Bonds that back the $200 million renovation of the State Farm Arena in Atlanta may be downgraded by rating agency Moody's, the Atlanta Journal Constitution reports. The move to downgrade is a response to an anticipated decline in car rental taxes due to COVID-19.
Moody's wrote in a letter to investors that it is reviewing Atlanta's A1 and Aa3 ratings and 2017 lien series bonds. As more Americans stay home due to the coronavirus, car rental bookings have decreased, meaning the city's the collect the taxes are not able to pay off the debt.
The Atlanta Recreation Authority sold $150 million in bonds for the arena to investors. Last year, the city and College Park earned a total of $14.7 million in car rental taxes in 2019, $13 million of which was used to make bond payments.
Experts told the AJC that while no one could have predicted this pandemic, industry experts have previously warned about relying too much on sales tax.