Following the lead of Moody’s Investor Services, Fitch Ratings today downgraded the City of Evanston’s general obligation bond rating from the highest ‘AAA’ grade by one notch to ‘AA+.’

The downgrade affects $12.7 million of bonds scheduled to be sold July 31 as well as $154 million in outstanding general obligation bonds.

In a news release Fitch said its rating outlook for the city is stable and that the downgrade reflects the company’s concern “over persistent long-term risks associated with the sizeable unfunded pension liability in the city’s police and fire plans.”

“Despite the city’s efforts to reduce the liability through periodic supplemental contributions,” Fitch says, “the systems are severely underfunded.

Positive factors Fitch noted were that the city maintains health reserves desipte operating deficits, has a strong and diverse economy, superior socioeconomic fundamentals and a manageable debt level.

Fitch says that despite pro-active steps by the city to addrss its pension liability, it has failed to meaningfully reduce the total pension debt burden.

Moody’s announced its rating downgrade last month.

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Bill Smith is the editor and publisher of Evanston Now.

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