For the second time this year, Standard & Poor's has lowered Vadnais Heights' credit rating. The bond rating agency dropped the city's long-term rating on lease revenue bonds six levels from A- to CC and cut ratings on its general obligation bonds from A to B.
The downgrades came after the City Council voted Aug. 21 to discontinue covering shortfalls at the financially-troubled Vadnais Sports Center beginning in 2013. Estimates show the city would have had to raise property taxes by 30 percent to recover the $1 million needed to make debt payments. By terminating the center's lease agreement and not appropriating funds, this "indicates a severe lack of willingness to pay debt service, and thus reduced credit quality," analyst Caroline West wrote.
West said the lower rating stems from the "city's diminished willingness to meet its obligations," but she said the outlook is stable given the city's history of making timely payments on its general obligation-backed debt.
