Standard & Poor's Ratings Services said it lowered to AA from AA-plus its long-term rating and underlying rating on Dallas' parity general obligation bonds.
It also assigned a AA rating to the city's series 2015 GO refunding and improvement bonds. The outlook is stable.
In addition, Standard & Poor's lowered to A from A-plus its long-term rating and SPUR on the Downtown Dallas Development Authority's (DDDA) tax increment contract revenue bonds, issued on behalf of the city of Dallas.
It also lowered to A from A-plus the rating on the Dallas Convention Center Hotel Development Corp.'s series 2009A, B, and C hotel revenue bonds, issued on behalf of Dallas. The outlook for both ratings is stable.
Standard & Poor's also affirmed its A-1-plus short-term rating on Dallas' series 2010A and C GO commercial paper notes The rating reflects its view of the city's strong general creditworthiness and liquidity.
"The GO debt downgrade is due to the city's rising pension liabilities and lack of a sufficient plan to address them in the near term," said Standard & Poor's credit analyst Jennifer Garza. "The stable outlook reflects our view of the city's consistent financial performance and economy, which is supported by very strong management."
The pledge of an ad valorem property tax, limited to $2.50 per $100 of assessed valuation (AV) by state law, secures the GO bonds. The city has ample flexibility under the tax cap given its current tax rate of 79.7 cents per $100 of AV.
