University Place's Credit Rating Downgraded

Citing the debt on the Town Center development, Moody’s Investors Services has downgraded the City of University Place’s credit rating, officials confirmed today.

The city’s rating changed from “A1” to “A2.” Also, Moody’s assigned a “negative outlook” to the rating, according to The Bond Buyer, a financial trade publication.

The city has $48 million in outstanding debt related to Town Center. Mayor Debbie Klosowski told Patch that much of the downgrade is due to a $1 million payment the city made this year on a previous bond, which required using general fund money.

That payment, Klosowski said, likely triggered the downgrade. Part of Moody’s decision was based on how much money UP has in its general fund compared to how much debt it owes.

“They do recognize that our overall debt limit is higher compared to cities our size,” Klosowski acknowledged.

Despite the downgrade, the mayor said she’s confident about the city’s finances. University Place still has an “A” rating, she says. Also, Town Center is expected to start generating revenue via a future apartment complex at the development along Bridgeport Way West.

Also, the city doesn’t look to make any large payments out of its general fund in 2012, she said.

“This is not something to get alarmed about,” she said about the downgrade. “The city is on a strong financial foundation.”

“Moody’s is not concerned with our overall ability to pay off our debt,” she added.

Patch will have more on this story later.