posted March 13, 2008
Fitch Ratings has assigned an 'AA+' rating to Hamilton County's approximately $97 million general obligation bonds, series 2008, and approximately $37.6 million GO refunding bonds, series 2008B.
Both series of bonds are expected to sell competitively on March 25.
Proceeds of the 2008 bonds will permanently finance a portion of the county's outstanding commercial paper notes, as well as fund various general government and school capital improvement projects; proceeds of the 2008B bonds will refund a portion of outstanding series 1997A, 1998A, and 2000 GO bonds. In addition, Fitch affirms the rating on the county's approximately $107.7 million of outstanding GO bonds at 'AA+'.
The rating outlook is stable, Fitch said..
The 'AA+' rating "reflects the county's stable, diverse economy; strong financial management that results in high general fund reserve levels; and low direct debt levels. The county's economy benefits from ongoing redevelopment of central business district properties, and a strong financial position is underpinned by continued overall growth in tax revenues. Unemployment has risen slightly but remains consistently below state and national averages. The county's manageable capital improvement plan (CIP) should keep direct debt ratios low."
The Fitch report also says, "Hamilton County contains the City of Chattanooga (GOs rated 'AA' with a Stable Outlook) and is located in the southeastern corner of Tennessee. It serves as the regional economic center of a four-county area spreading across the Georgia state line and is approximately equidistant from Atlanta and Nashville. The Chattanooga area has an above-average proportion of employment in the manufacturing sector relative to national levels. However, its employment base is well diversified and stabilized by the Tennessee Valley Authority and a large higher education sector, including the University of Tennessee at Chattanooga and the Chattanooga State Technical Community College. Enterprise South, an industrial park, provides a significant amount of developable land. Income levels are 112% and 101% of the state and national averages, respectively.
"The county's excellent financial management practices include maintaining substantial operating fund reserves and providing pay-as-you-go capital support from annual revenue. Fiscal 2007 ended with a $3.0 million general fund surplus, bringing the unreserved general fund balance to $56.8 million, or a high 31.9% of expenditures, transfers out, and other uses. The county's strong unreserved general fund balances have ranged from 29.1%-33.6% of spending over the past five fiscal years. Officials expect to end fiscal 2008 with another sizeable general fund surplus, which should further build reserve levels.
"Direct debt levels are low at $752 per capita and 1.0% of taxable market value (TMV). Including overlapping debt, overall debt ratios are moderate at $2,104 per capita and 2.74% of TMV. The county has a policy of retiring most debt within 15 years of issuance, which results in a rapid amortization rate of 74.3% within the next 10 years. Debt service claimed a moderately low 5.7% of fiscal 2007 expenditures and has been consistently maintained at that level. The fiscal years 2008-2012 CIP totals a manageable $281 million, despite having grown considerably over the prior plan with the addition of two schools and ballooning construction costs; the county's next GO issuance is planned for fiscal 2010. Officials plan to create a trust fund to help manage an approximately $100 million other post-employment benefits liability for the county and schools. The county has budgeted for their allocation of the annual required contribution (ARC) in fiscal 2008; school officials are evaluating funding options for the remaining portion. The county makes its ARC to the Tennessee Consolidated Retirement System for pensions."
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