Standard & Poor's Ratings Services said it lowered its long-term rating to AA-minus from AA on Warrick County, Ind.'s series 2009 redevelopment district bonds, issued for the Warrick County Redevelopment District.

The outlook is stable.

"The lower rating is based on a general fund imbalance that has developed in recent years, significantly lowering cash reserves," said Standard & Poor's credit analyst John Sauter, "and the rating change is also based on actual results in recent years falling below management's previously stated expectations." Overall unrestricted cash remains strong, however.

The rating also reflects the county's: participation in the Evansville regional area economy; good incomes and very strong wealth, measured as gross assessed value (AV) per capita; and strong overall reserve position, albeit on a cash basis of accounting, factoring in general and nongeneral fund unrestricted cash.

The bonds are secured by ad valorem property taxes levied on all taxable property in the district. The district is coterminous within the county, excluding the city of Boonville. The bonds are also secured by tax-increment financing (TIF) revenues and monies on deposit in the project and reserve accounts.

The county is foregoing the property tax levy and instead using TIF revenues to pay debt service; however, the rating reflects the pledge of ad valorem property taxes, which is the stronger revenue pledge. A debt service reserve funded in excess of 100% of maximum annual debt service provides additional rating security, as well as protection against possible timing disruptions or revenue underperformance.

Warrick County is in southwestern Indiana along the Kentucky border. The county is part of the Evansville metropolitan area, and its western border is adjacent to the city of Evansville, the third-largest city in the state.

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