Fitch Ratings assigns an underlying 'A+' rating to the
City of Port St. Lucie, Florida's (the city) $45 million general
obligation (GO) bonds, series 2006. The bonds, expected to be insured,
are scheduled to sell on Aug. 10, 2006 through negotiation with RBC
Capital Markets. In addition, Fitch affirms the 'A+' rating on the
city's $44.8 million in outstanding GO bonds and affirms the 'A'
rating on $25.5 million in outstanding sales tax revenue bonds. Fitch
also revises the Rating Outlook to Positive from Stable.
The 'A+' GO rating reflects the city's sound financial position characterized by ample liquidity and solid reserve levels, a rapidly growing population that should lead to increased commercial and retail development, and very high tax base growth in recent years. The Rating Outlook revision to Positive reflects the city's recent formulation of a capital improvement program that Fitch believes is both comprehensive and financially manageable, as well as management's demonstrated ability to handle the city's significant population growth. The rating also considers the city's above average debt burden and sizable growth-related infrastructure needs.
Located in St. Lucie County on the Atlantic Coast, Port St. Lucie is primarily a residential community that continues to experience very rapid growth. Driven by a significant increase in the availability of water and sewer service, the city's population - estimated at 131,692 in 2005 - grew 59% between 1990 and 2000 and an additional 48% since the 2000 census. City unemployment rates that historically showed large seasonal variation due to the presence of citrus and other agricultural industries have stabilized somewhat. The May 2006 unemployment rate of 2.7% registered well below those of the state and nation. Income levels lag state and national averages, and well below average per capital retail sales levels illustrate the lack of commercial development within the city, although several planned projects are likely to increase commercial and retail activity.
Financial operations are strong, as evidenced by seven consecutive fiscal years of increased general fund reserves. The undesignated general fund balance at the end of fiscal 2005 totaled a healthy $11 million and represented 19.3% of expenditures and transfers out. Fitch believes that management has handled the growth well to date financially, and that this is a reasonable level of reserves for a rapidly growing and changing municipality. Operations have benefited from strong tax base growth averaging 32% annually over the past five fiscal years, including 43% increases in each of fiscal years 2006 and 2007. The fiscal 2006 tax rate of 4.43 mills includes one mill dedicated for transportation projects and a small portion dedicated for other capital projects. The low tax rate affords ample flexibility under the 10-mill statutory limit. Fitch believes that although tax base growth at anything close to recent levels is unsustainable, financial flexibility should be adequate to handle a correction in the real estate market, In addition, management appears to have realistic expectations regarding a slowdown in the rate of tax base growth.
The bulk of the city's outstanding debt is for the water and wastewater utility system, which is fully self-supporting through rates and special assessments. Excluding special assessment bonds, overall debt is moderate, representing 3.2% of market value and $2,930 per capita. Debt service coverage on sales tax revenue bonds, which are secured by the local government half cent sales tax, improved for the third consecutive year to a strong at 2.5 times (x) maximum annual debt service by fiscal 2005 revenues. The fiscal 2007-2011 capital investment plan (CIP) totals approximately $753 million, with slightly more than half (52%) dedicated to transportation needs and almost one-third (30%) devoted to expansion and improvement projects related to the city's stormwater system and water and sewer system. the remainder of the plan will focus on the city's general government and recreational needs.
The series 2006 GO bonds represent the second issuance under a $165 million authorization approved by 89% of voters in 2005 to provide funding for construction of the Crosstown Parkway, an east-west transportation corridor that will connect US Route 1 to Interstate 95. The city plans to issue the remainder of the GO authorization in fiscal 2007.
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+' GO rating reflects the city's sound financial position characterized by ample liquidity and solid reserve levels, a rapidly growing population that should lead to increased commercial and retail development, and very high tax base growth in recent years. The Rating Outlook revision to Positive reflects the city's recent formulation of a capital improvement program that Fitch believes is both comprehensive and financially manageable, as well as management's demonstrated ability to handle the city's significant population growth. The rating also considers the city's above average debt burden and sizable growth-related infrastructure needs.
Located in St. Lucie County on the Atlantic Coast, Port St. Lucie is primarily a residential community that continues to experience very rapid growth. Driven by a significant increase in the availability of water and sewer service, the city's population - estimated at 131,692 in 2005 - grew 59% between 1990 and 2000 and an additional 48% since the 2000 census. City unemployment rates that historically showed large seasonal variation due to the presence of citrus and other agricultural industries have stabilized somewhat. The May 2006 unemployment rate of 2.7% registered well below those of the state and nation. Income levels lag state and national averages, and well below average per capital retail sales levels illustrate the lack of commercial development within the city, although several planned projects are likely to increase commercial and retail activity.
Financial operations are strong, as evidenced by seven consecutive fiscal years of increased general fund reserves. The undesignated general fund balance at the end of fiscal 2005 totaled a healthy $11 million and represented 19.3% of expenditures and transfers out. Fitch believes that management has handled the growth well to date financially, and that this is a reasonable level of reserves for a rapidly growing and changing municipality. Operations have benefited from strong tax base growth averaging 32% annually over the past five fiscal years, including 43% increases in each of fiscal years 2006 and 2007. The fiscal 2006 tax rate of 4.43 mills includes one mill dedicated for transportation projects and a small portion dedicated for other capital projects. The low tax rate affords ample flexibility under the 10-mill statutory limit. Fitch believes that although tax base growth at anything close to recent levels is unsustainable, financial flexibility should be adequate to handle a correction in the real estate market, In addition, management appears to have realistic expectations regarding a slowdown in the rate of tax base growth.
The bulk of the city's outstanding debt is for the water and wastewater utility system, which is fully self-supporting through rates and special assessments. Excluding special assessment bonds, overall debt is moderate, representing 3.2% of market value and $2,930 per capita. Debt service coverage on sales tax revenue bonds, which are secured by the local government half cent sales tax, improved for the third consecutive year to a strong at 2.5 times (x) maximum annual debt service by fiscal 2005 revenues. The fiscal 2007-2011 capital investment plan (CIP) totals approximately $753 million, with slightly more than half (52%) dedicated to transportation needs and almost one-third (30%) devoted to expansion and improvement projects related to the city's stormwater system and water and sewer system. the remainder of the plan will focus on the city's general government and recreational needs.
The series 2006 GO bonds represent the second issuance under a $165 million authorization approved by 89% of voters in 2005 to provide funding for construction of the Crosstown Parkway, an east-west transportation corridor that will connect US Route 1 to Interstate 95. The city plans to issue the remainder of the GO authorization in fiscal 2007.
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.