Fitch Ratings has assigned a rating of 'AAA' to the following --
The bonds are scheduled for competitive sale on
In addition, Fitch affirms the following ratings:
The Rating Outlook is Stable.
The GO bonds are secured by the full faith and credit and unlimited taxing power of the county.
The university center COPs are payable from lease rental payments by the county, subject to annual appropriation. Rental payments are payable from any legally available source of the county. Bondholders are additionally secured by a surety-funded debt service reserve fund equal to 50 percent of maximum annual debt service, and a leasehold interest in facilities providing educational and laboratory space for
The hospitality tax COPs are payable from lease rental payments by the county, subject to annual appropriation. Rental payments are made solely from the proceeds of a 2 percent hospitality tax and, if these are not sufficient, the county's share of the state accommodations tax. Bondholders are additionally secured by a cash- funded DSRF equal to 50 percent of MADS and a leasehold interest in certain tourism-related properties.
Key Rating Drivers
Strong Fiscal Oversight:
Diverse and Broad Economic Base: The county serves as an economic anchor for its region. Diversifying from its former textile manufacturing base, the local economy contains a broad mix of business services, healthcare, government, tourism and educational activities.
Modest Debt Load: Direct and overlapping debt levels are moderate while direct debt is rapidly amortized. Capital needs are very manageable and additional debt plans are not expected to alter the county's overall debt structure.
Appropriation Risk: The COPs ratings reflect the risk of annual appropriation. The one notch difference between the GO and COPs ratings for the university center project COPs reflect the leasehold interests in essential facilities for the county.
Lower Rating on Hospitality Tax COPs: The three-notch difference between the GO and hospitality tax COPs incorporates the narrow and potentially volatile repayment source for the COPs. Heightened appropriation risk due to the non-essential nature of leased recreational facilities is somewhat offset by restrictions on use of the revenues dedicated to COP repayment.
Weakening of Reserve Balances: Poor financial performance leading to substantial drawdown of reserves could threaten the GO and COPs ratings.
Reduced Hospitality Tax Coverage: Large declines in hospitality tax revenues resulting in significant reductions in debt service coverage could lead to negative rating action for the hospitality tax COPs.
The county encompasses 792 square miles in the northwestern
Economic Anchor for the Region
The county benefits from its location along
Tepid Job Growth Since 2011
County job growth slowed considerably since 2011 with employment increases of only 0.9 percent and 0.7 percent in 2012 and 2013, respectively. The marginal growth rates result in part to a series of layoffs in 2011 and 2012 as well as growing automation in the manufacturing and distribution sectors. Despite the slow pace of jobs recovery, the county's unemployment rate continues to decline, dropping to 5.3 percent as of
Fitch believes that significant capital investment activity in recent years and rising building permit valuations are positive signs. In addition, the opening of an inland port by the
County wealth indices exceed state benchmarks but fall short of the national averages. Per capita income for 2011 accounts for 111 percent of state norms but only 95 percent of the national average.
Manufacturing Still an Important Economic Driver
Manufacturing remains an important component of the local economy, accounting for approximately 12 percent of
Major manufacturers include auto manufacturer
Consistent Taxable Value Growth
Assessed values have proven resilient, increasing every year since at least fiscal 2003. Tax base growth slowed in fiscal 2012 to less than 1 percent but improved in fiscal 2013 to a 1.4 percent rise. Management projects taxable values to maintain a modest growth trend, which Fitch believes is reasonable given the 4.1 percent gain in housing values over last year, according to Zillow.com. The tax base is diverse as the top ten taxpayers represent a modest 4.5 percent of total assessments.
Tax collections are exceptionally strong averaging 97 percent and 101 percent on a current and total basis, respectively. While county millage rates increased in fiscal 2014 to 51.9 mills from 47.3 mills in each of the three prior fiscal years, the 4.6 mill rate hike stems solely from the county absorbing the operations of its formerly separate recreation district, including its tax levy.
Excellent Financial Management
The county's finances are excellently managed, characterized by very strong reserves, prudent budgeting and wide levels of liquidity. The county reported a net surplus of
Property taxes are the largest revenue source providing approximately 60 percent of general fund revenues. Property tax revenues have generally increased in conjunction with the expansion of the tax base and account for the bulk of overall revenue growth over the past five years. However, in fiscal 2013 a sizable increase in state aid also supported overall revenue expansion of approximately 4 percent. Public safety and law enforcement services combined represent more than half of general fund spending, increasing moderately at a 2.2 percent average annual rate over the past four fiscal years. Management has exercised strict cost control, limiting operating spending to an average increase of 2.3 percent annually since fiscal 2009.
The county budgets conservatively with actual results generally outperforming budget. Management's policy is to build in a contingency equal to 2 percent of estimated revenues for emergencies. The fiscal 2014 general fund budget proposes a modest
High Levels of Liquidity
The county has ample liquidity with fiscal 2013 unrestricted general fund cash equaling almost 11x liabilities. The sizable cash balance covers operations until the major portion of property taxes are received in January and February. County projections for general fund operations call for a marginal surplus in fiscal 2015 followed by gradually expanding surpluses through fiscal 2017.
Manageable Debt Load
Total debt burden is moderate at 3.25 percent of market value. Direct debt levels are relatively low but substantial overlapping debt of the
Retirement Costs Do Not Pressure Finances
The county provides pension benefits to its employees through the South Carolina Retirement System or the
Other post-employment benefits including retiree medical care are provided to retirees through one of three county-subsidized medical plans. The county's OPEB costs are funded on a pay-go basis. The OPEB's unfunded actuarial accrued liability of
Critical Assets Under University Center Lease
The university center project COPS were used to fund facilities for the University Center, a consortium of higher education institutions including
Adequate Hospitality COPS Coverage
The hospitality tax has been collected pursuant to county ordinance since
Hospitality taxes have been steady through the recession, suffering their only drop-off in collections in fiscal 2010, a relatively minor 0.6 percent annual loss. Collections for the three following fiscal years have rebounded moderately with increases of 2.9 percent, 2.8 percent and 3.4 percent, respectively. Fiscal 2013 hospitality tax revenues provide debt service coverage of 1.88x. Also available to pay debt service are accommodations tax revenues which total only a small fraction of hospitality tax collections. Debt service is relatively level through 2028. Six month year-to- date collections of the hospitality tax in fiscal 2014 are down slightly over the same collection period in fiscal 2013.
Additional information is available at fitchratings.com.
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Fitch Ratings has assigned a rating of 'AAA' to the following