Fitch Ratings assigns an 'AAA' rating to Hennepin
County, Minnesota's approximately $103,025,000 general obligation (GO)
bonds, series 2006A, scheduled for competitive sale on May 3 with
Springsted, Inc. serving as financial advisor to the county. The bonds
are secured by the county's pledge of its full faith and credit and
unlimited taxing power to pay debt service on the bonds. Approximately
$50 million of bond proceeds will refinance outstanding GO debt for
debt service savings, while the balance will finance the county's
capital plan. The Rating Outlook is Stable. Additionally, Fitch
affirms the 'AAA' rating on approximately $452 million of outstanding
GO debt, and the 'AAA' rating on the Hennepin County Regional Railroad
Authority's approximately $47 million of outstanding GO bonds.
Hennepin County's 'AAA' rating is based on the diversified economic base, strong budgetary performance, and low tax-supported debt. Although many county services are restructuring at both the national and local levels, the administration's strong management has contributed to steady financial performance. It maintains considerable financial flexibility through its diverse revenue sources and ability to compress operating and capital expenditures in recessionary periods. The health care system requires tax subsidies from general revenues, and while these needs have declined in the past few years with excellent financial management of Hennepin County Medical Center (HCMC) and recent capital investment in equipment and facilities, recent state revenue reductions will require balancing tax support with service delivery.
Hennepin County, with the City of Minneapolis serving as the county seat, has a diverse and affluent economy that grows in line with national patterns. As the service and trade sectors expanded rapidly over the past two decades, the economy has reduced the importance of durable manufacturing to the county economy. Long-term growth tends to outperform national levels and has increased the county's wealth gains as compared with the U.S. Per capita income levels in the county are 32% above the state's and 43% above the nation's. After declining to a low of 2.1% in 1998, unemployment rates gradually increased to peak at 4.8% in 2003. More recently, unemployment rates declined to 3.9% in February 2006, compared to 4.9% and 5.1% for the state and nation, respectively. Most job creation is broad-based with service sector growth driving employment gains and a significant governmental presence providing stability.
As a key provider of social services and health care to the indigent and vested with sizable public safety responsibilities, the county, until recently, had improved service levels without real budgetary increases. Strong control and management systems have produced a record of strong financial performance and position at a time when grant support from senior governments is waning. Nevertheless, the county absorbed state revenue losses of $31 million and $50 million in fiscal years 2003 and 2004, respectively. The county also implemented an early retirement program to reduce staff by 392 positions, eliminated other positions through layoff, and reduced programs in health and public safety. As a result, the general fund produced a surplus in fiscal 2004 of $13.4 million, bringing total general fund balance to $158 million or 45.4% of spending. Although audited 2005 results are not available, the county anticipates a surplus in the general fund. Unreserved governmental balances (including general, special revenue, and debt service funds) increased to 25.4% of spending in 2004, compared to 23.9% of spending in 2002.
The county's 2006-2010 capital improvement program totals $741 million. Although 63% of the program will be financed through debt, most projects are discretionary. The county's limited use of tax-supported GO debt has created a low debt burden with rapid retirement. Per capita direct debt equals $365; including municipal and school district debt, overall per capita debt equals $2,646. Against property market values, direct debt equals 0.3%, and overall debt equals 1.9%.
In May 2005, the county board of commissioners approved a resolution to seek taxing authority from the state legislature for financing a new Minnesota Twins baseball stadium. The county would finance approximately $392 million of the total project cost through a 0.15% sales tax increase.
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.
Hennepin County's 'AAA' rating is based on the diversified economic base, strong budgetary performance, and low tax-supported debt. Although many county services are restructuring at both the national and local levels, the administration's strong management has contributed to steady financial performance. It maintains considerable financial flexibility through its diverse revenue sources and ability to compress operating and capital expenditures in recessionary periods. The health care system requires tax subsidies from general revenues, and while these needs have declined in the past few years with excellent financial management of Hennepin County Medical Center (HCMC) and recent capital investment in equipment and facilities, recent state revenue reductions will require balancing tax support with service delivery.
Hennepin County, with the City of Minneapolis serving as the county seat, has a diverse and affluent economy that grows in line with national patterns. As the service and trade sectors expanded rapidly over the past two decades, the economy has reduced the importance of durable manufacturing to the county economy. Long-term growth tends to outperform national levels and has increased the county's wealth gains as compared with the U.S. Per capita income levels in the county are 32% above the state's and 43% above the nation's. After declining to a low of 2.1% in 1998, unemployment rates gradually increased to peak at 4.8% in 2003. More recently, unemployment rates declined to 3.9% in February 2006, compared to 4.9% and 5.1% for the state and nation, respectively. Most job creation is broad-based with service sector growth driving employment gains and a significant governmental presence providing stability.
As a key provider of social services and health care to the indigent and vested with sizable public safety responsibilities, the county, until recently, had improved service levels without real budgetary increases. Strong control and management systems have produced a record of strong financial performance and position at a time when grant support from senior governments is waning. Nevertheless, the county absorbed state revenue losses of $31 million and $50 million in fiscal years 2003 and 2004, respectively. The county also implemented an early retirement program to reduce staff by 392 positions, eliminated other positions through layoff, and reduced programs in health and public safety. As a result, the general fund produced a surplus in fiscal 2004 of $13.4 million, bringing total general fund balance to $158 million or 45.4% of spending. Although audited 2005 results are not available, the county anticipates a surplus in the general fund. Unreserved governmental balances (including general, special revenue, and debt service funds) increased to 25.4% of spending in 2004, compared to 23.9% of spending in 2002.
The county's 2006-2010 capital improvement program totals $741 million. Although 63% of the program will be financed through debt, most projects are discretionary. The county's limited use of tax-supported GO debt has created a low debt burden with rapid retirement. Per capita direct debt equals $365; including municipal and school district debt, overall per capita debt equals $2,646. Against property market values, direct debt equals 0.3%, and overall debt equals 1.9%.
In May 2005, the county board of commissioners approved a resolution to seek taxing authority from the state legislature for financing a new Minnesota Twins baseball stadium. The county would finance approximately $392 million of the total project cost through a 0.15% sales tax increase.
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.