NEW YORK - Moody's Investors Service said it has downgraded the town of Scarborough, Maine's general obligation rating to Aa3 from Aa2, affecting $66.9 million in outstanding debt and removed the negative outlook.
Concurrently, Moody's has assigned a Aa3 rating to the town's $46.3 million 2012 general obligation bonds. Of the current issue, $25 million in issue proceeds will finance a portion of the costs associated with the Wentworth School project, $3.4 million will cover various annual capital improvement projects, and the remaining $21.1 million in proceeds will refund, in part, the town's Series 2003, 2004 and 2005 bonds for budgetary relief and restructuring of the town's debt profile.
The town's outstanding debt, including the current issue, is secured primarily by the town's limited general obligation property tax pledge, although the town's general obligation unlimited tax pledge secures $32 million in debt outstanding for the town's school projects as well as $25 million of the current issue related to the Wentworth school project.
The downgrade to Aa3 from Aa2 reflects the town's reduced financial flexibility and deteriorated financial position, stable tax base with favorable wealth levels and increasing debt burden with below average payout.