On the eve of a critical vote by the Memphis City Council, a report from Moody’s Investors Service gives a “negative” outlook to its Aa3 rating of $23.6 million in revenue bonds the city plans to use to finance the purchase of AutoZone Park and improvements to it.

The report, dated Dec. 2, was released over the weekend and comes a month after city leaders were in New York for an annual meeting with executives at Moody’s and the two other major bond rating agencies.

Moody’s analysts gave the revenue bonds to be issued through the Center City Revenue Finance Corporation a “Aa3” rating that reflects confidence that the non-general fund or non-city property tax revenues Memphis Mayor A C Wharton Jr. has said would back the debt will be sufficient to cover it.

The concern for Moody’s however is the “above average debt burden” the city has overall.

The Dec. 2 Moody’s report says its analysts expect “the city’s financial position will remain challenged as fixed costs, including debt service, pensions and other post-employment benefits represent 42 percent of operating expenditures in fiscal 2012.”

“In addition, the city has continued to leverage its non ad-valorem tax revenues by securing approximately $296.8 million in debt, including the expected issuance of the Series 2013A and 2013B bonds through the Memphis Center City Revenue Finance Corporation,” the report continues.

The series cited are the bonds that would be used for the city to buy AutoZone Park as well as finance $5 million worth of improvements to the ballpark.

The other part of the proposal is that the St. Louis Cardinals would buy the Memphis Redbirds franchise and commit to $15 million in improvements to the ballpark as well.

Without a city purchase of the ballpark, the Wharton administration has said Fundamental Advisors LP, the equity firm that owns the team and ballpark since the Memphis Redbirds Foundation defaulted on the original bonds used to build the Downtown ballpark, would likely foreclose on the ballpark and sell it at auction to the highest bidder and sell the team as well.

The administration has pitched the deal to the council in much the same way it has pitched the financing of other public-private projects from the adaptive reuse of The Pyramid to its plans for a revitalization of The Fairgrounds.

That method is public financing from various revenue streams as well as sales tax rebates and incremental sales tax generated within a Tourism Development Zone that avoids using or obligating general fund revenue, specifically city property tax revenue.

The “non-ad valorem” revenues of the city dropped by 3.2 percent in the fiscal year that ended June 30, 2012. The city expects an uptick in those revenues by 2.9 percent once the books are closed on the current fiscal year this summer. And the Moody’s report expects those revenues to “stabilize going forward.”

“However, continued leverage of these revenues could put pressure on both the non-ad valorem bonds and the city’s General Obligation Rating,” the same report warns.

The administration’s pitch for its various projects that are not to be financed with property tax revenue is that the use of other revenues streams has no impact on general obligation bonds and their debt, which is paid as a part of the property tax rate.

But among the concerns in the Moody’s report is the city’s “above-average debt burden” that is expected to rise in the next several years, nearly half of that to be funded with additional bonds. As things stand now, Moody’s describes the city’s overall debt burden as “well above average at 5.8 percent.”

The Moody’s report balances that with a decline in the city’s $36.5 billion tax base of -0.2 percent in the five years since 2008.

The report includes several references to the still to come response from Wharton and his administration to the city’s unfunded pension liability. Wharton had been scheduled to give some ideas about what that will involve at last week’s council session.

The presentation was delayed by the council as it complained of not having enough details in a timely manner on the complex ballpark deal. The busy council day also included last minute details of how the city intended to fund $15 million from local, state and federal sources for the public and last piece of financing for the $180 million revitalization of the Crosstown building.