The Rating Outlook has been revised to Positive from Stable.
The GOs and COs are secured by an annual property tax levy limited to
KEY RATING DRIVERS
IMPROVED FINANCIAL PERFORMANCE: The revision of the Outlook to Positive reflects strong sales tax growth resulting in solid general fund gains for fiscals 2012 and 2013, following three years of operating deficits. The city's financial reserves are high as a percentage of spending but modest as a nominal dollar amount.
HIGH SALES TAX DEPENDENCE: The general fund's revenue mix, comprised primarily of sales taxes, exposes the city's operations to economic volatility but also allows the cost of municipal services to be shared with its many non-resident shoppers.
POSITIVE TAX BASE TRENDS: The city's tax base is small and concentrated but per capita tax base wealth is high, reflective of the city's affluence. High-end homebuilding activity along nearby
WEAK DEBT PROFILE: The overall debt burden is very high and given slow principal pay-out will remain high. Additionally, debt service as a percentage of spending is above average; however, the city has no plans for additional tax-supported debt over the near term.
POSITIVE OPERATING PROFILE: Continuation of recent operating gains and growth in reserves could lead to an upgrade.
ECONOMIC EXPANSION: Positive rating action would hinge on continued expansion of the city's limited economy.
WEAKENED DEBT PROFILE: Further weakening of the debt profile, though unexpected, could lead to negative rating action.
SMALL BUT GROWING COMMUNITY
The city is a regional commercial destination in the fast-growing
TAV performed well through the recession, with growth slowing to approximately 8% annually from fiscal 2010-2012. The city's tax base posted a solid 15% gain for fiscal 2014, assisted in part by annexations of raw land; preliminary values for fiscal 2015 also show growth of over 15%. Top 10 taxpayer concentration remains high at more than 20%, led by a local shopping center.
Recent commercial projects include a mix of retail, office buildings, multifamily housing, and assisted living apartments. Construction will begin in summer 2014 for a shopping center to be anchored by a Kroger grocery store, which management anticipates will double the city's sales tax revenue. An 80-unit apartment complex is also expected to break ground in fall 2014. Prospects for continued growth appear positive, given the city's desirable location near
HEALTHY RESERVES, SALES TAX DEPENDENCE
The city's financial reserves are strong as a percentage of spending (although modest as a nominal dollar amount), and were bolstered by positive general fund operations in fiscals 2012 and 2013. The unrestricted general fund balance equaled
Sales taxes are the largest general fund revenue source, and they grew by 15% and 25% in fiscals 2012 and 2013. However, year-to-date allocations show a 16% increase over 2013 on a calendar year basis. Management's projections for fiscal 2014 include a modest general fund surplus, which would continue the recent trend of positive performance. Fitch views the city's healthy reserves as a key mitigant to its dependence upon historically volatile sales tax revenues. City officials expect to monitor this revenue source and adjust expenditures accordingly in order to maintain structural balance.
VERY HIGH DEBT LEVELS
Overall debt levels, which include overlapping school district debt, are very high, particularly on a per capita basis 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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