One agency downgrades North Las Vegas’ bond rating
one agency downgrades north las vegas' bond rating
One of the three top international bond-rating agencies has downgraded North Las Vegas and said the city's outlook for the next three years is negative.
Fitch Ratings last week downgraded the city's bond rating from AA to AA-. The move reflected the city's "further economic decline since the fall of 2009" despite deep spending cuts, the agency said.
Today, the city began selling $145 million in bonds to complete its new wastewater reclamation facility.
"Through fiscal 2009, the city's financial operations had been strong with surpluses resulting in solid fund balance levels, which are now considerably weakened by the economic downturn," the Fitch report said. "The city has made numerous budget adjustments and cut spending to mitigate the revenue declines, but does not project balanced operations until fiscal 2013 and this includes a large amount of as yet unidentified spending cuts."
Fitch's downgraded rating was bad news for North Las Vegas, Mayor Shari Buck said, but the other major agencies, Moody's and Standard & Poor's, have not changed the city's rating.
"I am certain that when the economy recovers, we will resume our strong rating again with Fitch," she said.
The downgrade of North Las Vegas is the result of a number of factors, according to Chris Stream, associate professor in the School of Environmental and Public Affairs at University of Nevada, Las Vegas.
"Really, it is a matter of declining revenues, shrinking general fund balances and an unstable housing market," Stream said.
Stream said the negative ratings outlook could make borrowing for the city more difficult and more costly in the future. "It could raise rates significantly," he said.
The city's current bond will be used to complete a $240 million wastewater treatment plant that is being built on leased land just outside the city near Nellis Air Force Base. The project is scheduled to be completed by May 2011.
AMANDA LLEWELLYN, VIEW STAFF WRITER
