Standard & Poor's Ratings Services said it lowered its long-term rating and underlying rating to A-minus from A-plus on Glendale, Ariz.'s general obligation bonds.
The outlook is negative.
"The rating action reflects our view of the city's continued general fund deficits and estimated negative 19.5% general fund balance for fiscal 2012," said Standard & Poor's credit analyst Alda Mostofi.
The negative fund balance primarily results from large payments representing nearly 20% of city general fund expenditures in the past two years, for management fees related to the hockey arena.
The ratings further reflect the city's: participation in the diverse Phoenix metropolitan statistical area economic base; moderate overall net debt burden, including all overlapping and direct tax-supported debt; and willingness to generate additional revenue through the recent adoption of local sales tax rate increase.
The negative outlook reflects the anticipation that the city will continue to carry a negative fund balance for the next few years.
