Standard & Poor's Ratings Services said it lowered its long-term rating to D from CC on the city of Vadnais Heights, Minn.'s series 2010A, B, and C annual appropriation lease revenue bonds, issued by the Vadnais Heights Economic Development Authority.
"The lowered rating reflects the city's principal payment default of $455,000 on Feb. 1, 2013," said Standard & Poor's credit analyst Caroline West. "The City of Vadnais Heights decided to not appropriate funds for its lease revenue bonds beginning in fiscal 2013, and we do not believe the city has any intention to appropriate funds in the future to pay debt service on the bonds," West added.
The trustee on the bonds, U.S. Bank, indicates that the interest payment of $581,826 was paid in full and on time.
S&P said it understands that the city's original intention was that operational revenues of the sports facility constructed with the bond proceeds would cover annual debt service payments. In 2011, the first year of its operation, the facility generated $300,000 to contribute to debt service after operations. Annual debt service is $1.6 million. The bonds mature Feb. 1, 2041.
Vadnais Heights, located in Ramsey County, is a second-ring suburb seven miles north of St. Paul.