In the course of routine surveillance, Fitch Ratings affirms the 'A' rating on Greater Richmond Convention Center Authority (GRCCA), Virginia's approximately $153 million hotel tax revenue bonds, including hotel tax revenue refunding bonds, series 2005 and hotel tax revenue bonds, series 2000. The bonds are limited obligations of the GRCCA, secured by the appropriation of revenues derived from a multi-jurisdictional hotel tax agreement, as well as a deed of trust on the facility and other trustee-held funds. The Rating Outlook is Stable.
The 'A' rating reflects the overall strength of the Richmond area economy, which Fitch anticipates will continue to generate hotel tax revenues sufficient to provide solid debt service coverage, an adequate additional bonds test that protects against future expansion-related leverage, and the ongoing commitment of the four highly rated municipal participants to the project.
GRCCA comprises the City of Richmond and the three surrounding counties of Chesterfield, Hanover, and Henrico. The area has shown strong economic growth, with low unemployment, increasing income levels, and significant commercial development. The diverse economic base includes state and local government, health care, financial services, higher education, and retail trade, as well as high-technology and traditional manufacturing. Continuing commercial and civic development activity enhances prospects for sustained growth in hotel tax receipts.
Fitch's general obligation bond ratings on the four participating entities are as follows:
--Richmond 'AA'; Stable Outlook;
--Chesterfield County 'AAA'; Stable Outlook;
--Hanover County 'AAA'; Stable Outlook;
--Henrico County 'AAA'; Stable Outlook.
Cumulative hotel tax receipts have exceeded forecasts, although GRCCA projects some softening in the revenue stream as a result of weakening economic conditions across the region and nation. Gross receipts rose 3.7% from fiscal 2007 to fiscal 2008, resulting in solid debt service coverage of 1.85 times (x). As a result of weakening economic conditions, GRCCA officials anticipate that fiscal 2009 hotel tax revenues will be roughly 5% below budget, providing coverage of 1.73x.
The economy of the Richmond metropolitan region continues to show signs of strength, driven in part by the revitalization of the city's downtown and development in neighboring counties. There are currently 128 hotels in the region and GRCCA reports that another 13 hotels are either under construction or in various stages of planning. The Hilton Garden Inn, discussed preliminarily during the last Fitch review, opened in February 2009 adjacent to the convention center facility in downtown Richmond.
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