Fitch Ratings assigns an 'AAA' rating to Fairfax County, Virginia's (the county) $459 million general obligation (GO) bonds, consisting of:
--$190 million GO public improvement refunding bonds, series 2009C;
--$144.3 million GO public improvement bonds, series 2009D;
--$124.5 million GO public improvement bonds, series 2009E (federally taxable-Build America Bonds).
Series 2009C is scheduled for bids on Oct. 7, while series 2009D and 2009E are both scheduled for bids on Oct. 14.
Concurrently, Fitch affirms Fairfax County's outstanding $2.1 billion GO bonds at 'AAA'.
Additionally, Fitch affirms the following bonds at 'AA+':
--Fairfax County Economic Development Authority lease revenue refunding bonds, series 2003 (Government Center Properties);
--Fairfax County Redevelopment & Housing Authority lease revenue bonds, series 2005 (Herndon Senior Center Issue).
Further, Fitch affirms the following bonds at 'AA':
--Fairfax County Economic Development Authority parking revenue refunding bonds, series 1998A (Huntington & Vienna Metrorail Stations Projects);
--Fairfax County Economic Development Authority facilities revenue bonds, series 2003 (Laurel Hill Pub Facilities Issue);
--Fairfax County Economic Development Authority parking revenue refunding bonds, series 2005 (Vienna II Metrorail Station Project);
--Fairfax County Economic Development Authority facilities revenue bonds, series 2005A (School Board Central Admin Building Project Phase I);
--Fairfax County Redevelopment and Housing Authority revenue bonds, series 2006 (Braddock Glen Adult Day Health Care Center & Southgate Neighborhood Community Center).
The Rating Outlook for all bonds is Stable.
Fairfax County's 'AAA' rating reflects its strong, diverse economic base, with high wealth levels and low unemployment, excellent financial planning and management, and a moderately low debt burden. Benefiting from its location near Washington, D.C., a highly educated regional labor force, and increasing international investment, the county remains one of the nation's major suburban office markets. Sector strengths include health care, telecommunications, general government and defense contracting, and related professional services. Fitch anticipates the recent decline in year-over-year employment to reverse, given the continuing attractiveness of the county for business relocations and expansions. County unemployment has historically been below commonwealth and national levels, and while the rate has increased during the current economic weakening, unemployment in August 2009 was still a very low 4.5%. Wealth indicators are well above the commonwealth's levels and about double the national averages.
County finances are well managed, adhering to long-standing policy guidelines, and include detailed planning for capital and operating needs. Audited fiscal 2008 results show a net deficit of $20.2 million in the general fund (total spending $3.3 billion), resulting in an unreserved fund balance of $227 million or 6.8% of spending, although the county contributed $35.4 million to capital projects during the fiscal year. In fiscal 2009, revenue shortfalls triggered the use of the revenue stabilization fund (RSF), although county officials have acted to conclude the year with additions to fund balance and the reservation of $16 million to restore the RSF to the 3% policy level. Prudent expenditure controls enacted in fiscal 2010, including position eliminations, limited lay-offs, and programmatic reductions and reorientations, are expected to alleviate the need to utilize the RSF. Currently, the county is considering how to eliminate a projected deficit in fiscal 2011 of $316 million. Tax base forecasts indicate a 12% drop in the fiscal 2011 AV. The county has aggressively compensated for the flat (0.5%) AV growth of fiscal year 2009 and the 10% decline of fiscal 2010 through tax rate increases of 3 cents and 12 cents per $100 of AV, respectively. Fitch anticipates the county's continued adherence to sound financial management practices, conservative budgeting, and proven ability to make adjustments during economic downturns will result in generally stable operations.
Reflective of consistent evaluations of debt capacity and a commitment to conservative policies, the county's overall debt burden is low at 1.4% of assessed value, or a moderate $2,995 on a per capita basis, and amortization is above-average, with 63% of principal retired within the next 10 years. The capital improvement plan (CIP) for fiscal years 2010-2014 totals $2.7 billion, with the largest funding allocated to education ($807 million), transportation ($652 million), and sanitary sewers ($546 million). To relieve CIP pressure on the budget, the county is planning to reduce its 2010 debt referendum by $100 million, although the 2009 and anticipated 2011 referenda should remain at the historical range of about $200-$250 million annually.
Additional information is available at 'www.fitchratings.com'.
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Fitch Ratings, New York
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Alexandra
Knight, +1-212-908-9181
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Relations)
cindy.stoller@fitchratings.com