-- Implied general obligation (GO) rating at 'AA'.
The Rating Outlook is Stable.
The infrastructure sales tax revenue bonds are secured by a pledge and lien upon the county's local government infrastructure sales surtax, a
KEY RATING DRIVERS
ULTGO RATING CAP: The sales tax rating is capped at the 'AA' implied unlimited tax general obligation (ULTGO) rating of the county which is supported by its proximity to the broad and diverse economy of
SOUND RESERVES: General fund reserves and liquidity are consistently ample. Conservative financial management and planning allows the county to regularly outperform budget despite recessionary revenue pressures.
FAVORABLE LIABILITIES BURDEN: The county's overall debt and carrying cost burden is very low, strengthened by rapid principal amortization, manageable capital needs, and affordable long-term liabilities.
ADEQUATE COVERAGE SUPPORTS REVENUE RATING: The 'AA-' infrastructure sales tax revenue bond rating is supported by Fitch's expectation that debt service coverage will remain adequate. Coverage increased modestly in fiscal 2013 compared to the prior year, and is projected to remain level for fiscal 2014. Infrastructure sales surtax collections have increased in each of the two prior fiscal years and are up moderately year-to-date in fiscal 2014.
STRONG FINANCIAL PROFILE: The ULTGO rating is sensitive to shifts in fundamental credit characteristics including the city's strong financial management practices as exhibited by healthy reserve levels. The Stable Outlook reflects Fitch's expectation that such shifts are unlikely.
SALES SURTAX BONDS: The rating on the infrastructure sales tax bonds is sensitive to declines in debt service coverage and material shifts in the ULTGO rating, given the cap. The Stable Outlook reflects Fitch's expectation that coverage levels will remain adequate.
ECONOMY BENEFITS FROM PROXIMITY TO
The county is primarily a residential community located within the greater
County wealth levels are mixed, with per capita personal income 87% and 82% of the state and national medians, respectively. On a median household income basis, county indicators are well above state and national averages at 126% and 112%, respectively. Unemployment continues to recover, with the 5.3%
Fitch is optimistic about the county's long-term prospects for tax base growth. The county has experienced steady population growth over the past decade, increasing 39.5% since 2000, but moderating in recent years. The recently completed
The county experienced steady declines in assessed value (AV) between the peak in fiscal 2008 and fiscal 2013, decreasing a total of 26%. The tax base grew in fiscal 2014 by 2.1% due to an improved housing market and the addition of new taxable property. AV posted moderate growth of 4.4% for fiscal 2015, with tempered positive momentum expected in future years. The county has moderate revenue raising ability, with a 7.851 millage rate, below the 10 mill cap. The proposed fiscal 2015 budget recommends an increase to 8.458 mills, leveraging some flexibility while remaining regionally competitive.
PRUDENT MANAGEMENT MAINTAINS AMPLE RESERVES
Consistent and healthy reserves and solid liquidity are hallmarks of the county's sound financial management. Unrestricted general fund balance levels have consistently been higher than 20% of spending, bolstered by a history of positive operations.
Fitch notes some pressure from reduced revenues due to the economic downturn and housing correction. Despite these pressures the county has actively managed spending to yield budgetary surpluses in recent years. After budgeting for the use of
The county's fiscal 2014 budget calls for similar results as fiscal 2013 with the use of approximately
Revenues for the general and MSTU funds are budgeted to increase by 13% in fiscal 2015 over budgeted 2014 due to increases in the general, fine and forfeiture, and law enforcement MSTU fund tax rates, increasing the county's direct tax rate from 7.851 to 8.458 mills. The tax rate increase will fund the creation of 14 state-required positions and law employee raises.
The county has historically budgeted to use a significant amount of reserves, since according to state law, reserves cannot exceed 10% of budget, and the county is required to budget revenues at 95% of expected collections. The county has consistently exceeded budget due to conservative expenditure budgeting and on-going monitoring throughout the year. Fitch believes the county retains a fair amount of expenditure flexibility, allowing it to reduce spending further if needed.
WELL-MANAGED LONG-TERM OBLIGATIONS
Overall debt equals a low 0.7% of market value (MV) and
The county's fiscal 2014-2018 capital improvement plan (CIP) totals a modest
Pension and other post-employment benefits (OPEB) obligations do not pressure the credit. Employees participate in the state administered Florida Retirement System (FRS). The county's fiscal 2013 annual required contribution (ARC) was
DEBT SERVICE COVERAGE REMAINS SUFFICIENT
Infrastructure sales tax revenues fell significantly in fiscal 2009 and more modestly in fiscal 2010 due to recessionary pressures. Since fiscal 2010, collections have exhibited moderate but steady growth. Sales tax revenues through the first nine months of fiscal 2014 are up 3.6% from the prior year. Management projects modest sales tax growth for future years as retail activity continues to rebound.
Fiscal 2013 infrastructure sales tax collections provide satisfactory maximum annual debt service (MADS) coverage of 1.57x increasing from 1.51x in fiscal 2012. Fiscal 2014 projected collections for the year would cover debt service by 1.55x. Debt service is essentially level, and Fitch expects debt service coverage to remain stable given the county's lack of additional debt plans and improving tax collections.
Legal provisions are sound. The additional bonds test requires a weak 1.35x MADS coverage to issue additional debt. Fitch believes additional issuance is highly unlikely, given the 2019 expiration. The debt service reserve fund is standard and cash funded.
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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