ATLANTA - Moody's Investors Service yesterday lowered its 23-year-old Al general obligation bond rating of Miami to A, citing growing financial pressures on the city.
"We do not have immediate concerns about Miami's ability to repay debt, but we felt that in light of a structural problem with its revenue base and increasing service demands, the Al was no longer appropriate," said Marcy Edwards, a Moody's vice president and manager of Southeast regional ratings.
The rating change affects $196.8 million of outstanding general obligation debt and $10 million of general obligation bonds scheduled for competitive sale next Wednesday.
The agency is also downgrading the city's community development tax-increment bonds to Baa from Baa1.
In a written statement announcing the downgrades, Moody's focused on the city's weakening property tax base and its deteriorating cash position.
"Property taxes, which account for nearly half of General Fund revenues, are constrained by proximity to operating limits, slowed property tax collections and a recent decline in assessed value," Moody's said. "Also the city's very narrow cash position and expected reduction of about half of an already modest General Fund reserve further limit operating flexibility."
Moody's added that one-third of Miami's population is now below the poverty level, and that its per-capita income level is only two-thirds thirds of Florida's as whole.
Ms. Edwards said Moody's expects to see "fundamental" improvement in the city's wealth level and its unemployment rate, currently at 12%, before it will restore Miami's A1 rating.
"There have been great social and economic changes in Miami over the last decade, mostly the result of immigration, which are responsible for the financial stress," Ms. Edwards said. "A lot is going on that is beyond the control of [city] management."
Moody's rating of the general obligation debt of Miami had remained steady since 1969, when it was upgraded from A.
The statement released by Moody's does praise the city for its "conservative and sound city management, which has kept the city's financial position balanced, albeit precariously, for several years by matching expenditures to expected revenues."
A spokesman for Standard & Poor's Corp. said the agency's A-plus rating on Miami's GO debt is under review. She said an announcement on the rating would be made today.