Fitch Rates Buffalo, NY’s LTGOs ‘A+’; Outlook Stable
The following is from Fitch Ratings on
Fitch Ratings assigns an 'A+' rating to the following city of
--
Proceeds will be used to refund outstanding bond anticipation notes and finance various capital projects. The bonds are scheduled for competitive sale the week of
In addition, Fitch affirms approximately
The Rating Outlook is Stable.
SECURITY
The current issue and the series 2011E, F, G, the 2012A, B, C and D, 2013 and 2014 bonds are general obligations of the city for which it has pledged its full faith and credit, subject to the 2011 state statute limiting property tax increases to the lesser of 2 percent or an inflation factor (the tax cap law). This limit can be overridden by a 60 percent majority vote of the city common council. The city has pledged its full faith and credit and unlimited taxing power for debt service on outstanding GO bonds issued prior to these bonds. No exemption is made under the tax cap law for debt service on outstanding GO debt; however, the constitutionality of this provision has not been tested.
KEY RATING DRIVERS
SOUND FISCAL DISCIPLINE: The city has restored a sound fiscal foundation after dropping to low reserve and liquidity levels early last decade.
FURTHER DECLINES PROJECTED: Additional declines are projected from the city's current elevated fund balance levels. Fitch believes management will take the necessary steps to prevent declines that will reduce fund balance to levels that would impair financial flexibility.
EXTENSIVE ECONOMIC DEVELOPMENT ACTIVITY: The economic base is benefitting from extensive investment by the University at
BELOW-AVERAGE SOCIOECONOMIC INDICATORS: Socioeconomic indicators are weak with below-average income levels, high individual poverty rates, and high unemployment rates.
ELEVATED UNFUNDED OPEB LIABILITY: An elevated burden of unfunded other post-employment benefit (OPEB) liabilities is notable. Overall carrying costs are above average.
NO RATING DISTINCTION FOR L-T DEBT: The bonds are rated on parity with outstanding debt as the city may exceed the property tax cap in any one year with 60 percent approval of the common council.
RATING SENSITIVITIES
MAINTENANCE OF SOUND RESERVES: The rating is sensitive to the city's ability to consistently balance operations and maintain reserves consistent with those projected in the current four-year plan.
CREDIT PROFILE
ECONOMY SHOWING SIGNS OF IMPROVEMENT
The city has a diverse economic base that benefits from its proximity toAfter years of declines, the city is showing notable signs of growth. In particular, BNMC, which employs roughly 12,000 people, has over
BELOW-AVERAGE SOCIOECONOMIC PROFILE
Socioeconomic indicators are below average with per capita income levels at 63 percent and 72 percent of the state and national levels, respectively. Poverty rates are more than double the statewide average, and the city's unemployment rate has been persistently above the state and national averages over the past decade, though it is down from past highs.
The most recent monthly unemployment figure, for
FINANCIAL OPERATIONS IMPROVED DURING BFSA CONTROL PERIOD
The city experienced financial pressures early in the past decade, resulting in chronic fiscal imbalance and ultimately a strain on liquidity. Consequently, in 2003, state lawmakers created the
The authority moved to an advisory role in 2012 as the city had achieved predetermined benchmarks. The hard control period can be reimposed if certain fiscal conditions are not maintained. Fitch looks favorably on management's efforts to codify many of the policies required by the
The city achieved operating surpluses every year from fiscal 2003 through fiscal 2010. During this period, the general fund unreserved fund balance improved from
TREND OF DEFICITS EXPECTED TO CONTINUE
Following this period of strong budget performance, the city has operated at a deficit in three of the past four fiscal years, spending down a portion of its unreserved fund balance. A large surplus in fiscal 2013, derived primarily from receipt of one-time and catch-up revenues, offset these reductions, leaving the city with still ample flexibility. However, further deficit spending is projected for fiscal 2015 and fiscal 2016.
The enacted budget for the current year, fiscal 2015, assumed a flat property tax levy and state aid, increased pension costs, and use of
The city's four-year financial plan features annual fund balance appropriations. The fiscal 2016 budget included a
MODERATE DEBT & PENSION BURDENS WITH HIGH OPEB LIABILITY
The city's overall debt burden is low on a per capita basis at
Employees participate in well-funded state-sponsored defined benefit pension plans, and the city has made all required pension payments to the state. The plan for police and fire is 85 percent funded as of
As of
Additional information is available at '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
Additional Disclosure
Solicitation Status
((Comments on this story may be sent to [email protected]))
Hub International Purchases Oklahoma Book of Business
American Legion investigated in DUI crash that killed Winnetka woman
Advisor News
Annuity News
Health/Employee Benefits News
Life Insurance News