The Rating Outlook is Stable.
The bonds are secured by semiannual lease rental payments paid by the
KEY RATING DRIVERS
REGIONAL HUB; TAX BASE STABILIZATION:
VERY MODEST PROPERTY TAX LEVY: The authority's property tax levy for operating, building and debt service constitutes less than 2% of the total property tax levy within the county, including the city, county and other overlapping entities. This provides revenue flexibility as even sizable changes in the authority's tax rates only marginally affect overall taxes.
ABATEMENT RISK: Rental payments are subject to abatement if the leased premises are not available for use. This risk is mitigated by the master lease requirement that the authority maintain rental value insurance equal to two years of rent payments and property damage insurance at 105% of replacement cost.
The rating is sensitive to shifts in fundamental credit characteristics including the strong financial performance and a stable local economy. The Stable Outlook reflects Fitch's expectation that such shifts are unlikely.
The authority operates two airports in
DIVERSE LOCAL ECONOMY SHOWS RECOVERY
County unemployment levels, at 6.2% in
STABILIZING TAX BASE
Assessed valuation has experienced modest increases since 2010, signaling stabilization of the county's taxbase. The
SMALL AIRPORT WITH INCREASED ENPLANEMENT ACTIVITY
Airport operations are modest with enplanements averaging just under 300,000 annually for the past 10 years. Cargo/freight service is provided by three carriers including Federal Express and United Parcel Service. Airport activity slowed considerably during the past economic downturn as indicated by a 44% decline in landing weights and a 7% drop in passenger counts between fiscals 2007 and 2010.
More recent statistics suggest that a rebound may be in progress. The rebound is led by cargo carriers, which increased from five carriers in 2010 to nine in 2013; passenger landing weights have declined slightly since 2011. Enplanements grew 5% in fiscal 2013, the largest annual growth over the past five years.
FAILURE OF CARGO FACILITY LESSEE TRIGGERS DEBT SERVICE LEVY
The outstanding bonds refunded a 1998 issue which financed the construction of a cargo facility. The authority expected the cargo carrier leasing the facility to cover debt service costs. The carrier declared bankruptcy and vacated the cargo facility in 2008 and the authority has since been levying property taxes for debt service. The authority is currently in negotiations with a tenant for the facility.
Financial management has been sound supported by a compensatory cost structure built into the airline agreements as well as user fees and taxes. Operations are mostly self-supporting with tax revenues used to fill any revenue gaps and cover debt service. Unaudited fiscal 2013 operations report a
Fiscal 2013 unrestricted net assets are robust accounting for 167.4% of expenses less depreciation and interest. Liquidity levels are ample with fiscal 2013 unrestricted cash and investments cover 20 months of operations, excluding depreciation. The authority is budgeting a deficit for fiscal 2014, driven by cash funding of capital expenditures, but year-to-date results indicate actual results may be better than budgeted expectations.
Debt levels are low to moderate with overall debt burden at 2.8% of market value. Principal amortization is very rapid with all bonds fully retired within seven years. The authority's capital plans are manageable and are primarily funded with federal and state grants. There are no plans to issue additional bonds.
RISING BUT MANAGEABLE PENSION COSTS
The authority participates in two plans administered by the
The remaining amortization period as of
LEASE PAYMENTS SUBJECT TO ABATEMENT
The bonds are subject to a master lease between the airport authority and the building corporation. The leased property consists of an air cargo hub facility composed a 240,000 square foot sortation building, maintenance building, an administrative building and other site improvements. Semi-annual rent paid by the authority corresponds to debt service on the bonds. Payments are made directly to the trustee and deposited into the debt service account. Typical of
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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