Standard & Poor's Ratings Services said it has lowered its long-term rating and underlying rating on Romulus, Mich.'s general obligation debt to A from A-plus due to recent drawdowns of reserves.

The outlook is negative, reflecting expected drawdowns of reserves in the coming years and uncertainty regarding management's ability to return the budget to a balanced position for several years.

"The negative outlook reflects our opinion of the uncertainty regarding the extent to which reserves may decrease in the coming years," said Standard & Poor's credit analyst Katilyn Pulcher. "We could likely lower the rating within the outlook's two-year period if reserves decrease to a level that is less than 4% of expenditures and structural imbalance continues," she noted.

The rating reflects Standard & Poor's view of the city's: contraction in the local economy; draws on general fund reserves in recent years and predicted draws in the years to come; and potential pressure from property tax appeals.

Tempering factors include the city's: access to employment opportunities throughout southeastern Michigan; and good reserves, measured as a percentage of expenditures.

Romulus is located in western Wayne County and consists of 36 square miles containing an estimated 21,966 residents, surrounding the Detroit Metropolitan Airport.

 

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