Dearborn Heights, MI GO Bond Rating Lowered To ‘BBB’ On Operating Fund Deterioration


CHICAGO (Standard & Poor’s) April 11, 2013–Standard & Poor’s Ratings Services

said that it lowered its rating on

Dearborn Heights Municipal Building Authority and Dearborn Heights

Tax Increment Finance Authority, Mich.’s

limited-tax general obligation (GO) bonds, issued for Dearborn Heights,

to ‘BBB’ from ‘A’.

“The downgrade reflects a structural imbalance and

substantial deterioration in the city’s primary operating fund,”

said Standard & Poor’s credit analyst

Katilyn Pulcher.

 

“More staff took advantage of an early retirement incentive

than management expected, leading to lump sum payouts and

contributing to the draw on operating reserves which led to a

negative fund balance in excess of $5 million.”

 

The rating reflects our opinion of the city’s:

  • Draws on corporate fund (its primary operating fund) reserves in recent years and projected negative fund balance position for years to come;
  • Economic deterioration; and
  • Recent reliance on interfund transfers for cash flow needs.

The city’s limited-tax GO pledge secures the bonds.

 

“We believe the city’s finances significantly weakened due to management’s

overly optimistic budget assumptions and prior failure to make expenditure

adjustments,” added Ms. Pulcher.

 

Source:Standardandpoors.com

 

In June of 2011 the city had its rating lowered from an A+ to an A

 

This statement,

“We believe the city’s finances significantly weakened due to management’s

Overly  optimistic budget assumptions and prior failure to make expenditure

adjustments,”

 

is a very polite way of saying what many on the council and taxpayers have been saying for years

“Fantasy Budget.” For years the Mayor has been playing with the numbers over inflating revenue well this is what happens when you play with Fire Mr. Mayor a whole city suffers. While you spoke so proudly not to many years ago about the city getting an A+ rating telling all the residents at a council meeting that we would see our insurance rates drop because of it. Now what Mr. Mayor? Are you as willing to speak on camera at the next meeting as to how all of us might see an increase in our insurance rates because of your budgets.

 

There was one council member that wasn’t sitting by all these years Councilwoman Badalow years ago was asking to make “expenditure adjustments.” She saw what was coming and wanted to do something about it. For years she has voted NO on these budgets seeing them for what they are. Those of you who’ve been watching over the years have heard her and know what I’m talking about  Thank You Councilwoman Badalow for trying.

 

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4 thoughts on “Dearborn Heights, MI GO Bond Rating Lowered To ‘BBB’ On Operating Fund Deterioration”

  1. I think Janet has a good handle on the money’s/ financial situation in our city. It is too bad our rating has gone down

    Like

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