In addition, Fitch assigns an 'AA-' implied unlimited tax general obligation (ULTGO) bond rating to the city of
The Rating Outlook is Stable.
The bonds are limited obligations of the FMLC, payable from payments equal to debt service made by the borrower, the city, pursuant to the loan agreement. Under the loan agreement, the city covenants to budget and appropriate (CB&A) in its annual budget, by amendment if necessary, an amount of non-ad valorem revenue to satisfy its loan agreement. Additional security is provided by a cash-funded debt service reserve fund equal to the
The issuer has assigned and pledged all of its right, title and interest in and to the loan agreement, including the right to receive loan repayments, to the trustee for the benefit of bondholders.
KEY RATING DRIVERS
SUBSTANTIAL FINANCIAL FLEXIBILITY: Ample reserve levels, significant legal capacity to increase revenues, and conservative budgeting underscore the city's strong financial profile.
NARROW ECONOMY: The primarily residential city has a thin commercial base. Wealth levels hover around regional and national averages.
LIGHT DEBT BURDEN: Limited capital needs and a lack of intermediate term financing plans will help support maintenance of a low debt burden. Pension and other post-employment benefits (OPEB) remain minimal.
COVENANT DEBT NOTCHING: A one-notch distinction in the rating on revenue bonds from the implied ULTGO reflects the debt service payments as subordinate to essential services spending and the inability to compel the city to generate non-ad valorem revenue sufficient to pay bondholders. Available non-ad valorem revenues for debt service are ample and stable.
FUNDAMENTAL SHIFTS: The rating is sensitive to fundamental shifts in credit characteristics, including the city's sound financial management practices. The Stable Outlook reflects Fitch's belief that these shifts are unlikely.
The city is located along the Atlantic coast in central
GROWTH IN TAXABLE ASSESSED VALUE
The city's taxable assessed value (TAV) stabilized in fiscal 2013 after three consecutive years of significant declines. TAV is currently experiencing robust growth, increasing by 7.6% in fiscal 2014 and projected to grow an additional 7.9% in fiscal 2015. The city maintains substantial legal revenue raising capacity in its 2.3 millage rate, well-below that of the statutory 10 mill cap and very competitive in terms of neighboring areas.
Despite the termination of the space shuttle program at the
STRONG NON-AD VALOREM REVENUE AVAILABLE FOR DEBT SERVICE
Non-ad valorem revenues available to meet the city's CB&A requirement for debt service payments are broad, accounting for over three-quarters of total governmental revenues, totaling
SOLID RESERVE LEVELS
The city has maintained sound reserve levels and ample liquidity in recent years. Fiscal 2013 ended with an operating surplus after transfers of
The city has historically budgeted expenditures conservatively and has budgeted a deficit of about
WELL-MANAGED DEBT POSITION
Overall debt is extremely low on a per capita basis at
General employees participate in the Florida Retirement System (FRS) that has a Fitch-adjusted funded ratio of 78.9% using a 7% rate of return. Members of the police department participate in the city's single-employer defined benefit police employees' pension plan (police plan).
To meet its near-term stated goal of achieving 80% funded status for the local police plan, the city has been contributing more than 100% of the annual pension cost. Due to the increased contributions, favorable market returns, and reduced benefits for new hires, the city's police pension plan's funded status has improved significantly from a Fitch-adjusted 48.3% on
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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