The Rating Outlook is Stable.
The bonds are secured by an unlimited property tax levy.
KEY RATING DRIVERS
ROBUST BUILDING ACTIVITY/POSITIVE TAX BASE GROWTH: The mature tax base of the district is now benefiting from resumed development activity. Assessed value (AV) demonstrated solid growth in fiscal 2014 after three years of moderate declines.
HIGH TAX BASE CONCENTRATION: Taxpayer concentration remains a concern for Fitch. The district's largest taxpayer at 25% of AV - Simon Property Group, Inc. has an issuer default rating of 'A'/Stable.
FINANCIAL FLEXIBILITY: The district is not subject to property tax limitations under the Tax Payer Bill of Rights (TABOR), providing financial flexibility.
DISTRICT OPERATIONS LIMITED: District operations are limited in scope, with no full-time employees. Therefore, Fitch does not consider operating risk a material credit factor.
MIXED OCCUPANCY RATES: Occupancy rates at the district's retail centers remain high while rates are weaker at the district's office park.
WEAK DEBT PROFILE: The district's overall debt burden is high as a percentage of market value, and amortization is well below average. Fitch believes future debt is likely although the timing is unknown.
INCREASED DEBT BURDEN: Sizable debt issuance or sustained tax base losses could prompt a negative rating action, as the debt burden is already high and shouldered by a limited number of taxpayers.
Organized in 1984, the district is located primarily in
The district is located adjacent to
Other enterprises include a
District operations are limited in scope, funded by property taxes and specific ownership taxes. The majority of expenditures are consumed by debt service and capital outlay. The district has no full-time employees. The district's unrestricted general fund balance equaled a high 167% of general fund spending in fiscal 2013, but is small as a dollar amount at
HIGHLY CONCENTRATED TAX BASE
The district's top 10 taxpayers accounted for a very high 58% of assessed value (AV) in fiscal 2013, which Fitch views as a concern.
Fitch views positively Simon Property Group's solid investment grade rating and the district's advantageous location adjacent to the major east/west route through the
HIGH DEBT LEVELS
The district's overall debt levels are high at 14% of fiscal 2013 market value. Management is in the process of amending the district's service plan and increasing the debt limit in order to accommodate growth-driven capital needs in the south area of the district, as well as for general maintenance requirements. While future bonding is likely, Fitch expects near-term funding for capital needs will come through pay-go or the levy of a special assessment. Principal amortization is well below average, with only 32% of all debt to be repaid within 10 years.
TAX BASE IMPROVEMENT
After a cumulative tax base decline of 11.7% from 2010 through 2012 and no growth in fiscal 2013, AV increased by 6.5% in fiscal 2014, led by development within the district. The next reassessment will be in 2015 (impacting fiscal 2016 tax collections). Management projects AV will continue to increase over the next several years, driven by construction activity occurring within the district, including activity at the Promenade at Denver West, the Shoppes at Denver West, two new restaurants at
Management expects the property tax rate to remain level over the next couple of years. Fitch notes positively that district voters' permanent waiver of TABOR limitations provides additional financial flexibility. The district is not subject to any property tax limitations.
MIXED OCCUPANCY RATES
The office component of the district has experienced some weakening, with occupancy rates at the
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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