Fitch Affirms Dare County, NC’s GOs at ‘AA’; Stable Outlook
Proquest LLC |
The following is from Fitch Ratings on
Fitch Ratings affirms the following
--
--
The Rating Outlook is Stable.
SECURITY
The GO bonds are general obligations of the county secured by a pledge of its full faith and credit and unlimited taxing power.
The LOBs and COPs are payable from funds subject to appropriation by the county board of commissioners, and secured by a respective deed of trust granting a lien on certain project sites and improvements. If a default occurs the trustee can direct the foreclosure on the mortgaged property and apply the proceeds to the payment of amounts due to bondholders.
KEY RATING DRIVERS
STRONG FINANCIAL PROFILE:
PROPERTY TAX FLEXIBILITY: Property taxes account for about half of general fund revenues. The county's tax rate is among the lowest in the state, enhancing overall financial flexibility in the event of potential downturns in less stable sources.
MANAGEABLE DEBT POSITION: Debt levels are affordable, existing debt is rapidly repaid, and future capital needs and borrowing plans are modest.
TOURISM AND MAJOR STORM RISK: Economic activity is highly concentrated in tourism and related activities. The majority of developable land within the county is located on a barrier island exposed to storm damage; the attractiveness of the region has served to encourage rebuilding efforts following past storms.
APPROPRIATION RISK: The one-notch distinction in the rating between the GO bonds and the LOBs and COPs incorporates risk to annual appropriation by the county board of commissioners to pay debt service and limitations on bondholder's recourse to an event of non-appropriation or default; such risk is partially offset by the deed of trust granted on essential facilities.
RATING SENSITIVITIES
DIMINISHED RESERVES: Maintenance of large reserve balances offset concerns regarding the cyclical nature of the county's tourist- based economy and susceptibility to event risk. A significant reduction in reserve levels could lead to negative rating action.
CREDIT PROFILE
AFFLUENT, TOURISM-DEPENDENT TAX BASE
The county's resilient tourism industry fared well during the recession, as evidenced by only two years of moderate declines in the occupancy and local sales tax collections and subsequent consistent annual growth. Building permit values have shown strong growth over the past two and a half years. The estimated full value of real property is a sizable
The tax base includes approximately 12,500 rental homes and condominiums and 3,200 hotel or motel rooms. Only 44 percent of property taxpayers reside in
RESERVES A FAVORABLE RATING CONSIDERATION
Fitch views the sound reserves as an important mitigant to the financial unpredictability in an area dependent on tourism and susceptible to major storms. Historically strong reserve levels have moderated some in recent years but remain sound.
In fiscal 2013, the general fund incurred a modest operating deficit of
The fiscal 2013 unrestricted general fund balance is
FAVORABLE FISCAL 2014 PROJECTIONS
The fiscal 2014 budget was balanced with a
The county raised the mil rate to offset the revaluation decline and to allow for levy growth.
Expenditure savings were achieved through consolidations of health and social service departments as well as process changes in the emergency medical services department. The fiscal 2014 budget included a 3 percent employee cost of living adjustment for just under
PRUDENT FISCAL 2015 BUDGET
The fiscal 2015 budget is a 1.9 percent increase over the previous year and includes no wage adjustments. The largest cost driver is
MANAGEABLE LONG TERM OBLIGATIONS
Overall debt is low relative to market value (1.1 percent) and average on a per capita basis (
The majority of outstanding debt is for school projects and no near term needs are identified. The county is responsible for school debt service, but school instructional and educational expenses are reported separately in the school system's financial audit. Debt is rapidly retired (over 80 percent in 10 years), and future borrowing needs are moderate. The county is planning financings totaling approximately
Pension and other post-employment (OPEB) benefit liabilities continue to be low and well managed. The county contributes to five retirement plans, primarily the state's well-funded Local Government Employees' Retirement System (LGERS). The county's fiscal 2013 total contribution was a low 1.8 percent of governmental fund spending. The actuarially accrued unfunded OPEB liability is
Additional information is available at 'fitchratings.com'.
((Comments on this story may be sent to [email protected]))
Copyright: | (c) 2014 ProQuest Information and Learning Company; All Rights Reserved. |
Wordcount: | 1344 |
Advisor News
Annuity News
Health/Employee Benefits News
Life Insurance News