The Rating Outlook is Stable.
The special tax bonds, series 2004A, 2006A, and 2010A are secured by a senior lien on special tax revenues, net of administrative expenses. The debt service reserve requirements are met through a combination of surety bonds (series 2004A and 2006A) and a cash-funded reserve (series 2010).
The subordinate special tax refunding bonds, series 2012A are secured by the net special tax revenues on a subordinate basis to the senior special tax bonds. The debt service reserve requirement is met through a surety bond.
KEY RATING DRIVERS
SATISFACTORY DEBT SERVICE COVERAGE: The ratings reflect sound debt service coverage (DSC) on senior and subordinate bonds and satisfactory performance under various stress scenarios. The rating further reflects Fitch's expectation that management will generally keep future subordinate issuance in line with new revenue generating development (the senior lien is closed) and not leverage revenues to the 1.10x additional bonds test (ABT).
TESTED, STABLE REVENUE SOURCE: The special tax is assessed at a fixed dollar amount per parcel and therefore does not fluctuate with changing valuations on existing properties within the CFD. Special tax delinquencies peaked at 4.7% during the recession but have since dropped and delinquent properties are subject to accelerated foreclosure proceedings.
NON-CONCENTRATED TAX BASE: The tax base is largely residential and the top 20 taxpayers comprise a low 1.6% of the fiscal 2014 special tax levy. The total effective tax rate in the area is somewhat high but remains affordable given its above-average socioeconomic characteristics.
REBOUNDING ECONOMY: The regional economy centers on agribusiness, government, and petroleum-related industry. Both the economy and the property market are displaying positive trends and the local unemployment rate compares favorably to the state's.
The rating is primarily sensitive to material shifts in DSC. Risks to DSC include future leverage, taxpayer delinquencies, and/or taxpayer prepayments. The Stable Outlook reflects Fitch's expectation that such shifts are unlikely.
The authority was formed in 1992 by three school districts located in
The CFD encompasses approximately 18 square miles in and around north-western
The bonds are secured by either a closed senior lien (series 2004A, 2006A, and 2010A) or a subordinate lien (series 2012A) on special taxes, net of administrative expenses, imposed on properties according to the CFD's voter-approved special tax rate and method formula. The annual special tax escalates 2% annually with no sunset provisions. The special taxes are collected with property taxes and have the same lien priority as ad valorem property taxes. The authority has covenanted to pursue accelerated foreclosure proceedings if individual parcels are delinquent by
SATISFACTORY DEBT SERVICE COVERAGE
The CFD issued
Annual debt service in most years through fiscal 2036 ascends at roughly the same rate as the annual 2% levy increase, thereby preserving coverage levels without considering additional debt issuance. As a fixed charge, revenues do not fluctuate with valuations on existing properties but would expand if/when new property is added to the tax roll.
Principal payout on all bonds is slow at 36% in 10 years and features ascending debt service. With remaining debt authorization of
Net special tax revenues in excess of debt service are used by member school districts to fund pay-go capital projects and additional administrative expenses.
The regional economy centers on agribusiness, government, and petroleum-related industries.
The total effective tax rate in the area, including the special tax assessment, is somewhat elevated but remains affordable with the median effective tax rate for a single-family home at approximately 1.62%. The tax base is largely residential and non-concentrated with the top 20 taxpayers comprising only 1.6% of the fiscal 2014 special tax levy.
Special tax delinquencies were 1.05% in fiscal 2013 compared to a recent high of 4.68% in fiscal 2008. New development within the CFD slowed significantly during the recession. Development activity is now rebounding with 440 development permits issued in the 12 months ending
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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