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Manassas Park's Credit Rating Dropped by Moody's

High debt burden and narrow reserves cited as reasons for downgrade by Moody's Investor Service.

The City of Manassas Park’s credit rating dipped two levels to A3 from A1, partially because of the city’s high debt burden and significantly limited financial flexibility, according to a release issued Tuesday by Moody’s Investor Service.

The downgrade is specficially on the city's $116 million outstanding General Obligation debt.

 Moody’s analysts gave the city a negative outlook because they expect it to continue to have difficulty in restoring the city's reserves to adequate levels and a limited chance to improve its financial situation quickly.

 The city’s narrow reserves limit its financial flexibility and its ability to withstand more budgetary pressure. Further cuts by the city would be difficult because the city’s services are already signicantly reduced, according to Moody’s.

 “The downgrade to A3 reflects the city's deteriorating financial position since 2007 marked by a lack of structural balance due to declining property and sales tax revenues,” Moody’s analysts wrote in the release. “The A3 rating also incorporates the city's moderately-sized tax base experiencing contraction, coupled with high debt and average wealth levels.”

 Moody’s analysts put city officials on notice about the when it placed Manassas Park on Watchlist.

 Moody’s agreed to postpone its final decision for 60 days from the time it put the city on Watchlist. Analysts also asked Manassas Park city officials to come up with a financial plan within that time frame.

 —a plan that calls for tighter limits on spending and includes limiting the combined growth of city operating expenditures and school operating payments to a maximum of 1.5 percent a year, unless the city's tax base growth is more than 3.5 percent.

The 60 days expired in December, but Moody’s has an internal policy to not announce any rating changes between Christmas and New Years, Manassas Park City Manager Jim Zumwalt said earlier this month.

 Moody’s analysts said the ability to maintain adequate reserves will be key to maintaining overall credit quality.

 Tuesday’s downgrade wasn’t as severe as the f  The drop was partially because the city didn’t have a financial plan,

The other reasons given for the Standard and Poor's downgrade are:

·  The large decline in the city's tax base, which has led to large property tax revenue reductions;

·  Declines in other economically sensitive revenues; and

·  The city's high overall debt burden with elevated debt service levels, which Standard & Poor's considers somewhat mitigated by limited future capital need

mp January 11, 2012 at 11:57 AM
"partially because of the city’s high debt burden and significantly limited financial flexibility," Yep That fall on the everyone on city council except for the new newest members. Hey mayor "screwup "great job. You are better at ruining MP than Obama is ruining the country. Hey vice mayor you might want to rethink why your wife left being assistant Director at the Rec Center. I am going to ride you until you quit also. As for the city manager "Jimmy" you might want to retire, but before you do you might want to talk to the previous city manager on why he quit also. I say get rid of every director and hire new ones. Let the county take over the policing and fire response. Cut the staff at the rec center by 1/2. And cut useless workers at public works and city hall.
Worrywart January 11, 2012 at 01:19 PM
Not only are the services reduced but the schools are headed south. I'm pulling out my sixth grader next year so she can catch up with where she should be in the 7th grade. No textbooks, homework always done in class, nothing but worksheets handed out and not a single classic piece of literature is read. What kind of an education is that? They don't write or practice writing sufficiently to progress beyond where they are. What happened to the much tossed about phrase, "world class education"? Just empty words nothing more. Very disappointing and expensive. We're going to put our house on the market and get out before it all collapses.
Isaac Cohen January 11, 2012 at 04:19 PM
I will say this to you "mp" You have proven yourself to be consistently mean and vindictive. However, you don't have the courage to post using your real name. You insult elected officials but mentioning the spouse of an elected is OFF LIMITS. I don't know any of these people personally but I do know that your posts are out of line. when you talk about cut cut cut and firing people, remember these are people's lives your talking about.
Kris Day January 11, 2012 at 05:58 PM
Isaac, it's best just to ignore him or her, although I am in complete agreement with you. People like that are hurting a lot on the inside.
Isaac Cohen January 11, 2012 at 09:55 PM
You are right, Kris. I will not take my time up on that again. Thank you!

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