The proceeds of the bonds will be used to finance the costs of various capital improvement projects, refund a portion of outstanding GO bonds for debt service savings, and restructure a portion of outstanding GO utility bonds to smooth future debt service costs. The bonds are expected to sell competitively on
In addition, Fitch affirms the following ratings:
The Rating Outlook is Stable.
The GO bonds are backed by the town's full faith and credit and unlimited ad valorem taxing ability.
KEY RATING DRIVERS
HEALTHY FINANCIAL POSITION: Strong financial management has contributed to a pattern of generally positive operating results, healthy reserves, and high liquidity. Operations benefit from a diverse revenue base and unencumbered legal capacity to increase property taxes, the main general fund revenue source.
AFFLUENT ECONOMIC BASE: The town's strong economic profile reflects residents' high income metrics and educational attainment, healthy population gains, and history of low unemployment relative to the state and nation. The township's small employment base is significantly augmented by its proximity and commuting access to the
MODERATE DEBT LEVELS: Limited intermediate-term debt issuance will allow the town to maintain the current manageable debt position.
The rating is sensitive to shifts in fundamental credit characteristics including the town's strong financial profile. The Stable Outlook reflects Fitch's expectation that such shifts are unlikely.
WEALTHY TAX BASE LOCATED WITHIN STRONG D.C. AREA ECONOMY
The town is primarily a residential community, located at the confluence of state highway 7 and interstate 15, making it accessible to the nearby job markets of
STRONG FISCAL POSITION
Year-to-date general fund financial results for fiscal 2014 appear positive. The town is anticipating an operating surplus after transfers of
The adopted fiscal 2015 budget increases spending by 2.7% or
Town council has approved an increase to the unassigned fund balance policy to a minimum of 16% of general fund spending and management anticipates increasing the policy by 1% annually to reach 20% by fiscal 2019.
PLAN TO ACCOMMODATE RESTRUCTURED DEBT SERVICE
As part of the current issuance, the town is planning to restructure its outstanding utility GO debt to offset expected debt service increases starting in fiscal 2017. The system remains in strong fiscal health and generates self-sufficient operating results, so Fitch does not expect tax support to be needed for this debt. The restructuring would create a more level payout structure. The new 10-year payout ratio of the town's utility debt would be 38%, which is consistent with Fitch's water and sewer revenue bond amortization median. The town expects to vote later this month on multi-year rate increases to maintain fiscal stability going forward. This is the second time in the last four years that the town has decided to restructure its debt service schedule for budgetary savings, with the first, in 2011, deferring general fund payments. Fitch believes this practice is uncharacteristic of the town's otherwise very strong credit profile.
MODERATE DEBT PROFILE
The town's total debt levels are moderate with overall debt equal to
LIMITED OTHER LONG-TERM LIABILITIES
All town employees participate in the
Other post-employment benefits (OPEB) liabilities remain relatively low, and the town has fully funded its OPEB ARC for the past two years, which Fitch considers a credit positive. The town has also established an OPEB trust to fund future benefits, which had a balance 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' (
Tax-Supported Rating Criteria
U.S. Local Government Tax-Supported Rating Criteria
Source: Fitch Ratings
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