Fitch Ratings recently downgraded the Howard Bend Levee District's 2005 debt to BBB from A-minus.

The action affects the district's Series 2005 refunding and improvement bonds. Fitch also affirmed the 2007 levee bonds at their current BBB level.

"The downgrade reflects taxpayer concentration, the finite number of total taxpayers subject to the levy, and the potential cash-flow vulnerabilities created by how the levee tax is parceled to individual landowners," analysts wrote. "These credit concerns are tempered by the district's currently adequate funding of debt service, and the sizable reserves available to pay debt service."

The bonds are special limited obligations payable solely from a levee tax on certain property in the area. There is taxpayer concentration with Harrah's Casino accounting for 41% of the total special assessment levy on the Series 2005 bonds, and the top 10 accounting for 75%. The district covers a 2.1-square-mile area located 20 miles northwest of St. Louis.

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