August 27, 2014
RENO, Nev. (AP) - Moody's Investors Service has downgraded its rating for an $8.1 million bond the city of Reno used to finance part of the downtown railroad trench to just a step above "junk" status.
The Reno Gazette-Journal reports Moody's dropped the rating from A3 to Baa3 on Monday because of shortfalls in the 1 percent hotel room tax created to pay off the debt for the nearly $200 million project.
The new rating means it's a speculative investment.
The bond was issued in 2006 to finance a 30-year federal loan.
Downtown room tax collections have fallen 40 percent since 2006.
Moody's says the negative outlook "reflects expectations that pledged revenues will remain challenged over the medium-term."
It notes the city has access to multiple reserve funds to continue making payments.
Copyright 2014 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.