New Rochelle, New York, had its general-obligation debt rating lowered one level to Aa3, the fourth-highest investment grade, by Moody’s Investors Service after declining tax revenue drained reserves.
The downgrade affects $108 million in debt. The Westchester County city of about 74,000 people ended fiscal 2009 with a $5.3 million deficit after its reserves fell by almost half to $7.2 million from 2007, Moody’s said in a report today.
“Further declines in the general-fund reserves will put additional pressure on the rating downwards,” Moody’s analysts Vito Galluccio, Robert Weber and Geordie Thompson wrote.
New Rochelle, 16 miles (26 kilometers) northeast of New York City and popular with commuters, will continue to benefit from its “sizable $11.7 billion tax base with above-average wealth levels,” the analysts said. The city hopes to raise money through increasing parking-permit fees and a long-term land-sale agreement, and has reduced staff through a hiring freeze and attrition, the firm said.