Moody's Investors Service said it has downgraded the city of Waukegan, Ill.'s parking revenue and sales tax bonds to A2 from A1 and affirms the city's A2 general obligation rating.
The A2 special tax rating applies to $6 million in outstanding parking revenue and sales tax bonds and the A2 GO rating applies to $92 million of general obligation debt.
The city's general obligation bonds are secured by a property tax that is unlimited as to rate or amount. Affirmation of the A2 rating on Waukegan's outstanding general obligation debt reflects the city's stabilizing financial position but still narrow reserve position; moderately sized tax base located between Chicago (GO rated Aa3/possible downgrade) and Milwaukee (GO rated Aa2/stable) that continues to experience significant valuation declines; proactive management practices; and an above average debt burden with large unfunded liabilities.
The city's outstanding special tax bonds are secured by parking system revenues and sales tax revenues. The downgrade to A2 from A1 of the city's outstanding parking revenue and sales tax bonds reflects the recent deterioration of the city's tax base, and the city's weakened socioeconomic profile.
The A2 rating also incorporates stable pledged revenue trends with some historic declines. The city's special tax rating benefits from proximity to the Chicago and Milwaukee metro area, but also is impaired by competition from neighboring communities.