More Topics:
Fitch Rates Fauquier County, VA's $13MM GO Bonds 'AA+'; Outlook Stable
Posted January 30, 2012
We Recommend...
NEW YORK--(BUSINESS WIRE)--Fitch Ratings assigns an 'AA+' rating to the following Fauquier County, Virginia (the county's) general obligation (GO) bonds:
--$13.1 million GO school refunding bonds, series 2012.
The bonds are expected to sell via negotiation on or about Feb. 1st. The bonds will advance refund certain maturities of GO school bonds, series 2006.
In addition, Fitch affirms the following ratings:
--$35.4 million GO school bonds, series 2006 at 'AA+'.
The Rating Outlook is Stable.
SECURITY
The bonds are general obligations of the county, for which its full faith and credit are irrevocably pledged.
KEY RATING DRIVERS
STABLE FINANCIAL PROFILE: Sound county financial operations include stable reserve levels in accordance with a prudent fund balance policy and a solid cash position.
FAVORABLE DEBT POSITION: A moderately low debt burden and rapid amortization complement a history of pay-as-you-go capital financing and limited future capital needs.
NARROW ECONOMY: The county's limited commercial and industrial base contains a noteworthy concentration in the volatile construction sector. Employment opportunities in nearby localities have contributed to positive economic indicators, including high wealth levels and low unemployment.
CREDIT PROFILE
Fauquier County is located 40 miles southwest of Washington DC and approximately 95 miles northwest of Richmond, and is largely rural and agrarian in nature. Development activity is centered in the county's nine service districts and three incorporated towns, reflecting the county's stated intention to retain its rural character. Construction remains the largest private employment sector at 11.6% of total employment, even after substantial declines resulting from the economic deterioration. Growth in the financial, health, and professional service sectors has offset construction losses, and the county's November 2011 unemployment rate of 4.3% compared favorably to the state and national levels of 5.7% and 8.2%, respectively. Wealth indicators are comfortably above those of the state and nation yet slightly below those of the region as a whole.
Assessed valuation (AV) declined a steep 20.8% in the 2009 revaluation, capturing a sharp plunge in residential values; however, non-residential AV was relatively unaffected. Housing prices have since shown signs of recovery. Management chose to set the fiscal 2010 tax rate at $0.97 per $100 of AV, below-the revenue neutral rate, in order to prevent a substantial tax levy increase for county businesses. Fitch believes that the adopted tax rate has allowed the county to retain sufficient revenue raising capacity. The tax rate is high for the state although locally competitive.
Financial operations are sound, as evidenced by consistent maintenance of reserves in line with the adopted fiscal policy of an unassigned fund balance at 10% of general operating revenues. The county's unrestricted general fund balance (the sum of the committed, assigned, and unassigned fund balance), a measure more commonly used by Fitch, totaled $24 million or a sound 15.7% of expenditures and transfers out in fiscal 2011. The county has concluded at least the past five fiscal years with sound liquidity levels, as cash and investments have exceeded total liabilities by no less than 3.5 times.
Projections for fiscal 2012 indicate modest growth in the total fund balance and an unassigned fund balance near the $17.1 million reported in fiscal 2011. The county anticipates that fiscal 2013 will provide additional revenue growth, thus permitting expenditures to remain at current levels.
Conservative long-range forecasts project a possible decrease of total fund balance over the next few years from the current $24.4 million to closer to $21 million, which Fitch believes will be consistent with the rating category.
The county's adherence to its prudent policy of maintaining debt service expenditures at less than 10% of revenues has buttressed its conservative debt profile. Overall debt equals 1.3% of market value and is $2,145 on a per capita basis. Amortization is rapid at 67% repaid within ten years. Pensions and OPEB requirements do not pressure the credit.
The fiscal 2012 - 2017 capital improvement plan (CIP) totals $77.4 million, with projects geared to general government needs, utility funding, and school requirements. Cash funding is slated for $14 million over the course of the plan, consistent with the county's history of solid pay-as-you-go capital financing. Two debt issuances this spring totalling $17.7 million will fund the renovation of Fauquier High School and capital requirements for the landfill. The county does not anticipate new borrowing in fiscal 2013.
Fitch Ratings has withdrawn the 'AA+' rating on the Fauquier County (VA) general obligation school refunding bonds series 2010 as the bonds were not sold.
Additional information is available at www.fitchratings.com. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.
In addition to the sources of information identified in Fitch's Tax-Supported Rating Criteria, this action was additionally informed by information from Creditscope, University Financial Associates, S&P/Case-Shiller Home Price Index, IHS Global Insight, Zillow.com, and the National Association of Realtors.
Applicable Criteria and Related Research:
--'Tax-Supported Rating Criteria' (Aug. 15, 2011);
--'U.S. Local Government Tax-Supported Rating Criteria' (Aug. 15, 2011).
Applicable Criteria and Related Research:
Tax-Supported Rating Criteria
http://www.fitchratings.com/creditdesk/report...
U.S. Local Government Tax-Supported Rating Criteria
http://www.fitchratings.com/creditdesk/report...
blog comments powered by