MOBERLY, Mo. (AP) - The city of Moberly is working to repair its credit rating after plans for an artificial sweetener factory collapsed.
The city council passed two resolutions on Monday designed to convince a financial investment services firm that the city was a safe investment. Standard & Poors downgraded Moberly's credit rating from an A to B after it defaulted on payments on the plant's construction, the Columbia Daily Tribune reported.
Moberly's city manager, Andy Morris, said the new policies takes practices the city has had for years and puts them on the books. It includes several limitations on how the city can acquire debt, such as barring the use of long-term debt to fund current operations.
The city is meeting with Standard & Poors next year to try to get its credit rating back up to an A and has hired a consulting firm to outline steps that it can take to do so. Morris said he doesn't expect Standard & Poors to upgrade the city's credit rating right away, but hopes the steps the city has taken will speed up the process.
Having a lowered credit rating makes it harder for the city to borrow money from the large credit market. The city has been able to get banks to finance several projects so far, but if it needs to fund a larger project, the B rating would likely make it harder to get the money it needs.
"To restore your credit rating, it's somewhat similar to personal bankruptcy in that it's a measure of time," Morris said. "Time will heal all wounds."
Bruce Cole, CEO of Mamtek U.S. Inc., convinced Moberly officials in 2010 to issue $39 million in bonds for the plant he said would employ 600 people.
The plant never materialized as the plan collapsed financially before construction finished. Mamtek defaulted on the debt in August 2011, and Moberly defaulted on its bonds. Cole, 67, has pleaded guilty to two counts of securities fraud and one count of theft.