The 'AAA' rating is based on a guarantee provided by the
In addition, Fitch affirms the following ratings for the district:
The Rating Outlook is Stable.
The bonds are secured by an unlimited ad valorem property tax pledge. The bonds additionally carry a guarantee from the
KEY RATING DRIVERS
GOOD FINANCIAL FLEXIBILITY: The district's financial position is sound, characterized by solid operating reserves and liquidity that have supported pay-as-you-go spending on facility repairs and renovations.
MODERATE TAX BASE CONCENTRATION: Declining mineral values, comprising 5% of fiscal 2014 taxable assessed valuation (TAV), account for recent tax base erosion, in contrast to a history of strong TAV growth. Fitch anticipates increased home prices and new construction to stabilize the tax base in the near term despite ongoing exposure to gas price volatility.
STABLE ECONOMY: The district's income trends moderately above state and national averages. Although near term growth expectations are modest, Fitch views the district's long-term prospects favorably given its proximity to the healthy
MODERATE DEBT BURDEN: Fitch anticipates the district's debt to remain manageable based on current levels and the lack of debt issuance plans.
SHIFT IN FUNDAMENTALS: The rating is sensitive to shifts in fundamental credit characteristics including the district's sound financial management practices. The district's history of maintaining solid reserves while addressing operating and capital needs supports expectations for rating stability.
The largely rural district has transitioned into a bedroom community of
Manufacturing and commerce, as well was historically significant agribusiness anchor the regional economy. Employment figures are not available at the local level, although
HISTORICALLY STRONG TAX BASE GROWTH LOSES GROUND
The district's tax base realized average annual gains of 12% between fiscal 2000 and 2010, in tandem with strong regional growth. TAV flattened in fiscal 2011 due to recessionary pressures before losing 10% of total value in fiscal years 2012 through 2014 due to a decline in oil and gas values. The district's top 10 taxpayers comprise a moderate 10.7% of fiscal 2014 TAV represented primarily by oil and gas, as well as manufacturing, retail, real estate and health care concerns. The largest single taxpayer,
Budget exposure to TAV weakness is mitigated by the state's target revenue funding system that subsidizes declines in local revenue with additional state aid. Fitch anticipates that improving residential values and new residential and commercial construction will continue to mitigate the district's downside exposure to mineral devaluations.
SOUND FINANCIAL POSITION
The district maintained strong liquidity despite five years of flat to declining revenues by aggressively managing costs. Responding to the challenges of a relatively flat enrollment growth and state funding cuts, the district reduced its costs through attrition, a salary freeze and discretionary spending cuts.
The fiscal 2013 unrestricted general fund balance of
Fiscal 2014 performance is trending favorable to the original budget which included an assignment of
MANAGEABLE DEBT PROFILE
Azle ISD's debt profile is a credit positive. The district last issued new money debt in fiscal 1997. This issue will bring the district's debt to a fairly low 2.4% per market value. Amortization is moderate at 52% in 10 years. Annual debt service represents a low 5.9% burden on the fiscal 2013 governmental spending budget.
The series 2014 bonds will fund a career and technology center, gymnasium, and fire suppression system at the district's high school. The district's current I&S tax rate of
The district fully funds it's statutorily required contributions for pension and other post-employment benefits (OPEB), both of which are provided through the Teacher Retirement System of
The judge agreed to reopen testimony after the
Additional information is available at 'www.fitchratings.com'.
In addition to the sources of information identified in Fitch's Tax-Supported Rating Criteria, this action was additionally informed by information from Creditscope,
--'Tax-Supported Rating Criteria' (
--'U.S. Local Government Tax-Supported Rating Criteria' (
Tax-Supported Rating Criteria
U.S. Local Government Tax-Supported Rating Criteria
Source: Fitch Ratings
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