Moody's Investors Service said it has downgraded the city of Trotwood, Ohio's general obligation limited tax rating to A2 from A1.
The A2 rating applies to $11.3 million of rated general obligation limited tax debt, which is subject to the state of Ohio's ten mill limitation. The outlook remains negative.
The downgrade to A2 from A1 reflects the city's modestly sized tax base in the Dayton (general obligation Aa2/stable outlook) metropolitan area which is experiencing substantial tax base depreciation, below average income levels, narrow financial reserves, and an elevated debt burden with below average principal amortization.
The negative outlook reflects the weakened financial position of the city due to volatile revenue streams and transfers to subsidize underperforming funds. Although the city plans on reimbursing the general fund and increasing reserves in fiscal 2014, unforeseen negative budget variances could further pressure the city's credit rating.
