--Implied unlimited tax general obligation (ULTGO) rating at 'A+'.
The Rating Outlook is Stable.
The bonds are unvoted obligations of the city, payable from the levy of an ad valorem tax on all property within the ten-mill limitation imposed by Ohio Law.
KEY RATING DRIVERS
STABLE BUT LIMITED ECONOMY: The city's economy is stable but limited, characterized by concentration in the auto sector.
RELIANCE ON INCOME TAX: The city's finances are reliant on economically sensitive and somewhat concentrated income tax revenues which have shown solid growth over the last few years but leave the city's finances vulnerable during downturns.
CONSERVATIVE MANAGEMENT; HEALTHY RESERVES: The city's conservative budgeting and prudent financial policies have resulted in strong reserves and adequate financial flexibility, somewhat offsetting concerns about exposure to income tax volatility.
MANAGEABLE LONG-TERM LIABILITIES: The city's debt profile is a credit positive, with low debt levels, limited capital plans, and manageable pension and other post-employment benefit (OPEB) costs.
LTGO AND IMPLIED ULTGO RATINGS ON PAR: Fitch currently makes no distinction between the implied ULTGO and LTGO ratings. However, erosion in taxing capacity or financial flexibility may result in future rating differentiation.
SHIFT IN FUNDAMENTALS: The rating is sensitive to shifts in fundamental credit characteristics including the city's strong financial management practices and healthy fund balance levels. The Stable Outlook reflects Fitch's expectation that such shifts are unlikely.
STABLE BUT CONCENTRATED ECONOMY
The city's employment base is concentrated in the automotive industry with major employers and taxpayers including a large car dealership --
Unemployment figures for the city are not available.
STABLE PROPERTY TAX BASE DESPITE ASSESSED VALUE DECLINES
Property tax revenues account for only 6% of general fund revenues. Taxable assessed valuation in 2012 declined to
STABLE REVENUE ENVIRONMENT AND PRUDENT MANAGEMENT AID HEALTHY RESERVES
General fund revenue trends are driven by income tax which comprises approximately 71% of general fund revenues. The city levies a 2% income tax on all who reside or work in the city with a 1.5% tax credit for those who have to pay income tax to another municipality. Income taxes are also levied upon the net income of corporations and other business entities. The tax is collected and administered by the city. For 2013, the top 10 income tax payers represented 27.8% of total income tax receipts, with the largest payer accounting for 5.2%. The payers are a mix of government entities (on behalf of employees) and commercial and manufacturing businesses.
The city recorded general fund operating surpluses after transfers of
Fitch believes the city will face financial pressure given its high reliance on economically sensitive income tax revenues. Offsetting this concern are the city's prudent management practices including conservative budgeting and past history of controlling expenditures. Fitch expects the city will retain sufficient reserve levels to provide adequate financial flexibility at the current rating level.
MANAGEABLE LONG-TERM LIABILITIES
City debt ratios remain low due to internal funding of capital projects. Overall net debt equals
The city provides pension benefits through state administered plans and funds 100% of its actuarial required contributions. The largest state retirement fund, OPERS, reported an 80.9% funded ratio as of
Additional information is available at 'www.fitchratings.com'.
In addition to the sources of information identified in the Tax-Supported Rating Criteria, this action was additionally informed by information from Creditscope, S&P/Case-Shiller Home Price Index,
--'Tax-Supported Rating Criteria', dated
--'U.S. Local Government Tax-Supported Rating Criteria', dated
Tax-Supported Rating Criteria
U.S. Local Government Tax-Supported Rating Criteria
Source: Fitch Ratings
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