Fitch assigns an 'AA' rating to Lorain County, Ohio's
$4.3 million general obligation (GO) limited tax energy conservation
bonds, series 2006. The bonds are scheduled for negotiated sale
through Seasongood & Mayer, LLC on Aug. 24. The Rating Outlook is
Stable. The bonds represent a general obligation of the county,
payable from ad valorem taxes levied on all taxable property subject
to county charter and statutory limitations. Proceeds will refinance
outstanding bond anticipation notes issued to finance energy
conservation improvements to various county buildings. In addition,
Fitch affirms the 'AA' rating on the county's approximately $31
million of outstanding general obligation debt.
The 'AA' rating reflects Lorain County's growing tax base with continued economic diversification from manufacturing toward service industries. The county's financial operations are well managed, benefiting from sizeable fund balance reserves and steady own-source revenue growth. Debt levels are low because of strong internal funding practices and remain manageable due to the limited need for additional borrowing. While the county will experience greater budgetary pressure in coming years due to reduced state aid, tax base growth and deliberate spending reductions should support continued financial strength.
Located in northeastern Ohio, approximately 30 miles west of the city of Cleveland and with an estimated 2005 population of 296,307, Lorain County's largely manufacturing economic base is slowly diversifying as the service sector expands. Community Health Partners, EMH Regional Medical Center, and Oberlin College are among the county's largest service sector employers. In 2002, Community Health Partners constructed a new comprehensive cancer center and expanded its services, adding to the diversification of the county's economic base.
The county experienced steady tax base growth of 5.7% on average annually since 1995. Attracted by affordable land and relatively low tax rates, the county's residential population has grown and residential uses now account for 70% of 2005 assessed valuation. Average home values rose at a strong 5.8% annual rate in the past five years, increasing markedly to an estimated $151,560 in 2005 compared with $119,875 in 2000. Per capita money income approximates the state average and equals 98% of the national average.
Management's conservative budgeting practices, along with the economic expansion in the services area, produced operating surpluses, before transfers for human services and capital purposes, in each of the past nine years. The county's total general fund balance equaled $37.7 million or 64.8% of expenditures and transfers out for fiscal 2005. The county's unreserved fund balance has exceeded 38% of spending since 1997, due to its growing economy, consistent voter approval for supplemental property tax levies, and management's sound expenditure controls. In previous years general fund appropriations were restricted annually to a 3%-4% increase from the prior year's appropriation, with the exception of those functions funded from tax levies and state and federal governments.
In 2006, state aid will decline about $3.5 million or 6% of total general fund revenues due to increased development which changes the formula for state revenue distribution. However, Fitch expects continued sales tax growth and deliberate cost containment efforts will partially offset this loss and reserves should remain sizeable. Additionally, the county retains revenue flexibility in sales tax capacity and could restrain capital spending if necessary.
The county's low direct debt equals $129 per capita and 0.2% of full market value. Overlapping debt totals a modest $1,019 per capita and 1.6% of full market value. The county's debt levels should to remain low, as capital needs are limited. General fund reserves and other internal sources will continue to finance ongoing most capital needs; over the past five years, capital contributions through general fund sources alone averaged $1.4 million annually.
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 'AA' rating reflects Lorain County's growing tax base with continued economic diversification from manufacturing toward service industries. The county's financial operations are well managed, benefiting from sizeable fund balance reserves and steady own-source revenue growth. Debt levels are low because of strong internal funding practices and remain manageable due to the limited need for additional borrowing. While the county will experience greater budgetary pressure in coming years due to reduced state aid, tax base growth and deliberate spending reductions should support continued financial strength.
Located in northeastern Ohio, approximately 30 miles west of the city of Cleveland and with an estimated 2005 population of 296,307, Lorain County's largely manufacturing economic base is slowly diversifying as the service sector expands. Community Health Partners, EMH Regional Medical Center, and Oberlin College are among the county's largest service sector employers. In 2002, Community Health Partners constructed a new comprehensive cancer center and expanded its services, adding to the diversification of the county's economic base.
The county experienced steady tax base growth of 5.7% on average annually since 1995. Attracted by affordable land and relatively low tax rates, the county's residential population has grown and residential uses now account for 70% of 2005 assessed valuation. Average home values rose at a strong 5.8% annual rate in the past five years, increasing markedly to an estimated $151,560 in 2005 compared with $119,875 in 2000. Per capita money income approximates the state average and equals 98% of the national average.
Management's conservative budgeting practices, along with the economic expansion in the services area, produced operating surpluses, before transfers for human services and capital purposes, in each of the past nine years. The county's total general fund balance equaled $37.7 million or 64.8% of expenditures and transfers out for fiscal 2005. The county's unreserved fund balance has exceeded 38% of spending since 1997, due to its growing economy, consistent voter approval for supplemental property tax levies, and management's sound expenditure controls. In previous years general fund appropriations were restricted annually to a 3%-4% increase from the prior year's appropriation, with the exception of those functions funded from tax levies and state and federal governments.
In 2006, state aid will decline about $3.5 million or 6% of total general fund revenues due to increased development which changes the formula for state revenue distribution. However, Fitch expects continued sales tax growth and deliberate cost containment efforts will partially offset this loss and reserves should remain sizeable. Additionally, the county retains revenue flexibility in sales tax capacity and could restrain capital spending if necessary.
The county's low direct debt equals $129 per capita and 0.2% of full market value. Overlapping debt totals a modest $1,019 per capita and 1.6% of full market value. The county's debt levels should to remain low, as capital needs are limited. General fund reserves and other internal sources will continue to finance ongoing most capital needs; over the past five years, capital contributions through general fund sources alone averaged $1.4 million annually.
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.