DALLAS — Standard & Poor's downgraded the Texas Panhandle town of Fritch to D from BBB-minus after it defaulted on $3.8 million of certificates of obligation issued in 2003.
The town 45 miles north of Amarillo filed a material event notice Thursday saying it had failed to make its Feb. 15 debt service payment.
A former official was blamed for mismanaging the town's finances.
"We understand the city is working to implement effective internal controls of its finances and arranging to remedy the delinquent payment," S&P noted.
In addition to the default, the town is dealing with a water problem caused by a pump failure. The Texas Commission on Environmental Quality said customers need to boil the water to destroy bacteria and other microbes before drinking it.
With a population of about 2,200, Fritch is known for using treated wastewater for irrigation in the arid region. In addition to farming and ranching, the area produces oil and gas.
Sanford-Fritch School District, with 115 employees, is the city's leading employer.
A stable population and modest assessed value growth, coupled with primarily low-end residential property and limited commercial property, have resulted in a low market value of about $25,501 per capita, according to S&P.