BOLINGBROOK – Moody’s Investor Service has downgraded the village of Bolingbrook’s bond rating to A1 from Aa3.
The financial group cites a high debt burden and decline in property values for five consecutive years as “challenges” for the village, among others.
“The A1 rating reflects the village’s weak debt profile characterized by a high debt burden and extremely slow principal amortization; narrow General Fund reserves and liquidity due to large advances to other funds, pressure from rising pension costs, relatively large tax base experiencing sustained declines, ample revenue raising flexibility and above average resident wealth levels,” a release states.
Bolingbrook Village Attorney Jim Boan cautioned the community not to put too much stock into the rating downgrade.
“The factors that [Moody’s] used to downgrade the rating are applicable to every municipality in Illinois, and that is the reduced assessed property values and pensions,” Boan said, adding the village hasn’t issued any new debt since 2007.
Among the “strengths” for the village listed by Moody’s are: easy access to employment centers in the greater Chicago area, home rule status and a large tax base with income levels above the national average.
Boan said the downgraded rating by Moody’s brings that rating equal to the ratings from the two other primary financial rating services – Fitch and Standard and Poor’s.
“All three essentially now have us in the middle at five on the scale of 10 [with 10 being the worst rating],” Boan said.
In its outlook, Moody’s states the village of Bolingbrook could face “very narrow General Fund liquidity and available reserves compared to other A1 rated cities” and that “should reserves fall further, the village’s credit rating could face downward pressure.”
The report states the rating could go up if there is an improvement in the village’s General Fund liquidity and available fund balance, and if there is a reduction in the village’s debt burden.
The rating could down if there is a continued decline in the village’s assessed property valuations and if there is a deterioration in the village’s General Fund, the report adds.