Thursday, August 13, 2009
Indianapolis Bond Bank Rating Downgraded
Fitch Ratings has downgraded its rating for bonds issued by Indianapolis' Bond Bank from AA to AA-, and the City's outstanding unlimited tax general obligation bonds from AAA to AA+. The Bond Bank rating affects $164 million refunding bonds for tax increment finance districts and $3.2 million taxable bonds. The rating service cited the contraction of the City's property tax revenue base as a result of the property tax caps and a decline in the City's fiscal reserves. Today's action by Fitch could lead to higher borrowing costs for the City. The bonds for the Indianapolis Water Company have already been downgraded. Fitch projects the City will lose $32 million in property tax revenues in 2010 as a result of the property tax caps; however, that loss is offset by the state's assumption of the City's public safety pension obligations and retirees' health care benefits. The City has been forced to borrow money because of the delays in property tax collections caused by the implementation of new assessments and property tax caps.