Concern over a looming budget gap and leadership turmoil has led Moody's, the bond rating agency, to downgrade its outlook on the City of Miami's $226 million in obligations from "stable" to "negative," according to an investor's report obtained by blogger Al Crespo. The agency also downgraded the city's tax and general obligation bonds, the report says.
Pat Santangelo, spokesman for Mayor Tomas Regalado, said he couldn't confirm the accuracy of the report; Moody's press desk didn't return a call from Riptide. The document, which is dated this past Friday, looks legit, though. If it is, which seems likely, there's big trouble for a city already reeling from lost revenues, an SEC investigation, and the sudden resignation of City Manager Tony Crapp Jr. last week.
In the document obtained by Crespo, Moody's cited Crapp's resignation in the downgrading, noting that "turnover in key city managerial positions at this time of fiscal instability is significant."
The report also notes the city has recorded deficits in five of the last six years, faces fiery battles with labor unions, and has seen revenues plummet thanks to a severe local housing crisis.
Santangelo says Crespo's report is the first he's heard of the downgraded ratings. "I can't confirm or deny if it's true because I hadn't heard about it until now," he says. "But I also haven't spoken to the mayor about it."
When Regalado appointed Crapp's replacement, Johnny Martinez, last week, he sought to reassure investors and ratings agencies like Moody's, saying, "We are a stable government."
We'll update this post when we hear back more from Moody's or City Hall.
Here's the full report, via Al Crespo's blog: