Fitch Ratings assigns an 'A-' rating to
Monarch-Chesterfield Levee District, Missouri's $10.1 million levee
district improvement bonds, series 2006, scheduled for negotiated sale
on or about June 19 through Stifel, Nicolaus & Company, Inc. The bonds
are secured by a special tax levied against each parcel of taxable
property within the district in proportion to the benefits conferred
by the construction of the improvements. Proceeds of the bonds will
finance construction of improvements to the levee system and additions
to the area's water and sewer infrastructure. The Rating Outlook is
Stable. Fitch also assigns an 'A-' rating to the district's $25.9
million of outstanding parity debt.
The 'A-' rating reflects the district's strong financial performance and ongoing development due to the growth and affluence of neighboring communities. Additionally, the levee improvements funded by the strong enforcement provisions of the special tax will ensure adequate funding of future capital needs. Concerns include moderate concentration of the district's largest taxpayers, which will be offset by continued development and the strengthened levee structure. The Rating Outlook for the district is Stable based on its minimal future borrowing needs and sizable reserves.
The district includes approximately 4,722 acres bordering the Missouri River and bisected by Interstate 64 in the cities of Chesterfield and Wildwood, approximately 20 miles west of downtown St. Louis. Approximately one-half of available land within the district is developed, including the Spirit of St. Louis Airport which serves general aviation and a variety of commercial development. Historically, development has been strong within the district with an estimated 1 million square feet of retail development added since 1998. Development continues with additional growth anticipated from the levee improvements, and more important, the extension of the district's water and sewer infrastructure.
The district is charged with protecting and reclaiming land within its borders from the effects of flooding and erosion, as well as sanitary and agricultural purposes. In 1999, the district implemented an extensive program to improve its levee system to protect against an estimated 500-year flood event plus an additional three feet. After this issue, the district will have approximately $36 million in outstanding debt, equaling approximately 5% of total market value.
The district generates revenues from two primary sources: an installment tax and a maintenance tax. The installment tax is a special tax levied against property in the district in proportion to the benefits received from the levee improvements. This tax pays for the cost of improvements, including interest from any related debt, with an additional 10% of the cost of improvements allowance as a contingency for emergencies. The separate maintenance tax is levied in a similar fashion for the maintenance and operation of the district's facilities. While the installment tax may not be used for operations, the maintenance tax may be used for debt service if needed. Unpaid taxes result in a lien placed upon the delinquent parcel of land, for which only the liens of the state, county, school, and road taxes are superior. The county collector collects the taxes for the district, which are due Dec. 31 of each year.
Estimated cost of levee improvements is $7.4 million with water and sewer infrastructure cost of $5.5 million, for total project cost of approximately $12.9 million. This issue will finance $10.1 million of total project costs with the City of Chesterfield contributing $2.8 million toward water and sewer infrastructure. Security for the levee improvement portion of the project is the installment tax levied district wide. Water and sewer infrastructure financed by this issue will be secured by a separate installment tax levied within a sub-district in the western portion of the district. The installment tax for the sub-district is subject to the same aforementioned limitations as the district-wide installment tax. The sub-district represents approximately $18.3 million (16%) of the district's $113.4 million total assessed benefit.
Operating expenditures of the district are minimal, with capital outlays and debt service expenses representing 91.4% of the district's total expenditures in fiscal 2005. The district's financial position fluctuated over the last three years due to a $13.5 million tax increment financing note from Chesterfield purchased in fiscal 2002. In spite of fluctuations in financial operations, the district maintains a total fund balance of $21 million in fiscal 2005 (298.5% of total expenditures and transfers out). Without consideration of the reserves for debt service, construction, and the non-current portion of the TIF note receivable, the district's total unreserved, undesignated fund balance remains substantial at $5.9 million in fiscal 2005, or 83.9% of total expenditures and transfers out.
The major taxpayers of the district represent 41.8% of the district's total assessed benefit indicating a moderate level of concentration for such a district. Major taxpayers include a number of developers and completed retail development including a large strip mall, Target, and Wal-mart. In addition, 17.2% of the district's total assessed benefit is attributed to government-owned properties, mostly by St. Louis County (general obligation bonds rated 'AAA' by Fitch). Past Missouri court rulings have established the ability of levee districts to assess the benefited municipal entities for these taxes. The sub-district is concentrated to a higher degree, with major taxpayers accounting for 83.3% of assessed benefit with government-owned properties at 20.7% of the sub-district's assessed benefit. While taxpayer concentration is a credit concern, continued development within the district should result in a slow diversification of the tax base.
Local economic and wealth indicators within and surrounding the district are strong. Per capita income levels in Chesterfield and Wildwood equaled 200.5% and 178.3%, respectively, of the national average in 1999. The district is located in St. Louis County, which ranks as the state's largest in terms of both population and total personal income. The county's economic base expanded at a 4.3% average annual rate from 1994-2004, trailing the national average of 5.2%. However, local unemployment rates rank consistently at or below the 5.1% rate for the nation in 2005, at 3.3% for Chesterfield, 3.0% for Wildwood, and 5.2% for the county.
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 'A-' rating reflects the district's strong financial performance and ongoing development due to the growth and affluence of neighboring communities. Additionally, the levee improvements funded by the strong enforcement provisions of the special tax will ensure adequate funding of future capital needs. Concerns include moderate concentration of the district's largest taxpayers, which will be offset by continued development and the strengthened levee structure. The Rating Outlook for the district is Stable based on its minimal future borrowing needs and sizable reserves.
The district includes approximately 4,722 acres bordering the Missouri River and bisected by Interstate 64 in the cities of Chesterfield and Wildwood, approximately 20 miles west of downtown St. Louis. Approximately one-half of available land within the district is developed, including the Spirit of St. Louis Airport which serves general aviation and a variety of commercial development. Historically, development has been strong within the district with an estimated 1 million square feet of retail development added since 1998. Development continues with additional growth anticipated from the levee improvements, and more important, the extension of the district's water and sewer infrastructure.
The district is charged with protecting and reclaiming land within its borders from the effects of flooding and erosion, as well as sanitary and agricultural purposes. In 1999, the district implemented an extensive program to improve its levee system to protect against an estimated 500-year flood event plus an additional three feet. After this issue, the district will have approximately $36 million in outstanding debt, equaling approximately 5% of total market value.
The district generates revenues from two primary sources: an installment tax and a maintenance tax. The installment tax is a special tax levied against property in the district in proportion to the benefits received from the levee improvements. This tax pays for the cost of improvements, including interest from any related debt, with an additional 10% of the cost of improvements allowance as a contingency for emergencies. The separate maintenance tax is levied in a similar fashion for the maintenance and operation of the district's facilities. While the installment tax may not be used for operations, the maintenance tax may be used for debt service if needed. Unpaid taxes result in a lien placed upon the delinquent parcel of land, for which only the liens of the state, county, school, and road taxes are superior. The county collector collects the taxes for the district, which are due Dec. 31 of each year.
Estimated cost of levee improvements is $7.4 million with water and sewer infrastructure cost of $5.5 million, for total project cost of approximately $12.9 million. This issue will finance $10.1 million of total project costs with the City of Chesterfield contributing $2.8 million toward water and sewer infrastructure. Security for the levee improvement portion of the project is the installment tax levied district wide. Water and sewer infrastructure financed by this issue will be secured by a separate installment tax levied within a sub-district in the western portion of the district. The installment tax for the sub-district is subject to the same aforementioned limitations as the district-wide installment tax. The sub-district represents approximately $18.3 million (16%) of the district's $113.4 million total assessed benefit.
Operating expenditures of the district are minimal, with capital outlays and debt service expenses representing 91.4% of the district's total expenditures in fiscal 2005. The district's financial position fluctuated over the last three years due to a $13.5 million tax increment financing note from Chesterfield purchased in fiscal 2002. In spite of fluctuations in financial operations, the district maintains a total fund balance of $21 million in fiscal 2005 (298.5% of total expenditures and transfers out). Without consideration of the reserves for debt service, construction, and the non-current portion of the TIF note receivable, the district's total unreserved, undesignated fund balance remains substantial at $5.9 million in fiscal 2005, or 83.9% of total expenditures and transfers out.
The major taxpayers of the district represent 41.8% of the district's total assessed benefit indicating a moderate level of concentration for such a district. Major taxpayers include a number of developers and completed retail development including a large strip mall, Target, and Wal-mart. In addition, 17.2% of the district's total assessed benefit is attributed to government-owned properties, mostly by St. Louis County (general obligation bonds rated 'AAA' by Fitch). Past Missouri court rulings have established the ability of levee districts to assess the benefited municipal entities for these taxes. The sub-district is concentrated to a higher degree, with major taxpayers accounting for 83.3% of assessed benefit with government-owned properties at 20.7% of the sub-district's assessed benefit. While taxpayer concentration is a credit concern, continued development within the district should result in a slow diversification of the tax base.
Local economic and wealth indicators within and surrounding the district are strong. Per capita income levels in Chesterfield and Wildwood equaled 200.5% and 178.3%, respectively, of the national average in 1999. The district is located in St. Louis County, which ranks as the state's largest in terms of both population and total personal income. The county's economic base expanded at a 4.3% average annual rate from 1994-2004, trailing the national average of 5.2%. However, local unemployment rates rank consistently at or below the 5.1% rate for the nation in 2005, at 3.3% for Chesterfield, 3.0% for Wildwood, and 5.2% for the county.
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.