Moody's Investors Service recently downgraded the bond rating for the City of Glendale, Arizona, owing to large declines in the City’s general-fund reserve over the last two fiscal years. The Moody's rating on the City’s general obligation bonds dipped from Aa3 to A2; this marked the City’s second downgrade in less than a year.

Glendale incurred debt relating to investment in sports venues. The City still owes 84 percent of a total $180 million borrowed to finance an ice hockey arena for the Phoenix Coyotes, and another $200 million on a spring-training ballpark.

William A. Hicks III, a public finance partner in Ballard Spahr's Phoenix office, said that, most likely, the ratings won't help the City of Glendale spur economic growth. "There is a penalty for bad judgment or bad fortune and they have to work their way out of that," Mr. Hicks said.

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