Fitch Ratings has assigned an 'AA' rating to Tolland, Connecticut's 2008 issue of $2,010,000 general obligation (GO) bonds and an 'F1+' rating to Tolland's $1,400,000 GO bond anticipation notes (BANs). The bonds and BANs will be sold competitively on August 28, with the bonds due serially Sept. 1, 2010-2018 and the notes maturing Sept. 10, 2009. Fitch has also affirmed the 'AA' rating on Tolland's approximately $41 million outstanding GO bonds. The Rating Outlook is Stable.
The 'AA' rating on the GO bonds reflects Tolland's solid financial operations guided by prudent fiscal management and debt policies, strong economic indicators, and a moderate debt burden with manageable capital needs. The rating also takes into consideration the town's growing but still limited economy and employment base. However, a desirable school system and more affordable land prices in comparison with other metropolitan Hartford, CT communities have generated some residential and commercial development, which mitigates this concern to some extent. Policies including multiyear financial forecasting, monthly financial reporting, and debt issuance guidelines have enhanced the town's management of fixed costs, creating flexibility to build solid reserves.
Tolland is a small, primarily residential community about 20 miles northeast of Hartford. Bisected by Interstate 84 (I-84), Tolland is only seven miles from the University of Connecticut's (UConn) flagship campus at Storrs, and within commuting distance of metropolitan Hartford. The town's population grew by a rapid 20% in the 1990s and is estimated to have risen another 11% since the 2000 census, outpacing growth seen across the county and state. At full build-out, the town estimates the population to be roughly 18,000, a decline from previous forecasts where the build-out population equaled 25,000 residents. Tolland's labor force is well educated, and although the unemployment rate has increased slightly over the past few months, to 3.8% in May 2008, the rate remains comfortably below county, state, and national levels. Economic development efforts have shown progress, evident with the recent relocation and expansion of Dari Farms and the opening of a 15,700-square-foot Wilson Woodworking building. Wealth indicators are slightly above average.
Tolland's financial performance is strong and steady, evidenced by healthy unreserved fund balance levels and ample liquidity. The unreserved general fund balance in fiscal 2007 was roughly $4.9 million, equal to 10.4% of expenditures, transfers out, and other uses, representing continued improvement over the 7.3% level reported in fiscal 2001. Fiscal 2007 ended with an operating surplus of approximately $575,000, and unaudited results for fiscal 2008 show another small surplus. The fiscal 2009 budget is approximately 5.3% more than the budget for fiscal 2008, and incorporates a property tax levy increase of 4.4%. The town's multi-year forecast for fiscal years 2009-2013 projects structural balance, albeit with moderate increases to the property tax rate.
Debt levels are moderate on a per capita basis and in relation to property values. Comprehensive planning and policies requiring annual pay-as-you-go capital spending have historically kept long-term borrowing to a minimum. While debt levels have increased in recent years as a result of additional public investment in schools and sewer infrastructure, future planned debt issuance is manageable and should ensure a moderate debt burden going forward. The town's manageable $14 million capital improvement plan (CIP) spans fiscal years 2009-2013. Amortization is above average, with 68% of principal retired in 10 years.
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