Standard & Poor's Ratings Services said that it lowered its long-term and underlying ratings on the city of Oak Park, Mich.'s general obligation bonds to A from A-plus.
The outlook is stable.
"The downgrade reflects a substantial deterioration in city tax base and subsequent budget pressures," said Standard & Poor's credit analyst Carol Hendrickson.
The ratings also reflect the city's: participation in the Detroit metropolitan area economy; willingness to make sufficient budget cuts to maintain at least adequate reserves; and recent voter support for city operating levies.
High unemployment, combined with the effects of the economic downturn on local revenues and high fixed costs, including pension and debt, temper the above credit strengths.
The city's GO pledge secures the bonds.
Oak Park (population estimate: 26,772) is a mostly residential community in southeastern Oakland County, adjacent to Detroit.
"The stable outlook reflects our expectation that the city will take the appropriate steps to correct structural imbalances and to achieve and maintain at least good general fund reserves over the two-year outlook horizon," added Hendrickson.