November 23, 2014

Elyria
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Lorain County bond rating downgraded

ELYRIA — Lorain County’s bond rating has been downgraded by New York-based Fitch ratings, a move that will likely mean higher interest rates for the county when it borrows money in the future.

In a report released this week, Fitch noted that the “downgrade reflects reduced financial flexibility, concerns about the county’s ability to consistently balance its budget, and signs of potential economic weakening. Further budget adjustments may be challenging given limited revenue-raising capacity and expenditure flexibility.”

County Commissioner Ted Kalo said if the county goes out for additional loans, it likely will mean fractionally higher interest rates, which can add up when it comes to millions of dollars in borrowed money.

Kalo said he was disappointed by the decision, which drops the county’s rating on its $21.6 million in limited tax general obligation bonds from an “AA” rating to an “AA-” rating.

The county also saw its rating fall from “AA-” to “A+” for its $790,000 for the county Port Authority bonds and from “AA” to “AA-” for the county’s implied unlimited tax general obligation pledge, although the county doesn’t have any of those bonds.

County Administrator Jim Cordes said the only piece of bright news in the bond rating evaluation is that the county’s rating outlook was rated “stable.”

Kalo said a key factor in the downgrade seems to have been the county’s recent decision to take out roughly $2 million in loans to cover capital improvements ranging from roof repairs to the purchase of new vehicles.

“When we start borrowing for mundane operations that in the past we have always paid cash for, they don’t look kindly on that,” he said.

The commissioners have struggled for years with dropping revenue, including hits to interest income and reduced funding from the state. Their efforts to convince voters to support a sales tax hike have failed at the polls.

The Fitch report also said that the Lorain County Jail has had an operating deficit for years. Jail operations are funded through a dedicated 0.25 percent sales tax and supplemented by the county’s general fund.

In terms of the county’s economic weakening, Fitch pointed to the decline of the assessed value of property in 2012 and “some local layoffs suggest some stall-out in the local recovery.”

While the report said that the county’s May 2014 unemployment rate of 6.6 percent was down from a year ago, it is still above the national and state averages. Unemployment in the county was below the national average through much of the recession.

“Local unemployment will likely remain elevated given recently announced layoffs at TeleTech and reductions at the Ford plant, the county’s biggest employer,” the report said. “However, Fitch believes that some degree of long-term economic stability comes from the several hospitals in the county, which have completed expansions in recent years, as well as Oberlin College.”

Kalo said the county’s other bond rating, provided by analytics firm Moody’s, remains unchanged at “AA+.”

Contact Brad Dicken at 329-7147 or bdicken@chroniclet.com. Follow him on Twitter @BradDickenCT.


  • oldruss

    The fruits we reap from Democrat stewardship. What about it, Ted? Lori?

  • Mark B

    Stop being Tax and Spend Democrats , learn to live within your means. Lorain county has been under democrat control for many years , and well just look where Lorain county is. It Is the Crap hole of Ohio

  • Sis Delish

    “In terms of the county’s economic weakening, Fitch pointed to the decline of the assessed value of property in 2012 and “some local layoffs suggest some stall-out in the local recovery.”

    Decline of the assessed value of property in 2012… There you have it, your property is worth less, yet the Levies Keep on Coming!

  • SniperFire

    How’s that Brinda Economy workin out for ya?

  • GreatRedeemer

    This gives the Commissioners an opportunity to show their business acumen. Oh yeah… How about collecting on some of the bad loans.

  • SniperFire

    Notice how the C-T seeks out Democrat politicians to apologize for this.

    Why would you not seek Matt William’s perspective? You sought Bundy’s opinion on the fake ‘maggot’ story in the prison.

    • the KGB

      Who is “Matt William’s”?

  • golfingirl

    Increased interest rates simply means taxpayer dollars no longer go as far as they once did.

    So, hold on to your wallets, they will be “comin’ at ya’” for more!

  • bigmacky

    they cant stay within the budget – its not their money – yet for a part-time job at 75k a year – you would think they would put in full time hours to make lorain county the center of Ohio. meh – why bother – any politician regardless of party affiliation is a blood sucking tick on the wallets of US the TAXPAYER

  • Christine Camarillo-Winrod

    So, to offset some of the debt obligations, are we going to return to the days of imposed increases in the county sales tax? When voters say no to increased taxes, shouldn’t that mean something? We have a county commissioner election this fall. I hope voters take the time to inform themselves where each candidate stands on the imposition of taxes. I know Commissioner Williams stands firmly on NEVER imposing a sales tax increase when voters have said, “NO!”…..

  • todd

    “”The commissioners have struggled for years with dropping revenue, including hits to interest income and reduced funding from the state. Their efforts to convince voters to support a sales tax hike have failed at the polls.”"
    How about we stop with the bazillion dollar landscaping of parks. Yes the flowers look nice, but read above sentence. Typical give me more bs