Fitch Rates Coral Springs, Florida's Capital Revenue Rfdg Bonds, Series 2008 'AA+'

2008-07-25 23:41:03 -

- Fitch Ratings assigns an 'AA+' rating to the City of Coral Springs, Florida's (the city) $16.9 million capital revenue refunding bonds, series 2008. The bonds are scheduled for competitive sale on July 29. Bond proceeds, together with other available funds of the city, will refund outstanding maturities of capital revenue bonds, 2001 series A and 2002 series B, issued by the Florida Intergovernmental Finance Commission on behalf of the city. In addition, Fitch affirms the 'AAA' rating on the city's approximately $25 million in outstanding GO bonds The Rating Outlook is Stable.

The 'AA+' rating on the capital revenue refunding bonds reflects the city's strong financial performance and maintenance of sound financial flexibility enhanced by prudent management policies, as well as the healthy coverage level provided by the non ad valorem revenues. The city publishes its formal strategic plan every two years, an annual business plan, and an annual operating budget that includes five-year financial forecasts and a six-year capital plan. The rating also incorporates the city's low debt levels and limited capital needs coupled with a stable economic base characterized by low unemployment and above-average income levels.

The city is located in the northern portion of Broward County. Rapid development throughout the 1990s, followed by moderate growth since the 2000 census, has led to residential buildout in Coral Springs. Consistent growth in the city's labor force and historically low unemployment rates are attributable to the city's proximity to Ft. Lauderdale and Palm Beach County. As a result of some redevelopment of the city's downtown, a small annexation in fiscal 2005, and appreciation of existing property, growth in taxable assessed value (TAV) has been strong averaging 9.9% annually over the past five years. However, due to the softening of the real estate market and implementation of a recent constitutional amendment regarding TAV (Amendment 1), TAV will decline 2.75% in fiscal 2009. Fitch will continue to monitor housing market conditions in the city, as the Miami-Ft. Lauderdale metro area has been hit hard by the softening real estate market. The area has seen significant increases in foreclosures, and home prices are projected to decline over the next five years. The city itself has seen increases in foreclosure activity over last year, as well as pressure on both ad valorem and non-ad valorem revenues resulting from tax reforms and the economic softening. Income levels are well above average, and the April 2008 unemployment rate of 3.7% compared favorably with state and national averages.

Financial operations are very well managed, with closely monitored expenditure controls and regular financial reporting. A general fund net surplus of almost $12 million for fiscal 2007 increased the unreserved fund balance to over $42 million, or a high 47.3% of spending. Year-to-date performance for fiscal 2008 is on budget, and the city expects to end fiscal 2008 with a healthy general fund surplus through expenditure savings, FEMA reimbursements, and other sources. The proposed fiscal 2009 general fund budget totals approximately $91 million, a decrease of 1.6% over the fiscal 2008 budget, and does not incorporate a property tax rate increase. The property tax rate remains among the lowest in Broward County.

Overall debt levels are moderately low at $736 per capita and 1.4% of market value, and are not expected to increase materially given limited capital needs. In total, the six-year CIP for fiscal years 2008-2013 amounts to $108 million, with roughly 60% allocated to general government projects and 20% dedicated to the city's water and sewer utility. Financing sources for the CIP include a significant amount of bonded debt (72%), although the city has historically planned for debt as part of the CIP, but been able to fund projects with equity.

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