CHICAGO — Moody’s Investors Service has raised its rating on the International Falls Economic Development Authority’s $11.4 million of taxable lease revenue bonds that financed a new headquarters for National Parks Service at the nearby Voyageurs National Park now that the government is using the facility.
Moody’s upgraded the bonds to Aa3 from A1.
For decades, Voyageurs park employees had worked out of a former car dealership. The park is located on the Minnesota and Canadian border. The Aa3 rating is based on the obligation of the federal government’s General Services Administration to make lease-rental payments. The payments are an absolute and unconditional obligation of the United States, not subject to annual appropriation.
The bonds are rated three notches off of the nation’s Aaa rating to reflect the presence of abatement risk, termination risk, the risk that payments would be offset if certain performance measures are not met, and the risk that an International Falls or EDA bankruptcy would affect the flow of funds available for debt service.
Moody’s bestowed the upgrade to recognize the project’s completion earlier this year and the government’s acceptance of it. If the government had rejected the final project, its 20-year lease could be terminated.
At the same time, Moody’s also placed the rating on review for a possible downgrade in conjunction with its recent placement of the country’s Aaa rating on review, which impacts all federal lease programs that are solely supported by federal payments.