Moody’s Investors Service has downgraded Union City’s credit rating from A3 to Baa1, saying the “outlook [is] negative” for their financial future, according to a report they released on Friday.Â
By John Heinis/Hudson County View
“The downgrade and outlook affect approximately $44.15 million of outstanding GO debt. The rating action resolves a review for possible downgrade that was initiated on March 13, 2015,” Moody’s wrote.
They explain that the downgrade comes from the city’s reliance on transition aid, which was $17.9 million this year – the third most in New Jersey (per The Record) – with no short-term plan on how to manage the city’s debt without the aid.
Moody’s also calls Union City’s fixed costs “manageable” and says their close proximity to New York City leads to “potential for future economic growth.”
Reduced reliance on transitional aid is listed as a way the rating could go up, while “significant deterioration in the tax base and/or socioeconomic profile” is one reason mentioned as to how the rating could go down.
Union City Mayor Brian Stack did not immediately return a call seeking comment.