The Fitch Rating Service announced Wednesday it is reducing the ‘A’ Rating for Rio Nuevo bonds to ‘BBB’. The annual review cited the ongoing concerns with the City of Tucson’s credit stability, which has a negative outlook on Rio Nuevo since the city is the bond guarantor, and the inability for the District to analyze and audit the tax district due to State regulations.
The “inability to analyze” issue has to do with the fact that Rio Nuevo never knows if the over 1,100 merchants within the District have actually filed a Transaction Privilege (Sales) Tax form with the State.
“The state decided we needed an Intergovernmental Agreement (IGA) before they could share this data with Rio Nuevo. The Arizona Department of Revenue (ADOR) is working on an agreement that would allow Rio Nuevo access to taxpayer data,” according to Fletcher McCusker, Chairman of the Rio Nuevo Board.
“But, as long as we can’t analyze our tax return revenue it will affect our credit ratings,” said McCusker.
ADOR representatives were unavailable for comments.
The ratings agency did acknowledge that the District is working with the State on a new Intergovernmental Agreement that would allow the Rio Nuevo board access to taxpayer data, but without the agreement finalized Fitch moved forward with the downgrade.
Fitch will not upgrade the rating with quarter to quarter visibility, so the next review, even with the IGA in place, will be pending until next year.
To read the full Fitch announcement click here: Fitch's+Rio+Nuevo+press+release+6.11.14.pdf
(An update to this story was published on Monday, June 16th please see https://realestatedaily-news.com/?p=10771 for additional information.)