Fitch Affirms Carmel-by-the-Sea, California, Lease Revenue Ctfs, Series 2001 at 'AA-'
2009-04-21 22:58:02 -
Fitch Ratings affirms its 'AA-' rating for Carmel-by-the-Sea (the city), California, Sunset Center lease revenue certificates, series 2001. The Rating Outlook remains Stable.
The 'AA-' rating reflects the city's solid financial operations marked by large unreserved fund balances, regular pay-as-you-go capital funding, very high wealth levels and manageable debt burden, as well as the city's reliance on tourism-related revenues such as sales and hotel taxes. The lease obligations are secured by payments from the city for use and occupancy of Sunset Center, an essential component of the city's tourism base, which annually hosts numerous arts festivals and performances. Various offices and community groups operate in the rented space in the center. The key rating driver will be the city's ability to trim spending to preserve its good financial cushion as revenue growth slows or reverses.
The city's economy is characterized by its high-end tourism and its small but affluent population of about 4,000. Located on the Monterey Peninsula just south of the city of Monterey, and covering just one square mile, Carmel's tourism is based on its established role as host to numerous performing arts programs and art festivals and benefits from the area's high-end golf courses and resorts. Like many areas, economic activity in the city's economy is slowing as hotel occupancy rates, room rates and taxable sales have declined.
The city's financial position remains strong in spite of the decline of some tax revenues. Property taxes increased about 9.7% through the first half of fiscal 2009 from the same period in fiscal 2008, but that increase is more than offset by declines in hotel and sales taxes. For the first eight months of fiscal 2009, hotel tax revenues (about 30% of general fund revenues) are down about 10% compared to the same period in fiscal 2008. Hotel taxes and sales taxes combined totaled about $6.7 million in fiscal 2008, or 49% of general fund revenues. Nonetheless, Fitch believes that the city's strong reserve levels somewhat offset the general fund concentration in economically sensitive revenues. At 2008 fiscal year end, unreserved fund balance totaled almost $11 million or 79.7% of expenditures and transfers out.
As a result of healthy pay-as-you-go spending, the 2001 certificates are the city's only outstanding debt. With $8.8 million remaining, the direct debt to market value is very low at 0.4%. On a per capita basis, debt is more moderate at about $2,900. Per capita income is well over twice the state and national level and market value per capita is a very high $741,000.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com : cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww .. .
Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
Fitch Ratings, San FranciscoKaren Ribble, 415-732-5611Scott
Monroe, 415-732-5618orMedia Relations:Cindy Stoller,
212-908-0526, New YorkEmail: cindy.stoller@fitchratings.com : mailto:cindy.stoller@fitchratings.com
