The GOs are scheduled for a competitive sale the week of
Fitch also affirms its 'AA+' rating on the following outstanding city obligations (COs):
The Rating Outlook is Stable.
The GOs and COs are secured by an annual property tax levy, limited to
KEY RATING DRIVERS
SOLID FINANCIAL POSITION: Management's commitment to structural balance is reflected in sound reserves and strong liquidity. Budgeting is conservative with results that are typically than better the city's forecasts. Revenues exhibit relatively low volatility and the city's cost structure retains ample flexibility.
STABLE LOCAL ECONOMY:
WELL-POSITIONED TAX BASE: The tax base is diverse with below average cyclicality. Situated along the North American Free Trade Agreement corridor, the city's tax base includes a broad array of industrial, warehousing and commercial interests. A growing transportation network positions the city for future growth.
HIGH, BUT MANAGEABLE DEBT: Fitch expects the city's debt to remain elevated given local and regional growth needs. However, the burden on the budget for debt service and pensions is manageable.
CONTINUED FINANCIAL FLEXIBILITY: The rating is sensitive to shifts in fundamental credit characteristics, including the city's strong financial management and ability to service utility COs from enterprise operations without pressuring general fund resources. The Stable Outlook reflects Fitch's expectation that such shifts are unlikely.
DIVERSE LOCAL ECONOMY WITH GROWTH PROSPECTS
The city is known for its institutions of higher education and regionally prominent medical sector.
A number of recent industrial expansions and relocations have contributed to the city's low 4.2% unemployment rate as of
New commercial and retail development continues to accompany the city's recovering residential market. Fitch believes that significant transportation improvements over the next several years combined with the city's ample capacity will likely result in ongoing growth.
SOUND FISCAL MANAGEMENT
A diversified revenue base of ad valorem tax (38%), sales tax (31%), and franchise fees (16%) support the city's governmental operations. Management continued to align expenditures with revenue growth to maintain healthy unrestricted reserves of
The fiscal 2014 budget continues funding in support of the city's competitive salary structure and applies increased franchise fee revenues (
The city's five year plan reflects regional growth pressure. However, officials have communicated a commitment to structural balance with maintenance of reserves at a level consistent with the city's 20% of spending policy floor.
MANAGEABLE DEBT BURDEN; ONGOING NEEDS
Overall debt is above average at 7.6% of market value due largely to high overlapping debt of local school districts. The burden of the city's debt service, pension and other employment benefits on its budget is moderate. At 22.5% of governmental spending, the burden reflects rapid amortization.
The city's fiscal 2015 capital plan includes an estimated
The city council has approved a development agreement with public and private partners to build a convention center and hotel. Pursuant to the outcome of a feasibility study underway, the city is considering issuance of approximately
The city participates in the Texas Municipal Retirement System, which had a strong fiscal 2013 funded ratio of 80% based on an investment assumption of 7%. The city also provides other post-employment benefits (OPEB) to its employees. The city's firefighters' pension is funded at an adequate level of 72% based on the plans 7% investment rate assumption. Pension and OPEB costs represent a modest obligation in relation to the city's market value.
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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