Moody's Investors Service said it has downgraded Zion Park District, Ill.'s general obligation unlimited tax rating to Baa3 from Baa1 and has downgraded the district's general obligation limited tax debt certificates to Ba1 from Baa2.
Concurrently, a negative outlook has been assigned. The Baa3 rating applies to $1.3 million in outstanding general obligation alternate revenue debt and $1.6 million in parity rated GOLT debt service extension base debt. The Ba1 applies to $440,000 in outstanding debt certificates.
The district's $3.4 million in Moody's rated GO and GOLT debt represent three different security types. $1.3 million is secured by the district's GO alternate revenue pledge, which is ultimately secured by the district's property tax pledge that is unlimited by rate or amount and supported by the district's tipping fee revenues. $1.6 million of outstanding GOLT debt is secured by the district's debt service extension base, which benefits from a dedicated property levy that is limited as to amount but unlimited as to rate.
The district has $440,000 of outstanding debt certificates that do not benefit from a dedicated levy, with repayment secured by general fund revenues.
The Baa3 GO rating reflects a rapidly declining tax base, related pressures from property tax rate caps in the district's major operating funds, managerial unwillingness to cut expenditures and very narrow operating cash reserves, as evidenced by a sustained negative cash position in the district's recreation fund and two of its three enterprise funds.
Also incorporated in the rating are risks posed by the district's escalating debt repayment structure and a manageable pension burden. The district's Ba1 GOLT debt certificate rating reflects the lack of a dedicated property tax levy for repayment of debt service, along with the district's narrow liquidity position.
