook is negative.
"We base the downgrade on the negative trend in the district's operations in the past five years, with a budgeted deficit in fiscal 2013 that brings reserves below what we consider an adequate level," said Standard & Poor's credit analyst Michael Stock.
The rating reflects Belle Creek Metropolitan District's: high total mill levy that we expect to equal approximately 162 mills in parts of the district; low assigned/unassigned general fund reserves equaling 29% of expenditures at fiscal year-end 2011, though somewhat small on a nominal basis at $143,000; five consecutive years of negative operations, with a budgeted sixth year.
These weaknesses are partially offset by the district's moderately diverse tax base, as well as its participation in the large and economically diverse Denver consolidated metropolitan statistical area.
The bonds are general obligations of the district and are secured by an unlimited ad valorem property tax pledge to be levied on all taxable property within the district.
The negative outlook reflects the district's continued negative operations with a sixth projected year in fiscal 2013, resulting in a projected low general fund balance. Should the district continue on this negative trend and should revenues decline significantly stressing it to make debt service payments, the agency said it could lower the rating. However, should the district stabilize its operations and maintain at least what we consider adequate general fund balances, we could view this as a stabilizing factor and revise the outlook.
Belle Creek Metropolitan District encompasses approximately 171 acres within the boundaries of the Commerce City, which is approximately 8 miles northeast of downtown Denver. The district encompasses the Bell Creek Family Center, parks, and playgrounds, as well as single-family homes, townhomes, and rental apartments.
