Moody's Investors Service said it has downgraded the city of Williston, N.D.'s general obligation rating to Baa2 from A3, affecting $4.7 million in parity debt obligations.
The bonds are secured by the city's unlimited ad valorem tax pledge which benefits from a dedicated property tax levy not limited by rate or amount.
Moody's has also concluded the review and assigned a negative outlook. The rating was placed under review with direction uncertain on December 27, 2013, due tothe lack of sufficient fiscal 2012 financial information, which it has since received.
The Baa2 rating reflects weaker than expected financial performance in fiscal 2012, including negative general fund balance, increasingly narrow reserve levels, as well as a history of weak management and late financial reporting. Other considerations include the city's rapidly growing tax base, improving resident income levels, and a high direct debt burden which is expected to moderate in the mid-term if no new debt is issued.
The negative outlook reflects the expectation that the city's financial position will remain challenged over the near- to mid-term given current reserve levels and significant infrastructure needs stemming from the ongoing oil exploration activities in the Bakken Shale formation.
