KBRA Assigns A Rating to the City of Detroit Downtown Development Authority Tax Increment Revenue Refunding Bonds, Series 2024 (Catalyst Development Project)
06 Junio 2024 - 3:08PM
Business Wire
KBRA assigns the long-term rating of A with a Stable Outlook to
the City of Detroit Downtown Development Authority Tax Increment
Revenue Refunding Bonds, Series 2024 (Catalyst Development
Project). Concurrently, KBRA places the outstanding long-term
rating assigned to the Tax Increment Revenue Refunding Bonds,
Series 2018A (Catalyst Development Project) on Watch-Developing,
pending the outcome of the planned financing.
Key Credit Considerations
The rating was assigned because of the following key credit
considerations:
Credit Positives
- FY 2023 Pledged Revenues provide pro forma 4.25x MADS
coverage.
- No additional parity bonds are permitted, with the exception of
refunding bonds for savings.
- Established growth trend in Pledged Revenues.
- Plans for further substantial private investment within the
District boundaries that, despite not directly increasing Pledged
Revenues, will further support taxable property valuation.
Credit Challenges
- Despite an overall improving trend and an ongoing rebound as
the pandemic wanes, the Detroit economy remains fragile, and if a
substantial economic decline occurs in the near future, before the
taxable property values have a chance to further stabilize, then
debt service coverage ratios could weaken.
- Potential for assessment reductions due to lower office space
demand resulting from hybrid working arrangements.
Rating Sensitivities
For Upgrade
- Significant development and diversification in the District
that is reflected in Pledged Revenue increases and higher debt
service coverage.
For Downgrade
- Declining property values, reduced investments, or other
economic factors that weaken the available Pledged Revenues in the
District further than current stress scenarios.
- Any change to the City’s or Wayne County’s tax practices that
erodes DDA’s current insulation from historically weak county-wide
property tax collections.
- Any actions by the City, State, County, or other taxing
entities to reduce tax rates, reduce taxable property value, or in
any other way weaken the Pledged Revenues.
To access rating and relevant documents, click here.
Methodologies
- Public Finance: General Property Tax/Assessment Revenue
Methodology
- ESG Global Rating Methodology
Disclosures
A description of all substantially material sources that were
used to prepare the credit rating and information on the
methodology(ies) (inclusive of any material models and sensitivity
analyses of the relevant key rating assumptions, as applicable)
used in determining the credit rating is available in the
Information Disclosure Form(s) located here.
Information on the meaning of each rating category can be
located here.
Further disclosures relating to this rating action are available
in the Information Disclosure Form(s) referenced above. Additional
information regarding KBRA policies, methodologies, rating scales
and disclosures are available at www.kbra.com.
About KBRA
Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit
rating agency registered with the U.S. Securities and Exchange
Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is
registered as a CRA with the European Securities and Markets
Authority. Kroll Bond Rating Agency UK Limited is registered as a
CRA with the UK Financial Conduct Authority. In addition, KBRA is
designated as a designated rating organization by the Ontario
Securities Commission for issuers of asset-backed securities to
file a short form prospectus or shelf prospectus. KBRA is also
recognized by the National Association of Insurance Commissioners
as a Credit Rating Provider.
Doc ID: 1004643
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Analytical Contacts
Harvey Zachem, Managing Director (Lead Analyst) +1 646-731-2385
harvey.zachem@kbra.com
Michael Taylor, Senior Director +1 646-731-3357
michael.taylor@kbra.com
Karen Daly, Senior Managing Director (Rating Committee Chair) +1
646-731-2347 karen.daly@kbra.com
Business Development Contacts
William Baneky, Managing Director +1 646-731-2409
william.baneky@kbra.com
James Kissane, Senior Director +1 646-731-2380
james.kissane@kbra.com