Global Credit Research - 26 Jun 2012
Baa1 rating applies to $6.2 million of outstanding debt
New York, June 26, 2012 -- Moody's Investors Service has downgraded to Baa1 from A3 the rating on St. Lawrence County's (NY) Series 2001 Lease Rental facility Revenues Bonds, affecting $6.2 million in outstanding lease revenue debt. Concurrently, Moody's has affirmed the negative outlook on the county's rating. The bonds were issued by the Canton Human Services Initiative, Inc. (NY) and are secured by a lease agreement between St. Lawrence County and Canton Human Services initiatives (CHSI), and are payable from lease rentals by the county, subject to annual appropriation.
SUMMARY RATINGS RATIONALE
The downgrade reflects the county's financial position that has continued to deteriorate as a result of significantly weaker-than-expected fiscal 2011 financial operating results, further pressured by a significant receivable that may not be realized. The Baa1 rating also factors in the county's moderately-sized tax base with a below-average socio-economic profile, and a manageable debt burden with a slow amortization rate.
The negative outlook reflects the expectation that management will continue to use fund balance to support operations, further straining the county's financial flexibility and liquidity.
Effective January 1, 2012, all local governments in New York State are subject to a property tax cap which limits levy increases to 2% or the rate of inflation, whichever is lower. While school district debt has been exempted from the cap, debt has not been exempted for all other local governments. Moody's believes that the risks associated with the property tax cap remain unchanged and we do not foresee making a rating distinction between debt subject and not subject to the cap. For more information regarding the property tax cap please reference the Special Comment "New York Local Governments' Debt Under New Property Tax Cap to Be Rated the Same as Unlimited Tax General Obligation Debt " released May 14, 2012.