The Rating Outlook for the 'A+' special tax rating is Stable.
The Rating Outlook for the 'AA' implied ULTGO rating remains Negative.
The special sales tax revenue bonds are special obligations of the district and are payable from and secured by a 7/8 of 1% sales and use tax levied in the unincorporated areas of the parish and a 1% sales and use tax levied within the town of
KEY RATING DRIVERS
NARROW BUT IMPROVED DEBT SERVICE COVERAGE: Pledged revenues in 2013 provide 1.31x coverage of maximum annual debt service (MADS), which Fitch views as somewhat thin for the rating. Pledged sales tax revenues have demonstrated annual growth since 2009, though growth is projected to moderate in 2014 after strong growth in the prior year.
GENERAL FUND OPERATING DEFICITS: The Negative Rating Outlook for the implied ULTGO rating reflects a trend of somewhat moderate general fund budget deficits and structural budget imbalance. Although the 2014 budget assumes a sizable general fund deficit, the parish is projecting that actual results will be better than budgeted, which has been the case in recent history.
MAINTENANCE OF SOLID GENERAL FUND BALANCES: The parish continues to maintain solid general fund balances, despite the recent operating deficits noted above. Continued maintenance of strong reserves is critical due to the parish's reliance on sales tax revenues, which can fluctuate rapidly with economic cycles.
MODEST DEBT BURDEN: Parish debt ratios are modest. Debt amortization is rapid and there are no near-term additional debt issuance plans. Pension funding is fairly sound, and carrying costs, including debt service and retiree related payment obligations are manageable.
BALANCED FINANCIAL OPERATIONS: A sizable operating deficit in the current year, though not anticipated by management, would likely result in a downgrade. Additionally, the current rating assumes the adoption of a budget for 2015 in line with the parish's historically conservative budgeting practices.
SPECIAL TAX RATING PRIMARILY COVERAGE DRIVEN: Fitch caps the rating on the special sales tax revenue bonds at the implied ULTGO rating of the parish as there is indistinct legal separation between the two entities. Improved coverage metrics and coverage dilution protections indicate a trend of rating stability; improvement in the rating would require a significant increase in debt service coverage.
GROWTH IN PLEDGED REVENUES AND DEBT SERVICE COVERAGE
Pledged sales tax revenues have been showing recovery from recession related declines and the natural waning of retail activity following Hurricane Katrina recovery efforts in 2006 -2008. Pledged revenues have grown 3.2% on average since the low mark of 2009, with growth of 6.1% in 2013 to
Year-to-date pledged sales taxes (through
MINIMAL RISK TO FUTURE LEVERAGING
The sales tax authorization expires in 2022 precluding future debt issuance without a new authorization. All of the outstanding special tax debt matures in 2022. In addition, the bonds' additional bonds test requires the pledged sales tax revenues collected during 12 consecutive months out of the previous 18 months to equal at least 1.33x MADS.
The parish also has about
TREND OF OPERATING DEFICITS
Parish general fund operations featured operating deficits for 2007 through 2011 ranging from 1% to 6% of spending. General fund revenues saw flat performance/declines in four of the last six years, with 2013 revenues less than 1% lower than 2008 revenues. Though the parish made spending adjustments, including headcount reductions and pay freezes, recurring expenditures remained in excess of recurring revenues.
Economically sensitive sales tax revenues make up over 1/3 of general fund revenues. The pledged special sales taxes and other various dedicated sales taxes do not flow into the general fund, but flow to separate special funds outside of the general fund. Sales tax receipts demonstrated recession related weakness from 2008 to 2009 but began to recover in 2010, and have shown annual growth since then. Sales tax revenues grew by about 5% in 2013, but management is projecting flat to modest growth for 2014.
General fund operations in 2012 ended with a
The 2014 amended budget assumes a deficit of
LOCAL ECONOMY PART OF
The parish benefits from its location in the
Parish income and wealth metrics are good though mixed. Personal income indicators are over 100% of state averages and just under (92%-95%) national averages. Poverty levels are lower than the state but higher than the national average.
TAV has seen annual growth in recent years including a 2.2% improvement in 2013. Management expects similar growth over the next year. Local home values have been on an upward trajectory since the recessionary low in 2011, with median values up 7.6% over the past year according to the Zillow.com home value index. The parish's tax base is diverse and major taxpayers include utilities and firms related to retail, banking, real estate, oil distribution, shipping, and manufacturing.
LONG-TERM LIABILITIES MANAGEABLE; FEMA LOAN FORGIVEN
The parish's overall debt ratios are low at
A previously outstanding
Parish pensions are provided through three pension plans: a local (closed) plan, a state plan and a statewide firefighters plan. Funding levels are fairly sound at 83%, 93%, and 71%, respectively for 2013. Other post-employment benefits for retiree healthcare are paygo funded. Carrying costs, including charges for debt service, pension ARC, and OPEB paygo made up an affordable 14% of governmental fund spending in 2013.
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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