The bonds are scheduled to sell competitively during the week of
Additionally, Fitch affirms its 'AAA' ratings on the following outstanding city bonds:
The Rating Outlook is Stable.
The bonds are general obligations of the city backed by its full faith and credit and unlimited taxing authority.
KEY RATING DRIVERS
STRONG FINANCIAL MANAGEMENT:
HIGH LEVEL OF LIQUIDITY: Consistent high levels of reserves and cash balances bolster the city's financial flexibility. The city is not constrained by legal tax limits and moderate current tax levels provide flexibility.
SOUND AND ESTABLISHED ECONOMIC UNDERPINNINGS: Government, health care, and a burgeoning energy sector are major components of the city's broad economy and supplement the historical anchors of retail and manufacturing. Employment indicators are favorable, but wealth levels are below average.
AFFORDABLE DEBT BURDEN: Debt levels are moderate and not expected to change as future borrowing needs are limited. Pension funding costs are projected to increase but overall funded levels are adequate. Total carrying costs for debt and future retirement costs are low and the city can absorb the expected increase in these costs over time.
VARIABLE RATE DEBT EXPOSURE: The city's variable rate exposure as a percent of total debt is well above average, although overall debt service is moderate as a percentage of spending and the city's budgetary flexibility mitigates its vulnerability to interest rate fluctuations.
CONTINUED STRONG FINANCIAL MANAGEMENT: The rating is sensitive to shifts in fundamental credit characteristics including the city's strong financial management practices. The 'AAA' rating and Stable Outlook reflect Fitch's expectation that such shifts are highly unlikely.
BROAD AND STABLE EMPLOYMENT BASE
The city and the surrounding area serve as the economic anchor of northeastern
The city's 2013 population of 183,270 is up 5.4% since 2000. Overall population growth in the state was 14.2% for the same period. Income levels are well below state and national averages but the cost of living is below average and the high student population may skew the income data. The poverty level is a high 23.3% compared to 14.9% nationally. The city experienced recent growth in both employment and labor force, contributing to a decline in unemployment rates to 7.4% for
The city's large tax base totals
STRONG FINANCIAL MANAGEMENT
Ample reserves and conservative budgeting are the hallmarks of the city's favorable financial profile. Reserve levels consistently exceed the city's formal policy of maintaining a general fund balance equal to 20% of budgeted operating expenses and an informal policy of 25%. The city has augmented the general fund balance in nine of the last 10 fiscal years.
Fiscal 2013 concluded with a
PROJECTED BREAKEVEN RESULTS FOR FISCAL 2014
The fiscal 2014 budget was up a modest 1.45% compared to fiscal 2013. Budgeted expenses are up primarily due to increased salary, benefit and pension costs across all departments. Management approved an amendment to the budget for an
Management is projecting breakeven results as Hall income tax revenues exceeded expectations and local option sales tax collections ended slightly higher than budgeted. Expenses remained in line with the original forecast. Total unrestricted fund balance is projected to remain similar to fiscal 2013 levels. Fitch expects the city's practice of conservative revenue and expense estimations to continue, resulting in maintenance of strong reserve levels.
FISCAL 2015 BUDGET INCLUDES TAX RATE INCREASE
The approved fiscal 2015 general fund budget of
MODERATE DEBT LEVELS; HIGH VARIABLE RATE DEBT EXPOSURE
The city's overall debt burden is moderately low at 3.2% of market value and
The city has
The city is not exposed to third party liquidity provider risk as the series VI-L-1 and series A-4-A VRDBs are index-linked direct placements. Interest rate risk is synthetically fixed via a swap contract on a portion of the variable rate debt (
MANAGEABLE LONG-TERM RETIREE COSTS
Pension and other post-employment benefit (OPEB) obligations are well-managed. The city maintains a single-employer defined benefit plan with separate divisions based on each employee's hire date and classification, and has traditionally paid 100% of its annual required contribution (ARC). The city's pension board chose to lower the discount rate from 8% to 7.375% effective fiscal 2014.
The budgeted contribution for fiscal 2014 of
The unfunded pension liability was
OPEB contributions represented a low 0.7% of fiscal 2013 spending and do not pressure the budget. Total carrying costs are manageable, with debt service (including convention center debt), pension and OPEB pay-as-you-go expenses representing 14% of fiscal 2013 total governmental spending.
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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