Fitch Ratings assigns an ''AA'' rating to three series of Jacksonville, Florida (the city) bonds:
--Approximately $39.8 million series 2009A excise tax revenue bonds;
--$28.9 million series 2009B;
--$22. million series 2009C.
Proceeds from series 2009A will fund various capital needs while series 2009B and 2009C will refund outstanding parity debt. The bonds are expected to price the week of Sept. 21st. Concurrently, Fitch affirms the city''s $358.9 million in outstanding excise tax revenue bonds at ''AA''. The Outlook is Stable.
The ''AA'' rating on the excise tax revenue bonds reflects the ample debt service coverage provided by pledged revenues, solid legal provisions and the general credit characteristics of the city including strong management, healthy financial position, and a diverse economy. Credit concerns include the city''s ongoing ability to balance its capital needs during a pressured operating environment.
The bonds are secured by a utilities services tax, which includes the discretionary communications services tax, and occupational license taxes. Roughly half of pledged revenues come from a 10% tax on commercial and residential electricity purchases from the quasi-independent Jacksonville Electric Authority (JEA) (rated ''AA-'' by Fitch). Fiscal 2008 revenues cover projected maximum annual debt service (MADS) a healthy 2.45 times (x). Year-to-date pledged revenues are up 12.6% through the first eight months largely due to rate increases by JEA on both electricity and water/sewer. The additional bond test (ABT) is adequate, requiring 1.4x MADS coverage. Fitch believes that the diversity of the underlying services subject to excise taxes lessens the volatility of pledged revenues.
Located on the northeastern coast of Florida, Jacksonville is the most populous city in Florida; the 2007 estimated population was 805,605, an increase of 9.4% over the 2000 census figure. The city''s diverse economic base has a strong long-term profile bolstered by its historical naval presence, large cargo port with a natural river harbor, and major banking, insurance, health care, and manufacturing industries. While the effect of the current economic downturn has so far been less severe in the city than in other parts of the state, unemployment has increased to 10.9% in June 2009 from 6.2% a year prior.
Financial operations are strong resulting in operating surpluses in four out of the last five years. Unaudited fiscal 2008 results show a $14.2 million surplus driven by the implementation of an effective expenditure reduction program and additional fees instituted to offset the impact of recent property tax reform. The unreserved fund balance plus a $40 million emergency reserve held in the general fund equal a satisfactory 8.8% of spending. Estimates for fiscal 2009 year end indicate break-even results.
Overall debt levels are moderate at 4.3% of taxable assessed value, or $3,215 per capita. The city''s capital improvement plan (CIP) for fiscal 2009-13 is relatively small at $77 million, although it excludes all Better Jacksonville Plan (BJP) projects, which at $2.3 billion account for the majority of the city''s capital needs. The CIP is fully funded and projects are concentrated in roads, accounting for roughly 50% of spending.
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Contacts:
Fitch Ratings, New York
Rachel A. Barkley, +1-212-908-0514
Amy
R. Laskey, +1-212-908-0568
Cindy Stoller, +1-212-908-0526 (Media
Relations)
cindy.stoller@fitchratings.com