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, a suburb of Detroit, 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," S&P credit analyst Caroline West said.
"Even with the emergency financial manager's help, we believe the city still faces significant challenges to improve its financial standing," West added.
On Monday, Michigan's state treasurer, Andy Dillon, said a workout plan short of fiscal bankruptcy was coming together for Allen Park, whose finances were wrecked by the failed movie studio project.
Dillon, who was a member of the panel that last week declared Detroit in financial emergency, gave no details or any timetable for an agreement to right Allen Park's financial ship.