Fitch Lowers Utica Rating

Fitch Ratings has downgraded the upstate city of Utica’s rating to BBB from A-minus on $41.4 million of unlimited-tax general obligation bonds. The outlook is stable.

“Negative financial margins over the past two years have resulted in an erosion of the city’s once-adequate financial cushion to a level more consistent with a BBB rating,” Fitch analysts said in a report.

A key rating driver is limited flexibility for this year’s budget, which is a result of fixed costs associated with long-term liabilities representing 25% of fiscal 2013 expenditures, Fitch reported.

Other key drivers of ratings include a tight cash position and weak socioeconomic indicators, along with below-average wealth and income, elevated unemployment, and low per-capita market value.

Well-funded pensions and rapid debt amortization are credit positives, Fitch said. However, according to analyts, the city’s fixed-cost burden is worsening an already limited financial flexibility.

The city is contemplating approximately $8 million in bond anticipation notes this year for various public improvement and sewer projects.

Utica is the county seat of Oneida County in central upstate New York.

The city reported a marginal population growth of 2.6% over the past decade.

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