March 1 Standard & Poor's Ratings Services on Friday, said it cut Allen Park City, Michigan unlimited-tax general obligation bonds to B-minus from B, with a stable outlook.
The rating agency also cut limited-tax GO bonds, some of which were issued by the Allen Park Building Authority and the Allen Park Brownfield Redevelopment Authority to B-minus from B.
The municipality of about 27,900 residents financed the acquisition of property for a film studio though the issuance of $31 million of limited tax, general obligation debt in November 2009. But the studio never operated and left Allen Park with annual debt service payments of about $2 million, according to a statement last year from the governor's office.
The downgrade reflects that even though an "emergency financial manager has developed a plan to improve the city's finances and return to a positive fund balance by fiscal 2015, the city remains severely pressured financially," said S&P credit analyst Caroline West.
"Even with the emergency financial manager's help, we believe the city still faces significant challenges to improve its financial standing," West added.