The bonds are scheduled to price on a negotiated basis on
Fitch also affirms the following ratings:
The Rating Outlook is Stable.
The GO bonds carry the city's full faith and credit pledge and are payable from an unlimited ad valorem tax levied on all taxable property within the city . The IDB bonds are secured by payments equal to debt service, which the city has covenanted to fund with various city revenues. In the event those revenues prove insufficient, the city agrees to budget and appropriate sufficient monies to pay all basic rent.
KEY RATING DRIVERS
SOUND FINANCIAL MANAGEMENT: Historically conservative budgeting and a willingness to raise revenues have enabled the city to maintain sound reserves and financial cushion.
MIXED EMPLOYMENT PICTURE: The city's diverse economy benefits from the increasing presence of health care, insurance and higher education, supplementing the traditional underpinnings of manufacturing and transportation. Labor force and employment totals have trended downward in recent months, however.
BELOW AVERAGE ECONOMIC INDICATORS: Unemployment remains above the national average. The high poverty rate contributes to below average wealth levels.
MODERATE DEBT BURDEN: Debt levels should remain moderate given limited borrowing needs and prospects for tax base growth.
LEASE RENTAL COVENANT TO BUDGET AND APPROPRIATE: The 'AA' rating on the lease rental bonds reflects the city's inherent credit characteristics and covenant to budget and appropriate sufficient funds for debt service, should other city revenues earmarked for debt service prove insufficient.
The rating is sensitive to shifts in fundamental credit characteristics, including improved socio-economic metrics. The Stable Outlook reflects Fitch's expectation that such shifts are unlikely.
DIVERSE ECONOMY WITH TRADITIONAL ROOTS
Health care, insurance, higher education, retail, and transportation companies as well as a growing energy presence diversify the city's economy. The city's Riverwalk, available outdoor activities, and historical sites have augmented its attractiveness as a tourist destination. Manufacturing remains above the state and national averages but no longer dominates the economy, as was the case several decades ago. Somewhat offsetting this sector's concentration is the increase in high end manufacturing. The region is the first nationwide to offer low cost internet service at gigabit speed to all residences and businesses.
City unemployment at 6.3% in
STRONG FINANCIAL PROFILE
Healthy reserve levels, conservative budgeting, and a willingness to raise revenues underscore the city's financially sound position. The city concluded fiscal 2013 with a
Fiscal 2014 operations are again tracking favorably to budget. The city estimates closing the year with a
The proposed fiscal 2015 budget represents a small 1% increase over the fiscal 2014 budget. The city indicates operations will be balanced, but anticipates appropriating about
MODERATE DEBT BURDEN
Overall debt levels are moderate at
The city's fiscal 2015 - fiscal 2019 capital improvement plan includes general government projects of
NOTABLE PENSION REFORMS IMPLEMENTED
Pension contributions escalated from
The city is fully funding its OPEB ARC, a
LEASE RENTAL BOND COVENANT TO BUDGET AND APPROPRIATE
The lease rental bonds are payable and secured by payments equal to debt service to be made by the
The city has covenanted to fund its obligations to pay rent under the lease with various city revenues, including a quarter cent sales tax, state contributions to the city, net income generated from the Chattanoogan (a conference facility), and interest on the debt service reserve fund. In the event those revenues are insufficient, the city agrees to budget and appropriate sufficient monies to pay all basic rent.
Bonds have been self-supporting (without the city's covenant support) since fiscal 2001 and coverage of annual debt service has ranged from 1.2 times (x) to 1.8x. Coverage equaled 1.4x in both fiscal 2012 and 2013. While Fitch notes the sufficiency of pledged revenues, it is not a factor in the rating.
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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