2009-06-24 21:34:01 -

Fitch Ratings assigns an 'A+' rating to Tamarac, Florida's (the city) approximately $5.6 million in sales tax revenue bonds. The bonds will be privately placed. Proceeds will be used to refund the city's outstanding series 1999 sales tax revenue bonds. Concurrently, Fitch also affirms the 'AA-' rating on the city's $1.9 million in general obligation bonds and the 'A+' rating

on its $27.6 million capital improvement bonds. The Rating Outlook is Stable.

The 'A+' rating on the sales tax bonds is based on the healthy debt service coverage provided by pledged revenues and adequate legal provisions as well as the general credit characteristics of the city, including strong financial management, a limited economy, and low debt levels with modest future capital needs. The bonds are secured by a pledge of the city's local half-cent sales tax revenues with a secondary pledge of a covenant to budget and appropriate (CB&A) non ad-valorem revenues in an amount sufficient to satisfy debt service. Coverage on all bonds secured by half-cent sales tax has historically been sound with 1.92 times (x) MADS coverage in fiscal 2008. Year-to-date revenues through the first eight months shows a 10% decline from a year prior. If revenues end fiscal 2009 10% down from fiscal 2008 levels, coverage would decline to a still healthy 1.73x. Legal provisions are adequate with an additional bonds test requiring 1.25x MADS coverage. The city has no plans to further leverage the tax and Fitch expects coverage to remain high as the city relies on excess sales tax revenues to support general government operations.

While the city expects to solely rely on sales tax revenues to repay the bonds, further stability is provided by the secondary pledge of a covenant to budget and appropriate (CB&A) non ad-valorem revenues if sales tax revenues are insufficient to meet debt service payments.
Fiscal 2008 results would have provided 3.99x coverage of series 2009 and all outstanding bonds secured by a CB&A pledge. Fiscal 2009 projections show coverage declining slightly to 3.29x.

Tamarac is located in northwest Broward County. Created in 1963 primarily as a residential retiree community, the city's demographics continue to shift to a younger population. The median age has decreased from 65 in 1990 to its current level of 45. While the city remains primarily residential, recent economic developments have begun to diversify the tax base with several of the city's largest employers located in a new 500 acre business park. Unemployment has increased to 10.8% in April 2009 from 5.4% a year prior, exceeding the state and national levels.

Financial operations are strong and stable with over eight years of consecutive surpluses. Audited fiscal 2008 results show a surplus of $2.6 million increasing the unreserved fund balance to a robust 42.1% of spending. Year to date fiscal 2009 results are on budget with the city projecting a $1.6 million surplus. The proposed fiscal 2010 budget is balanced with no use of reserves.

City overall debt levels are low at 2.9% of taxable assessed value and $1,890 per capita. Capital needs are modest with no additional general fund debt planned in the next five years. The capital improvement plan for fiscal 2009-13 is fully funded through pay as you go sources.

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Fitch Ratings, New YorkRachel A. Barkley, 212-908-0514Christopher
Hessenthaler, 212-908-0773orMedia Relations:Cindy
Stoller, 212-908-0526Email: cindy.stoller@fitchratings.com : mailto:cindy.stoller@fitchratings.com