The Rating Outlook is stable.
The bonds are special limited obligations of the county, payable from amounts on deposit within the trustee-held pledged revenue fund. The county is required to make quarterly deposits to the pledged revenue fund from its water quality protection charge (WQPC) and other revenue of the county, including a carryout bag tax, which are deposited into the water quality protection fund, a special revenue fund of the county. The DSRF is fully funded at maximum annual debt service (MADS).
The WQPC is assessed against all residential and certain non-residential property within the county based on the amount of square feet of roof, driveway, sidewalk and other fixtures or structures impenetrable to water.
The carryout bag tax is assessed at the rate of
KEY RATING DRIVERS
STABLE REVENUE PERFORMANCE ANTICIPATED: The WQPC is included as a line item on annual property tax bills, enforced through a tax lien and foreclosure process in the same manner as real property taxes. Historical collection rates are exceptional, and revenue from the WQPC is restricted to stormwater management purposes.
ADDITIONAL LEVERAGING & MODEST COVERAGE PROJECTED: The county plans to sell up to
WQPC SET BY COUNTY COUNCIL: The WQPC rate is established by resolution of the county council and is unlimited as to rate or amount. The county council has frequently approved increases in the WQPC rate in support of its stormwater management program.
FINANCIAL MANAGEMENT STRENGTH:
EXCELLENT ECONOMIC UNDERPINNINGS: Expectations for stable revenue performance are further supported by a very stable regional economy anchored by the extensive presence of the federal government and related contracting employment, and marked by consistently low rates of unemployment, a highly skilled labor force, and very high income metrics.
MAINTENANCE OF STRONG FINANCIAL POSITION: The rating is sensitive to shifts in fundamental credit factors. Preservation of a solid financial profile consistent with the high credit rating is a key consideration.
The WQPC was first implemented in 2002 to provide funds for the inspection and maintenance of residential and certain non-residential stormwater facilities and associated operating expenses. In 2013 (effective 2014) the WQPC rate structure was revised to broaden the non-residential base and create tiered structures for residential and 501-(3) entities. The charge is based on the median amount of impervious surface area for a single-family dwelling (and certain non-residential structures) in order to capture its actual contribution to stormwater runoff.
WQPC ESTABLISHED BY COUNTY COUNCIL
The WQPC is set by resolution of the county council and is not subject to charter or statutory restriction as to rate or amount. The WQPC charge is assessed and collected as a separate item on an annual property tax bill.
To support the county's mandated stormwater management efforts, the county council has increased the WQPC on seven occasions since its inception, from a rate of
WQPC CREATES A LIEN ON PARITY WITH REAL PROPERTY TAXES
Property tax bills are generally payable on a semi-annual schedule, due on
SATISFACTORY PRO-FORMA COVERAGE; RATE INCREASES ANTICIPATED
Fiscal 2013 ended with strong MADS coverage of 2.5x due to conservative budgeting of the bag tax. Based on the lower rate of
The county's rate model forecasts an increase in the WQPC to nearly
The forecast assumes an annual reduction in bag tax revenues, which reflects the reasonable assumption that consumers will respond to the tax by increasing their utilization of reusable bags. The rate model does not assume growth in the number of ERUs after 2016, following the three year phase-in of the assessment of nonresidential properties.
The pro-forma also builds up the balance in the water quality protection fund to
MODEST COVERAGE REQUIREMENTS OFFSET BY REVENUE STABILITY
The county has covenanted in the trust indenture to impose the WQPC at a rate that results in lenient 1.15x coverage of annual debt service after the payment of operating expenses of the county's stormwater management facilities. The county's current policy is to assess the WQPC in order to generate a slightly higher debt service coverage ratio of 1.25x. The additional bonds test also imposes a 1.15x coverage threshold on a net basis.
As a mitigant to this risk, Fitch recognizes the very stable and predictable nature of the WQPC based on its strong collection enforcement mechanism, very high historical collection rates (99.8% in 2011 and 99% in 2012), independent rate setting authority vested in the county council, and diverse nature of the WQPC base (the ten largest property owners paying the WQPC comprise only 2% of fiscal 2013 WQPC receipts).
ECONOMIC PERFORMANCE REMAINS VERY STRONG
While the rate of job growth within the county has not been robust, it has been very steady. The county's unemployment rate historically has been well below state and national averages. The county's unemployment rate remains a very competitive 4.5% as 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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