New York, August 05, 2014 --
Moody's Rating
Issue: General Obligation Bonds, Series 2014; Rating: Aa2; Sale Amount: $3,900,000; Expected Sale Date: 8/13/2014; Rating Description: General Obligation
Opinion
Moody's Investors Service has downgraded the Municipality of Mt. Lebanon, PA to Aa2 from Aa1, affecting $28 million of outstanding General Obligation debt. Concurrently, we have assigned a Aa2 rating to the municipality's $3.9 million General Obligation Bonds, Series 2014.
The bonds, including the municipality's guaranteed parking revenue and sewer revenue bonds, are secured by the municipality's general obligation, unlimited tax pledge.
Proceeds of the current issue will be used to fund seven capital projects, including improvements to municipal-owned parking garages, work on the municipal building's roof, and stormwater projects.
SUMMARY RATING RATIONALE
The downgrade to Aa2 incorporates the municipality's declining fund balance, which is now lower than average for the Aa1 rating category. The rating reflects the municipality's moderately sized and affluent tax base in suburban Pittsburgh (rated A1 stable), a favorable income tax trend, and a modest debt burden.
STRENGTHS:
Affluent tax base in strong regional economy
Favorable income tax trend
CHALLENGES:
Below average fund balance
Large overlapping debt with local school district
WHAT COULD CHANGE THE RATING - UP:
Increases in fund balance to levels more consistent with higher rating categories
WHAT COULD CHANGE THE RATING - DOWN
Further declines in the General Fund balance
Reversal of recent favorable income tax trend
