CHICAGO — Moody's Investors Service has stripped a suburban Chicago suburban park district of its investment grade rating due to concerns it will default on near term debt service payments.

Moody's lowered Lindenhurst Park District's rating to B1 from A3 and assigned a negative outlook to its $4.1 million of outstanding general obligation debt in a report published April 30.

Analysts are concerned the park district located far north of Chicago in Lake County could default on "near term debt service payments due to a weak liquidity position and a reliance on operating revenues and property taxes that have yet to be collected."

The rating also factors in the district's weak financial position underscored by a negative net ending fund balances in fiscal 2014; reliance on short-term bank notes to fund daily operations; and a trend of unwillingness to date to increase property tax rates or program fees to balance the operating budget.

"These weaknesses persist despite an only moderate debt burden and a relatively wealthy tax base, though there have been recent declines in taxable valuation," Moody's said.

Analysts expect a continued weakening of the district's financial position as it now depends upon receipt of grant reimbursements from the state — which is struggling with its own budget and liquidity problems — to stabilize its financial position for the near term.

The district covers ten square miles, serving about 15,000 residents, operating 110 acres of parkland, a community center, indoor and outdoor recreational facilities, as well as a day care.

The district's bonds are payable from the lawfully available moneys in the district's corporate fund and principal proceeds received by the district from the issuance of its general obligation limited tax bonds and ad valorem taxes levied against all taxable property in the District without limitation as to rate or amount.

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