Proceeds of the series 2014-5 bonds will be used to provide funds to advance refund selected maturities of series 2006A, 2007A and 2011A. Proceeds of the series 2014-6 bonds will be used to advance refund selected maturities of series 2006B and 2007B.
The bonds are scheduled for negotiated sale on
In addition, Fitch affirms the 'AAA' ratings on the following outstanding debt:
The Rating Outlook is Stable.
The ULTGO bonds are secured by the city's full faith and credit and its ad valorem tax, without limitation as to rate or amount.
The LTGO bonds are secured by the city's full faith and credit and its ad valorem tax, subject to the 10-mill limitation.
KEY RATING DRIVERS
DEEP AND DIVERSE ECONOMY: The city's growing economy benefits from the stabilizing presence of various levels of government,
STRONG CONSISTENT MANAGEMENT: City officials have continually demonstrated proactive and effective financial stewardship.
AMPLE FINANCIAL FLEXIBILITY: The income tax rate increase in 2009 materially improved the city's trend in operating results. Unrestricted balances in the general and income tax funds provide additional margins of flexibility.
MANAGEABLE LONG-TERM OBLIGATIONS: The aggregate debt burden is elevated but manageable, characterized by above-average principal amortization, affordable carrying costs and reasonable future capital needs.
STRONG FISCAL MANAGEMENT: The rating is sensitive to the maintenance of the strong fiscal management and budgeting practices that underscore the city's solid financial profile.
The city's population has increased 11% over the past decade, and residents are relatively well educated, with 32% of the adult population attaining higher education versus 28% for the national average. Wealth levels are slightly below average with per capita income at 93% and 86% of the state and national means, respectively, but are negatively skewed by the OSU student population.
Significant facilities investment by the healthcare and financial services sector, namely OSU,
The city's employment profile remains positive. The
AMPLE FINANCIAL FLEXIBILITY, STRONG MANAGEMENT
The city's financial position materially improved with the passage of a permanent 25% increase in the city's income tax levy to 2.5% from 2% effective
Since 2010, the first full year of collections at the 2.5% rate, the city has recorded consecutive general fund net operating surpluses (after transfers).
The city generated a healthy general fund operating surplus, equivalent to 2.5% of spending in 2013, despite the state's elimination of the estate tax, accelerated phase-out of tangible property taxes, and reductions in local aid. The unrestricted fund balance at year-end
In addition, the city retains substantial unrestricted reserves in its special income tax (SIT) fund, which totaled
The proposed 2014 budget anticipates a
Prospectively, Fitch expects the city will maintain structural balance fully and, pursuant to an updated 2013 resolution, will continue to replenish the RDF to
MANAGEABLE LONG-TERM OBLIGATIONS
The city's overall net debt load is moderate at
The city limits borrowing in accordance with its internal debt affordability policies and has no exposure to derivative risk.
Historically, the city paid the employee's portion of the pension contribution in addition to the city's APC payment (pension pick-up). The city has been negotiating phase-out of this practice in recent labor contracts. All negotiated contracts now include provisions to gradually reduce the pension pick-up, resulting in material pension cost savings which should keep future increases more manageable. Carrying costs for debt service, pension ARC, and other post-employment benefits (OPEB) have been declining over the past several years and amounted to a moderate 16.7% of governmental fund spending in 2013, excluding the portion of the employees' costs that the city covered. Including those costs, the figure rises to a still moderate 18.3%.
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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