Bond proceeds will refund a portion of the county's outstanding special obligation bonds. The bonds are scheduled to sell via competition on
In addition, Fitch affirms the following ratings:
A complete list of ratings being affirmed is provided at the end of this release.
The Rating Outlook is Stable.
The bonds are secured by separate county guaranty agreements to which the county's full faith, credit, and taxing power are irrevocably pledged. The pledge is subject to the county charter's limitation on annual revenue increases from taxes levied on existing property after
KEY RATING DRIVERS
RATING CONTINGENT UPON COUNTY'S PROFILE: The rating reflects the underlying credit characteristics of the county.
RETURN TO STRUCTURAL BALANCE: County financial operations are structurally balanced after past reliance upon reserves and other one-time revenues.
ADEQUATE RESERVE POSITION: Fitch believes that fund balance levels will be adequate after the expected attainment of policy levels, an increase from the very weak position of a few years ago.
SOLID REVENUE-RAISING CAPACITY: The county's low income tax rate provides revenue-raising flexibility. A charter-imposed cap on property tax growth somewhat limits the county's ability to raise revenue, although a substantial taxable assessed valuation cushion bolsters the consistency of property tax collections.
VITAL EMPLOYMENT BASE: A considerable and strong economic base, concentrated in the governmental and military sectors, shows excellent prospects for continued development and expansion. Wealth levels are well above average.
LOW DEBT BURDEN: Overall debt levels are moderately low and amortization is rapid, consistent with the county's conservative debt policies. Long-term obligations do not pressure the credit.
SUFFICIENCY OF RESERVE LEVELS: Fitch will continue to monitor the county's success in maintaining structural balance and adequate reserves.
DISTRICTS' RATINGS LINKED TO COUNTY'S GO PLEDGE
Each series of bonds is payable from that district's tax increment revenues. Special tax revenues generated by the
Should tax increment revenues and special tax revenues prove insufficient to service the debt, the county will fund the appropriations by levying ad valorem taxes, subject to charter limitations on the county's taxing power. The county's obligation is an unconditional full faith and credit pledge and is the basis for the rating on the bonds.
All three districts leverage the county's strong commercial base and have demonstrated tax base resiliency as well as sound to ample debt service coverage.
VIBRANT GOVERNMENT AND MILITARY-BASED ECONOMY
Government and defense related contractors coupled with the robust employment opportunities in the
The county is
ATTAINMENT OF BUDGETARY BALANCE; REBUILDING OF RESERVES
A return to a structurally balanced budget and adequate reserve levels has enhanced the county's financial profile. Fiscal 2013 concluded with a
Fiscal 2013 benefitted from 6.9% revenue growth from the prior year. Property and income taxes, which combined account for nearly 80% of county revenues, continued to demonstrate sustained improvement. Recordation and transfer taxes rebounded with better housing market performance after relatively flat returns from fiscal 2009-fiscal 2012. Actual collections exceeded the budget by a notable 35.1%, the first positive variance since fiscal 2008. Fitch considers conservative revenue forecasting as prudent financial management, especially given the volatile history of these taxes and results that until fiscal 2013 had been below budget for a number of years.
The year concluded with an unrestricted fund balance, including the county's revenue stabilization fund (RSF), equal to a satisfactory 9.4% of spending, adjusted for bond proceeds. This level compares favorably to the fiscal 2009 available fund balance equal to 2.6% of spending, adjusted for bond proceeds. The
EXPECTATION OF LOWER BUT ADEQUATE RESERVES
The fiscal 2014 budget achieves balance with a minimal use of one-time impact fees, which Fitch believes do not compromise structural budget integrity. The budget includes a
County management reports that they do not anticipate using the full fund balance appropriation in fiscal 2014, which Fitch accepts given preliminary indications of positive revenue variances. Nevertheless, reserves are projected to decline. The current rating incorporates Fitch's expectation that the county will operate over time with fund balance levels that fluctuate somewhat but include a fully funded RSF along with some additional reserves. Fitch views projected fiscal 2014 reserve levels as adequate given the historical volatility of reserves and the revenue flexibility afforded primarily by the leeway under the income tax cap, an economically-sensitive revenue source. A commitment to structural balance and a fully funded RSF is a key rating consideration going forward.
The fiscal 2015 budget is still under consideration. Preliminarily, the county will appropriate a lower level of fund balance than in fiscal 2014 and will again restrict its use to one-time projects. The county is considering a contribution to the RSF, with the possibility of aligning the fund with the
MEASURABLE FINANCIAL FLEXIBILITY
Fitch view positively the flexibility embodied in the county's income tax rate, which at 2.56% is among the lowest in the state. The county estimates that it could generate around
LOW DEBT LEVELS
The county's debt levels remain moderately low, well within conservative debt affordability targets. Overall net debt equals
AFFORDABLE LONG-TERM OBLIGATIONS
Fitch does not believe that long-term obligations will pressure the credit, even as the county assumes the increased cost of funding teachers' pensions due to a funding shift from the state to local governments. County employees excluding teachers participate in one of four single-employer defined benefit plans, all in separate trust funds administered by the county's pension system. The county's annual contributions total a manageable 4.1% of government spending. The county is considering lowering its investment rate of return by .25% to 7.75%, which would raise the annual required contribution (ARC). Calculations that use Fitch's assumption of a 7% investment rate of return result in a just-satisfactory funded ratio of approximately 69%.
Pension requirements increased in fiscal 2013 by a modest
Effective fiscal 2014, the county will augment its annual OPEB appropriation, with the goal of achieving full ARC funding within five years. Fully funding the OPEB ARC in fiscal 2013 coupled with debt service and pension payments would have resulted in total carrying costs equivalent to a manageable 19.9% of spending. Fitch believes that through sound financial management the county can implement the increased contributions without undue pressure.
Fitch affirms the following GO bonds at 'AA+':
--GO bonds series 1987; 1996; 1998;
--GO general improvement bonds series 2005;
--GO consolidated general improvement bonds (Taxable-Build America) series 2010;
--GO consolidated general improvement bonds series 2004; 2006; 2007; 2009; 2010; and 2014;
--GO consolidated general improvement refunding bonds series 2003; 2005; 2006; and 2009;
--GO consolidated water and sewer bonds (Taxable-Build America) series 2010;
--GO consolidated water and sewer bonds series 2003; 2004; 2006; 2007; 2009; 2010; and 2014;
--GO consolidated water and sewer refunding bonds series 2005, 2006, 2009, and 2003;
--Consolidated general improve bonds series 2008;
--Consolidated water and sewer bonds series 2005; and 2008;
--(Consolidated Golf Course Projects) GO bonds series 2005;
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
Most Popular Stories
- Pandora Tumbles in Late Trading
- Sporty Ford Fiesta Fires on All 3 Cylinders
- Stop-Start Engines Save Gas, Reduce Emissions
- World Tensions Don't Curb Enthusiasm for Stocks
- Russia Fears Lasting Damage From Ukraine Crisis
- Visa, Amazon Results Drag Down the Street
- U.K. Economy Surpasses Pre-Crisis Peak
- Ohio State Band Chief Fired After Probe
- Hispanic Leader Goes the Extra Mile
- Shia LaBeouf Plea Deal, Alcoholism Treatment