JACKSONVILLE, Fla. - Jacksonville was dealt a financial setback this week when Moody’s downgraded the city’s bond ratings in response to JEA’s lawsuit over the Plant Vogtle nuclear power plant project.
The credit rating agency, which judges the city’s financial health, said Thursday it has also lowered its outlook on the city’s outstanding $2.1 billion debt load from stable to negative.
Moody’s cited the city’s efforts to withdraw from a decade-old contract with Municipal Energy Authority of Georgia (MEAG) to pay for the construction of Plant Vogtle as the reason for the downgrade:
“The city’s action calls into question its willingness to support an absolute and unconditional obligation of its largest municipal enterprise, which weakens the city’s creditworthiness on all of its debt.”
Sam Mousa, the city’s chief administrative officer, responded Thursday with a statement slamming Moody’s for the move, noting the city’s track record of making debt payments on time.
Mousa said the lawsuit is part of an effort by the city to protect taxpayers and JEA consumers from a “skyrocketing, out-of-control” project with “no certainty in cost or completion timeline.”
“This downgrade is based on wild speculation, completely without rationale or merit, and not at all indicative of the city’s commitment to pay its debt, or its financial strength and integrity,” he said.
JEA signed a contract with MEAG back in 2008 to fund the plant’s construction, but its commitment has mushroomed as the plant has become what some call a multi-billion dollar boondoggle.
The downgrade could affect future contracts with JEA and the city, meaning it could cost the city millions more to borrow money for construction and other capital projects.
It comes nearly a month after the city celebrated receiving a AAA credit rating upgrade from Fitch’s, another rating agency, the highest rating it has ever received.
Mousa said Moody’s overlooked the city’s history of honoring its financial promises, in addition to its growing reserve funds, reduced debt load, unprecedented pension reform and thriving economy.
Among other things, Moody’s said the city’s credit rating could go up if it withdraws from its lawsuit, shores up the cash it has on hand, sees growth in its tax base and lowers its pension debt.
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