Moody's Investors Service said it has downgraded Park Creek Metropolitan District, Colo.'s senior lien limited property tax bonds to Ba2 from Baa2.
A stable outlook has been assigned.
The bonds are secured by a capped mill levy rate (50 mills subject to minimal adjustments) on all taxable property within the Westerly Creek Metropolitan District (the taxing entity) for the benefit of the Park Creek Metropolitan District (the operating district) bonds.
The downgrade reflects a substantially weakened debt profile including sizable and growing exposure to subordinate debt payable to the district's master developer and its subsidiaries.
The scale and growth of subordinated bullet payments and the inability to issue long-term takeout financing in the medium term create outsize risks that largely offset credit strengths from adequate projected coverage on the GOLT bonds' senior claim on revenues, large and relatively well-developed project footprint, cash-funded debt service reserve fund at the standard three prong test, and a weak but adequate 1.35 times additional bonds test.
The rating also considers the limited scope of district operations including characteristically passive governance featuring limited fiscal stewardship, and a modestly-sized and somewhat concentrated tax base favorably located within the Denver metro area.
