S & P Global Ratings lowered Butler’s bond rating four notches, to B from BB+, because of its lack of management and plan to repay a $2 million loan it borrowed for the Butler Redevelopment Authority for the Marriott Springhill Suites in the Centre City project downtown.

The ratings for the city’s series 2015 A and B general obligations bonds were lowered last week for the third time this year.

S & P Global lowered the bond rating from BBB, which signifies medium grade bonds, to BB+, signifying noninvestment grade bonds in October. Previously S & P lowered the rating from A, signifying good to medium investment grade bonds, to BBB.

The new B rating signifies “speculative” grade bonds and means the city is more vulnerable to adverse business, financial and economic conditions, but currently has the capacity to meet financial commitments, according to S & P.

The loan will be repaid with a $2 million state grant the city will receive when the hotel is completed.

PNC Bank extended the maturity date of the loan to Dec. 6, but has agreed to delay further action until Jan. 6, when the sale of the hotel is expected to close.

J.S. Capitol, the current owner and developer, is in the process of selling the hotel to an unnamed buyer for $7.3 million.

The agreement between the city, authority and developer require the developer to pay off the loan if the city defaults.

Mayor Tom Donaldson said the downgrading is somewhat unfair because the agreement covers the loan repayment, but paying off the loan won’t restore the city’s bond rating.

“Repaying the loan won’t significantly impact the bond rating. It might go up a little,” Donaldson said.

He said the city’s lack of cash and high overtime wages in the fire department must be addressed to improve finances and restore the bond rating.

This year’s budget allocates $110,000 for overtime, but $197,000 has been spent so far, he said.

Donaldson said he supports monetizing parking operations and using the proceeds for needed purchases and improvements, and lowering the business privilege taxes.

“You’ve got all these different issues that are tied to the city finances,” Donaldson said. “Nothing’s going to change until someone’s willing to go after the fire department and make some changes.”