Peekskill, N.Y., Downgraded to Aa3 by Moody's

Moody's Investors Service has assigned a Aa3 rating on the city of Peekskill, N.Y.'s $9.9 million public improvement (serial) bonds, 2013, and downgrades the rating to Aa3 from Aa2 rating on $53.7 million general obligation bonds, including the current offering.

The negative outlook has been removed.

The bonds are secured by a general obligation pledge as limited by the Property Tax Cap - Legislation (Chapter 97 (Part A) of the Laws of the State of New York, 2011). Bond proceeds will fund acquisition and construction of improvements to the city water front, payment of tax certiorari and water and parking improvements.

The downgrade to an Aa3 from an Aa2 rating reflects the city's pressured finances as a result of increased health, pension, and labor costs including one-time labor expenditures, which have narrowed the city's cash reserves and fund balance.

The Aa3 rating also reflects the city's average socioeconomic indicators, moderately sized tax-base, manageable debt burden, and conservative financial management as evidenced by a strong internal fund balance policy.

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