Fitch Ratings last week downgraded $41.1 million of transportation improvement bonds issued by the Butler County Transportation Improvement District, Ohio, to A from AA-minus. The outlook is negative.
The bonds, issued in 2007, are payable from revenue generated from three tax-increment financing districts located near a new highway interchange in Butler County, which includes Cincinnati.
The debt also features two secondary pledges, including 25% of non-tax revenues from the county’s general fund and 95% of income tax revenues available to Liberty Township from the Joint Economic Development District.
Fitch said its A rating is based on the 25% pledge of nontax revenues from the county’s general fund, which offers the highest level of credit quality among all the pledges.
The rating reflects the “below-average credit fundamentals” of the county’s general fund pledge, analysts said in the report.
“The negative outlook reflects a meaningful decline in pledged county non-tax revenues and a trend of multi-year general fund operating deficits yielding deterioration in the county’s financial flexibility. Fitch expects deficits to persist over the near term,” analysts said.
The bonds are expected to be paid from revenues generated by the TIF districts. The districts are currently 50% built-out and future commercial development is likely due to their location, Fitch said.
