Moody's Investors Service said it has downgraded the rating on the city of Storm Lake, Iowa's outstanding general obligation debt to A2 from A1, and the rating on the city's GO debt subject to annual appropriation to Baa1 from A3.
Post-sale, the city will have $14.4 million in outstanding GO debt not subject to annual appropriation and $6.2 million in GO debt subject to annual appropriation. Concurrently, Moody's has assigned an A2 rating to Storm Lake's $6.8 million taxable GO urban renewal capital loan notes, Series 2015A and a Baa1 to the city's $3.5 million taxable GO annual appropriation urban renewal capital loan notes, Series 2015B.
The A2 rating reflects the city's modestly sized and concentrated tax base located in western Iowa (issuer rated Aaa); satisfactory financial operations characterized by adequate reserve levels; elevated debt burden; and manageable pension liabilities.
The Baa1 rating on debt subject to annual appropriation is notched twice off the GO rating reflecting the risk of non-appropriation, the lack of a pledged asset, and the non-essential nature of the asset originally financed (Kings Pointe Resort).
