Moody’s Investors Service last week downgraded Matteson’s unlimited-tax general obligation rating two notches to Baa2 from A1 and warned of further action with a negative outlook.
The action affects $23 million of debt. Moody’s also assigned a Baa3 to the village’s upcoming $28 million of capital debt appreciation certificates that carry a limited-tax pledge.
Proceeds from the certificates, which are ultimately secured by monies in all legally available operating funds, will finance a new community recreation center and additional capital infrastructure and equipment improvements over the next three fiscal years.
The rating reflects the village’s significantly pressured financial position with negative reserve levels, a moderately-sized tax base experiencing steady growth primarily due to commercial and retail development, and an elevated debt burden with below average principal amortization and no immediate borrowing plans.
Matteson has new managers in place that have taken steps to cut spending and raise revenue. The measures are expected to return the village to balanced operations in fiscal 2011, Moody’s said.