The bonds are scheduled for public bid on
In addition, Fitch affirms the following ratings:
The Rating Outlook is Stable.
The GO bonds are secured by the city's full faith and credit and unlimited tax pledge.
The COPs and LOBs are secured by annual payments made by the city subject to annual appropriation and a deed of trust on certain governmental property.
KEY RATING DRIVERS
SOUND RESERVES AND BUDGETARY FLEXIBILITY: The city's financial profile is bolstered by conservative budget assumptions and regular performance monitoring that consistently generates results that outperform budgeted expectations and are in line with the formal 14% general fund balance policy.
MODERATE DEBT BURDEN: Debt ratios are expected to remain stable, given the rapid amortization and affordable future capital needs and debt issuance plans.
ROBUST ECONOMY: The economy benefits from an extensive government, university and healthcare presence and proximity to the
APPROPRIATION DEBT: The ratings on the LOBs and COPs reflects the appropriation risk inherent in the installment payments to be made by the city to the trustee, the level of essentiality of the respective leased assets to governmental operations, and the general creditworthiness of the city of
AMPLE LIQUIDITY: The 'F1+' rating principally reflects the long-term credit quality of the city and sufficient period of time following a tender and failed remarketing to access the capital markets and provide takeout proceeds.
SOUND RESERVE LEVELS
Fiscal 2013 ended with a continuation of positive operating results. The
STABLE OPERATIONS PROJECTED FOR FISCAL 2014
The fiscal 2014 budget was balanced with a
The fiscal 2014 year-over-year budget increase is 5.5% and includes funding related to merit increases, the addition of 29 new positions, infrastructure and funding for employee training and development. Based on the city's historical financial performance operations are expected to remain positive and reserves ample.
CONTINUED REVENUE GROWTH EXPECTED IN FISCAL 2015
The fiscal 2015 budget shows continued favorable revenue growth. Consistent with previous years, the adopted budget includes a
AFFORABLE DEBT PROFILE
Debt levels are moderate at 2.9% of market value, and debt service accounts for 11.7% of total governmental spending excluding capital. Amortization is rapid with 64% of GO debt retired in 10 years.
The current fiscal 2014 to 2018 five-year capital improvement plan (CIP) totals
The variable-rate 2009 LOBs were issued at an initial rate equal to the SIFMA index as of the date of delivery plus a fixed index spread (the first 'windows' rate) and will bear interest at the windows rate until adjusted to another interest rate (daily, weekly, long-term, etc.). All bonds in the window mode will not be subject to mandatory tender for purchase until 210 days following the tender notice. While in the windows mode upon tender there is a 30-day remarketing window which is followed by a 180-day funding period during which time the city may issue refunding bonds, remarket in the windows mode at a new spread, convert to another mode or another security type including third-party liquidity, or liquidate investments to provide for the purchase price of the bonds. The city's growing investment balances provide ample liquidity relative to the
WELL-FUNDED PENSION AND OPEB COST
Pension and other post-employment benefits (OPEB) continue to be well managed. The city is a member of the statewide cost-sharing multi-employer defined benefit Local Government Employees' Retirement System (LGERS). The overall plan is well funded at 94%, after adjusting the discount rate to 7%. The city also contributes to the defined benefit law enforcement separation allowance plan. The separation allowance plan is poorly funded at 11% but the total liability is small relative to the city's budget (less than 1%). For OPEB, the city has set up an irrevocable trust with actuarily valued assets 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. Local Government Tax-Supported Rating Criteria
Tax-Supported Rating Criteria
Source: Fitch Ratings
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