Fitch Ratings assigns a 'BBB' rating to Vanderburgh
County Redevelopment District, Indiana's $28.5 million tax increment
revenue bonds of 2006, scheduled for negotiated sale on or about May
24 through KeyBanc Capital Markets. The Rating Outlook is Stable.
Proceeds of the bonds will finance road improvements to serve and
benefit the Burkhardt Road Economic Development Area (the area) and to
fund a debt service reserve. The bonds are secured by real property
tax revenues generated within the area less revenue attributed to the
base assessed value of the area (the tax increment). In addition,
available monies within the district's funds, as specified by the bond
resolution, may be used for debt service, with further security
provided by a debt service reserve fund. Fitch also assigns its 'BBB'
rating to approximately $5.1 million in outstanding parity debt
supported by tax increment revenues of the area.
The 'BBB' rating reflects the established nature and diversity of the development within the area, historical tax increment revenues sufficient to cover debt service of this issue and outstanding obligations of the area without future growth, and substantial developable land within the area for future generation of additional tax increment revenue, coupled with limited retail competition and the favorable demographics of the surrounding area. Credit concerns include the possibility of reduced coverage from the recently enacted state circuit breaker and the somewhat concentrated nature of the area's property tax base. The Stable Outlook is based on the sound coverage of debt service from existing tax increment and ongoing additional development within the area.
Located in the southwestern corner of the state along the Ohio River, Vanderburgh County includes the City of Evansville. The county established the area near the intersection of state highway 66 and Interstate 164 in 1995. The area was expanded in April 2006 to a total of approximately 4,000 acres, nearly doubling in size. Established, major retail developments within the area include Wal-Mart (rated 'AA' by Fitch), Home Depot (The Home Depot, Inc. rated 'AA' by Fitch), Kohl's (Kohl's Corp. rated 'A' by Fitch), and Lowe's (Lowe's Companies, Inc. rated 'A+' by Fitch). The area also includes several large apartment complexes, further enhancing the stability of the area. Construction continues in the mixed-use Cross Pointe Commerce Center in the southern portion of the area with completed development including office buildings, restaurants, and a hotel. The road projects funded by this issue will greatly improve accessibility and should encourage additional growth within the area.
The competitive nature of the retail industry is a concern, mitigated by the Evansville metropolitan area serving as the major population and retail center for an approximate 40 mile radius. The strength of retail demand within the Evansville metropolitan area is indicated by the majority of retailers within the area having a corresponding location approximately 10 miles away on the west side of the city. In addition to limited competition outside of the immediate Evansville area, the strong demographics of the county, with a total population of approximately 173,187 and per capita income equal to 109.0% of the state average, would suggest other retailers would be willing to enter the market should the current merchants leave the area. The 10 leading property taxpayers of the area are concentrated at 44.2% of the area's total assessed valuation. However, a measure of diversity alleviates concentration concerns, with the 10 leading taxpayers including a variety of retail establishments, commercial office space, a hotel, and apartment complexes.
The location of the area adjacent to the city raises the possibility of annexation of the area by Evansville. As the city's tax rate is higher than the township's tax rate, if the city were to annex the area, the recently expanded state circuit breaker legislation would apply. The circuit breaker legislation limits property taxes payable for individual properties to 2% of the property's gross assessed value, effective in the 2008 collection year for residential property taxpayers and 2010 for all property taxpayers.
Coverage for this issue and outstanding debt supported by the area does not include any projections of ongoing and future growth. Tax increment revenues provide 1.52 times (x) coverage for total debt service of the area assuming the area is not annexed by the city. While coverage levels would decrease, if the area was annexed by the city and the circuit breaker triggered, tax increment revenues still provide sufficient coverage at 1.20x total debt service.
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.
The 'BBB' rating reflects the established nature and diversity of the development within the area, historical tax increment revenues sufficient to cover debt service of this issue and outstanding obligations of the area without future growth, and substantial developable land within the area for future generation of additional tax increment revenue, coupled with limited retail competition and the favorable demographics of the surrounding area. Credit concerns include the possibility of reduced coverage from the recently enacted state circuit breaker and the somewhat concentrated nature of the area's property tax base. The Stable Outlook is based on the sound coverage of debt service from existing tax increment and ongoing additional development within the area.
Located in the southwestern corner of the state along the Ohio River, Vanderburgh County includes the City of Evansville. The county established the area near the intersection of state highway 66 and Interstate 164 in 1995. The area was expanded in April 2006 to a total of approximately 4,000 acres, nearly doubling in size. Established, major retail developments within the area include Wal-Mart (rated 'AA' by Fitch), Home Depot (The Home Depot, Inc. rated 'AA' by Fitch), Kohl's (Kohl's Corp. rated 'A' by Fitch), and Lowe's (Lowe's Companies, Inc. rated 'A+' by Fitch). The area also includes several large apartment complexes, further enhancing the stability of the area. Construction continues in the mixed-use Cross Pointe Commerce Center in the southern portion of the area with completed development including office buildings, restaurants, and a hotel. The road projects funded by this issue will greatly improve accessibility and should encourage additional growth within the area.
The competitive nature of the retail industry is a concern, mitigated by the Evansville metropolitan area serving as the major population and retail center for an approximate 40 mile radius. The strength of retail demand within the Evansville metropolitan area is indicated by the majority of retailers within the area having a corresponding location approximately 10 miles away on the west side of the city. In addition to limited competition outside of the immediate Evansville area, the strong demographics of the county, with a total population of approximately 173,187 and per capita income equal to 109.0% of the state average, would suggest other retailers would be willing to enter the market should the current merchants leave the area. The 10 leading property taxpayers of the area are concentrated at 44.2% of the area's total assessed valuation. However, a measure of diversity alleviates concentration concerns, with the 10 leading taxpayers including a variety of retail establishments, commercial office space, a hotel, and apartment complexes.
The location of the area adjacent to the city raises the possibility of annexation of the area by Evansville. As the city's tax rate is higher than the township's tax rate, if the city were to annex the area, the recently expanded state circuit breaker legislation would apply. The circuit breaker legislation limits property taxes payable for individual properties to 2% of the property's gross assessed value, effective in the 2008 collection year for residential property taxpayers and 2010 for all property taxpayers.
Coverage for this issue and outstanding debt supported by the area does not include any projections of ongoing and future growth. Tax increment revenues provide 1.52 times (x) coverage for total debt service of the area assuming the area is not annexed by the city. While coverage levels would decrease, if the area was annexed by the city and the circuit breaker triggered, tax increment revenues still provide sufficient coverage at 1.20x total debt service.
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.