Not surprising given all the investment failures of City Hall doling out your money.

Moody’s Investors Service has placed the ratings on Port St. Lucie, FL’s general obligation, non-ad valorem, lease and guaranteed debt on review for downgrade. The review is driven by ongoing litigation and economic fallout from the collapse of a start-up research institute, the Vaccine and Gene Therapy Institute (VGTI), which is now under receivership. VGTI revenues were insufficient to make the May 2015 debt service payment and the trustee tapped the debt service reserve to make the payment. The city has covenanted to budget and appropriate available non-ad valorem funds to cure any reserve fund deficiencies. The city is currently making monthly payments to the trustee to replenish the debt service reserve fund. Additionally, the city made the November 2015 interest payment and has budgeted to make the May 2016 debt service payment.

In a disclosure notice filed to EMMA on February 29, 2016, the bond trustee questioned the city’s willingness to pay the trustee’s legal fees and additionally cited concerns about the long term tax-exempt status of the bonds if the city chose to lease or sell the facility, the construction of which was originally financed by the bonds. The facility and VGTI are currently both under receivership. The city has reiterated its commitment to fulfill all of its obligations under the loan agreement, trust indenture, and the receivership agreement, including principal and interest payments, monthly debt service reserve replenishment payments (the debt service is expected to be fully funded in June), and payments to the receiver who is now maintaining the facility.

Moody’s remains cautious.

The city has guaranteed a material amount of debt related to economic development projects, and several of these projects have already invoked city support. Our review will focus on the city’s ongoing ability to provide support for all of these projects while maintaining financial flexibility. Our review will also consider the likely trajectory of all city-guaranteed obligations and the city’s plans for managing these liabilities. Currently, the city maintains $25.5 million in cash in the General Fund or 36.3% of revenues, as of the end of 2015.

Source: Moody’s places Port St. Lucie, FL under review for possible downgrade