Fitch Rates Wilmington, Delaware's $204MM Outstanding GOs 'AA-'; Outlook Stable
2008-04-25 00:05:41 -
- Fitch Ratings assigns an initial 'AA-' rating to Wilmington, Delaware's (the city) estimated $203.5 million outstanding general obligation (GO) bonds. The Rating Outlook is Stable.
The 'AA-' rating reflects the city's strong fund balance levels, moderate debt burden with manageable capital needs, and substantial economic base, although concentrated in financial and business services. The rating also incorporates the city's below average wealth levels and economic indicators. Ongoing economic development has increased Wilmington's tax base and diversified its revenue stream. Fitch expects development to continue at a measured pace, allowing management to address infrastructure requirements in a timely manner without undue fiscal strain.
With an estimated 2006 population of 72,826, relatively unchanged from the 1990 census, Wilmington is the largest city in the state. Access to major transportation networks as well as undeveloped waterfront tracts have spurred residential and commercial development in the Riverfront and downtown areas, although the city's urban renewal efforts also target other neighborhoods in need of redevelopment. Several recent projects have mitigated the revenue declines that resulted from Bank of America's acquisition of MBNA, and Fitch expects the city to continue to benefit from its growing economic base, in spite of an economic softening. Nevertheless, unemployment has been consistently above regional, state, and national levels for at least a decade. Per capita income is slightly below state and national levels at 92.3% and 98% respectively, although median household income significantly lags state and national levels, at 67.7% and 73.8% respectively.
The city has strengthened its financial operations and maintained ample reserve levels, ending the past four fiscal years with unreserved general fund balances equaling or exceeding 30%, overcoming the structural challenges earlier in the decade. Wilmington projects that it will maintain its unreserved fund balance at or slightly below the 37.6% of fiscal 2007 and going forward it will limit drawdowns to funding one-time initiatives or capital projects. The city has augmented and broadened its revenue base by accessing state funds for certain commercial filings and by enhancing its collection efforts. The city anticipates that it will increase its fund balance at the end of fiscal 2008.
The city's debt levels are moderate and expected to remain so. Overall debt, including a planned issuance of $92 million prior to the end of the fiscal year, equals $2,900 per capita and 3.7% of market value. Amortization will be marginally below average, with approximately 48.2% of outstanding debt retired within ten years. The fiscal 2008 - 2013 capital plan totals $166 million, including $128 million for public works. Funding will consist of $110 million of water and sewer debt, which Fitch credits as self-supporting, while the remainder will probably be funded by GO debt. The city is addressing its $96.6 million police and firefighter unfunded pension liability by reexamining its actuarial assumptions and limiting future benefit enhancements.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. 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, New York
Barbara Ruth Rosenberg, 212-908-0731
Alexandra Knight, 212-908-9181
Cindy Stoller, 212-908-0526 (Media Relations)
