The Week in Public Finance: Kansas City Suburb Headed Toward Default
Platte County, Mo., is being punished for its resistance to bailing out a retail center that opened during the recession and has struggled to make bond payments.
County officials argue that taxpayers shouldn't have to pick up the tab. But the downgrades, says Municipal Market Analytics’ Matt Fabian, are already costing taxpayers. That’s because it will now be more expensive for the county to borrow money the next time it issues general obligation bonds in the municipal market. And Platte County is also extremely unlikely to find future buyers for any revenue debt that depends on an annual appropriation from the government.
“It hardly seems worth it when just restructuring the debt could have been an easy fix,” says Fabian. “From an economic development perspective, you’re now a non-investment grade county walking away from a bond. It’s hard to talk companies into moving there if that’s your debt profile.”