In addition, Fitch affirms the following ratings:
The bonds are to be sold via negotiated sale on
The Rating Outlook is Stable.
The bonds are special revenue obligations of the authority, payable from unlimited ad valorem taxes on taxable land within improvement districts (IDs) located in the
KEY RATING DRIVERS
ANALYSIS OF INDIVIDUAL IDS: The rating reflects the weakest link among the individual IDs as their obligations are several and not joint. Fitch views ID Nos. 4 and 4B as the least strong due to high overall debt levels and tax base pressure during the recession.
STRONG SERVICE AREA; NO ADDITIONAL DEBT: The district services a largely built-out, affluent residential community demonstrating ongoing property development. No additional debt is planned and amortization is typically rapid.
HEALTHY OPERATIONS: The district's water and sewer operations are financially healthy, with substantial liquidity.
TAX BASE REBOUNDING: The bonds are secured by an ad valorem tax pledge from taxable land only (excluding improvements). After experiencing recession-related land assessed valuation (AV) declines, all IDs' land values increased in fiscal 2014 and are projected to increase further in fiscal 2015.
HIGHER OVERALL DEBT LEVELS: While direct debt levels are low to moderate, overall net debt levels of ID Nos. 3, 4, and 4B are high. However, these high debt levels are mitigated by rapid amortization, limited capital needs, and no additional debt plans.
Future land AV weakening could pressure the rating given tax base vulnerability during the recession and the tepid recovery to date in most IDs. The rating is also sensitive to shifts in the district's strong financial profile and customer base. The Stable Outlook reflects Fitch's expectation that such shifts are highly unlikely.
The district is located in the southeastern portion of
STRONG FINANCIAL PROFILE
The district's water and sewer operating profile is strong, reflecting low customer concentration, limited capital needs, and solid financial performance. Fiscal 2013 ended with a strong cash and investments position of
Operations are financed by a combination of user fees and property taxes. Operations remained positive after debt service payments throughout the recession, with draws on the rate stabilization fund (RSF) in the latter years (fiscal years 2012 and 2013) to maintain the trend. Fitch considers the district's projected maintenance of the RSF in fiscal 2014 at the current
The district relies on importing costly water from
WEAK LINK ANALYSIS
Direct debt levels are low for the IDs, while overall debt is high for ID Nos. 3, 4, 4A, and 4B. The district has no plans to issue further debt for these IDs despite
Fitch analyzed each of the seven IDs and concluded that ID Nos. 4 and 4B demonstrate relatively lower credit quality for two reasons: high debt and tax base pressure. ID No. 4 has the highest overall debt level at
STRONG SERVICE AREA
The impact of home value declines on the district has been somewhat mitigated as pledged revenues are based on land AV and not improvements. Compared to state and national levels, county incomes are very high and unemployment is below average at 5.2% as 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' (
--'U.S. Water and Sewer Revenue Bond Rating Criteria' (
Tax-Supported Rating Criteria
U.S. Local Government Tax-Supported Rating Criteria
U.S. Water and Sewer Revenue Bond Rating Criteria
Source: Fitch Ratings
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