Moody's Investors Service downgraded Coral Gables' issuer rating to Aa1 from Aaa on Tuesday due to the city's historically narrow financial reserve position. Its total general fund balance as a percentage of operating revenues historically has been around 8% and "well below" the median for a Aaa-rated credit, said Moody's analyst John Nichols.
The fiscal year-end 2009 financial reserve position weakened after large budgetary variances in revenue streams associated with building and zoning permit fees, he said. A $4.8 million operating deficit reduced total general fund reserves to $4.9 million, or a narrow 4% of operating revenues. Available fund balance, including the city's unreserved portion of general and debt service funds, also fell to 3.8% of operating revenues.