KBRA Affirms BBB- Rating with Stable Outlook on the City of Detroit Downtown Development Authority Tax Increment Revenue Refunding Bonds, Series 2018A (Catalyst Development Project)
20 Nov 2023 | New York
KBRA affirms the long-term rating of BBB- with a Stable Outlook on the City of Detroit Downtown Development Authority Tax Increment Revenue Refunding Bonds, Series 2018A (Catalyst Development Project).
Key Credit Considerations
The rating was affirmed because of the following key credit considerations:
- FY 2023 Pledged Revenues provide 3.17x MADS coverage of Catalyst Bonds debt service.
- Plans for further substantial private investment within the District boundaries that, despite not directly increasing Pledged Revenues, will further support taxable property valuation.
- Despite an overall improving trend and an ongoing rebound as the pandemic wanes, the Detroit economy remains very 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.
- Significant increases in Pledged Revenues that lead to higher debt service coverage.
- Significant decrease in outstanding debt that leads to higher debt service coverage.
- 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.