Citing declining property values associated with the recession, Moody’s Investors Service on Tuesday downgraded the city of Henderson’s general obligation bond rating.
The downgrade, to Aa2 from Aa1, affects $258.9 million in outstanding debt.
Moody’s also removed its stable outlook on the debt.
While the new rating is still an investment-grade rating, Moody’s expressed concern about two things:
• “Budgetary pressures will remain through at least fiscal 2012, especially given the likelihood of an additional decline in assessed value, which will result in a similar rate of decline in property tax revenue.”
• “Above-average unemployment and a slower-than-projected economic recovery will continue to weigh on the city’s revenue base.”
“Similar to the Southern Nevada region, Henderson assessed valuations declined significantly, 20.5 percent in 2010, and another 24.6 percent in 2011, due to increased foreclosures, declining median home prices and flat to declining residential construction and commercial activity,” Moody’s said in its report.
On the plus side, Moody’s praised the city for having healthy financial reserves, conservative budgeting practices and a limited level of debt.
“Moody’s notes the 2011 full (property) valuation of $27.9 billion remains sizeable,” the debt-rating agency said in its report on the city of 267,000 people.
In May, the city approved a $498 million budget for fiscal year 2012.