Fitch also has affirmed the 'AA' implied unlimited tax general obligation (ULTGO) rating for the township.
The Rating Outlook is revised to Stable from Negative.
The LTGO bonds are secured by the township's full faith and credit and its ad valorem tax pledge, subject to applicable charter, statutory and constitutional limitations.
KEY RATING DRIVERS
STABILIZING VALUATIONS: After several years of sizeable declines in taxable value (TV), levels have stabilized with growth in the current year and further growth projected.
STABLE RESERVES DESPITE ECONOMIC PRESSURE: Conservative financial management has resulted in positive operating results and stable fund balance levels despite recent recessionary pressures.
MANAGEABLE LONG-TERM OBLIGATIONS: The township maintains a moderate debt burden. Combined debt service, pension and other post-employment benefit (OPEB) costs are average as a percentage of governmental expenditures, although increases in funding requirements for the poorly funded pension plan could increase this burden.
DISTINCTION BETWEEN ULTGO AND LTGO: Fitch believes the township's inability to raise its property tax rate and limited ability to capture TV growth warrants a one notch distinction between the implied ULTGO and LTGO ratings.
DECLINES IN TV: Further deterioration in TV could lead to the need to use reserves or other non-recurring measures to balance the budget, which could negatively impact the rating.
ABOVE AVERAGE ECONOMIC FACTORS
The local economy is anchored by the
General Motors (GM) is the township's second largest taxpayer. It planned to close one of its two facilities in the township, but instead decided to use it for storage, dramatically reducing the number of employees in the short term but with plans to return to past employment levels in the longer term. Management reports that the other GM facility is stable. Wealth levels in the area remain above average with median household income at 125% and 115% of the state and national averages, respectively.
TAXBASE VALUATION DECLINES END
After several years of large declines, TV apparently has stabilized. TV was down a cumulative 23% from 2008 to 2012. After a nominal decline in 2013, TV is up 1.8% in the current year. Management expects TV to continue to grow, which Fitch views as reasonable given current economic development activity and increases in home prices.
CONSISTENT FINANCIAL PERFORMANCE DESPITE CONSTRAINTS
Property tax revenue is the township's largest revenue source at approximately 61% of the total, which makes TV changes particularly important. The township's tax rate is currently at the maximum under the Headlee amendment, which limits future revenue raising flexibility. The township board has no plans to seek a Headlee amendment override at this time. Voters overwhelmingly approved a 0.5 mill levy increase for fire protection in 2010, but this success does not necessarily mean voters would approve other proposed levy increases.
The township's second largest funding source is state-shared revenue (24%). There was a small decline in this source from 2011 to 2012, but the township expects a small increase in 2014.
In 2012 both general fund revenues and expenditures were under budget. Expenses were kept down through turnover due to attrition, increased labor contributions for health care, and close expense management. The township prudently allocated
The township expects to finish 2013 with another surplus of approximately
MANANGEABLE DEBT BURDEN; UNDERFUNDED PENSION
The township contributes to the Michigan Municipal Employees Retirement System (MERS), as well as a separate defined contribution plan. Total pension expenses were
OPEB is generally funded on a pay-go basis, although the township has also been prudently pre-funding its OPEB obligation; its OPEB trust had a balance of
The township's overall debt burden is in the moderate range at
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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