NEW YORK - Standard & Poor's Ratings Services said it lowered its long-term rating on Wanamingo, Minn.'s general obligation (GO) bonds outstanding to BBB from A due to its structural imbalance that has led to a negative fund balance.
This has been caused in part by the strain on the general fund's financial operations due to the Heritage Hills Senior Living Facility.
At the same time, Standard & Poor's assigned its BBB long-term rating to Wanamingo, Minn.'s series 2010B general obligation (GO) improvement crossover refunding bonds and lowered its rating on the series 2009A bonds issued by the Southeastern Minnesota Multi-County Housing and Redevelopment Authority that are secured by the city's GO pledge.
The outlook on all ratings is stable.
The ratings reflect Standard & Poor's opinion of the city's: access to various employment opportunities in Rochester and Minneapolis-St. Paul (Twin Cities), adequate to good income and strong wealth levels measured by market value per capita, and lack of additional debt plans.
Offsetting the preceding credit strengths are the city's high debt levels, high carrying charges, as well as our concerns about the general fund's structural imbalance and the current and projected negative fund balance.
Officials will use proceeds from the series 2010B bonds to crossover refund the city's series 2002 GO improvement bonds.
"We find the city's financial operations to be weak and its liquidity position inadequate; however, management expects that the city will take the necessary steps to eliminate its general fund deficit and return to structural balance in the near term," stated credit analyst Blake Yocom.
