News Column

Fitch Affirms Columbia County, GA's GOs at 'AAA'; Outlook Stable

July 28, 2014

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has affirmed Columbia County, Georgia's (the county) bonds as follows:

--$ 63.9 million outstanding general obligation (GO) bonds, series 2007A, 2007B, and 2009, at 'AAA'.

The Rating Outlook is Stable

SECURITY

The GO bonds carry the county's full faith and credit and unlimited taxing power. Outstanding series 2009 bonds are payable first from the proceeds of a one percent special purpose local option sales tax (SPLOST) collected within the county.

KEY RATING DRIVERS

STRONG FINANCIAL PROFILE: Financial operations are characterized by consistent operating surpluses, robust reserve levels and conservative financial policies.

STRONG MILITARY PRESENCE: The local economy has remained relatively stable and is anchored by a strong and growing military presence. Relatively low unemployment, above-average wealth levels and minimal housing pressures support stability.

FAVORABLE DEBT PROFILE: Debt levels are low, amortization is rapid, and long-term obligations related to pension and other post-employment benefit (OPEB) costs are nominal.

RATING SENSITIVITIES

STABLE CREDIT PROFILE: The rating is sensitive to shifts in fundamental credit characteristics including the county's strong financial management practices. The Stable Outlook reflects Fitch's expectation that such shifts are highly unlikely.

CREDIT PROFILE

The county is located on the border of South Carolina, just north of Augusta (rated 'AA'; Stable Outlook by Fitch). The county's 2013 population was 135,416.

CONTINUED STRONG FINANCIAL PERFORMANCE

The county's financial position is characterized by conservative budgeting practices and robust reserve levels. The county consistently follows its fund balance policy which calls for a minimum fund balance of 27% of general fund spending and requires reserves over 50% to be used for debt reduction. The county posted a $27.5 million unrestricted general fund balance in fiscal 2013, a very strong 49.8% of general fund spending. County projections show an addition of $1 - 1.5 million to fund balance in fiscal 2014 despite budgeting for a $2 million use of reserves. These projections appear to be reasonable given that expenditures for all county departments came in well under what was originally budgeted for fiscal 2014.

ROBUST SPLOST REVENUES

The county has historically paid debt service on the series 2009 bonds from SPLOST revenues. SPLOST requires voter renewal every five years and the current SPLOST is authorized through calendar year 2016. The county has scheduled an additional SPLOST referendum for the November 2014 ballot in support of $10 - 12 million in additional debt. Coverage of MADS from the county's share of SPLOST revenues remained strong at 2.1x in calendar 2013. Year-to-date collections of SPLOST revenues through May are approximately 3% above the prior year.

STABLE LOCAL ECONOMY

The county benefits from its close proximity to Augusta coupled with its affordable cost of living relative to other areas in the state of Georgia. Military, health care, and manufacturing serve as the major economic sectors with some representation from leisure activities.

Fort Gordon is partially located within the county. It is the world's largest military communications and information technology training center and has a large National Security Agency presence. Additional job growth appears likely at the fort given its designation as the new site for the Army Cyber Command headquarters.

The county's unemployment rate in April 2014 was 5.2% which was well below both the state and national levels. Wealth levels in the county are above average with median household income equal to 134% of the state average and 126% of the national average.

LOW-RISK LONG-TERM LIABILITY PROFILE

Fitch expects the county's overall debt burden to remain low given modest needs and rapid amortization. Overall debt is low at $851 per capita and 1.0% of market value. Approximately 97% of principal is amortized within 10 years, which is considered rapid.

The county and its qualified employees participate in the Columbia County Money Purchase Retirement Plan, a defined contribution retirement plan. The county's unfunded other post-employment benefits (OPEB) liability is a negligible 0.03% of market value. Annual payments reflect only 1% of the ARC but Fitch believes full ARC funding would not apply pressure to operations. Carrying costs for debt service (11.6% of governmental expenditures in fiscal 2013) and retirement benefits (2.2% and 0.5% for pension contributions and OPEB, respectively) are affordable.

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, University Financial Associates, S&P/Case-Shiller Home Price Index, IHS Global Insight, National Association of Realtors, and Zillow.

Applicable Criteria and Related Research:

--'Tax-Supported Rating Criteria' (Aug. 14, 2012);

--'U.S. Local Government Tax-Supported Rating Criteria' (Aug. 14, 2012).

Applicable Criteria and Related Research:

Tax-Supported Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=686015

U.S. Local Government Tax-Supported Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=685314

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=842098

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.



Fitch Ratings

Primary Analyst

Brendan Scher, +1-212-908-0686

Analyst

Fitch Ratings, Inc.

33 Whitehall Street

New York, NY 10004

or

Secondary Analyst

Michael Rinaldi, +1-212-908-0833

Senior Director

or

Committee Chairperson

Jessalynn Moro, +1-212-908-0608

Managing Director

or

Media Relations

Elizabeth Fogerty, New York, +1-212-908-0526

elizabeth.fogerty@fitchratings.com

Source: Fitch Ratings


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