Fitch Ratings has assigned an 'AAA' rating to the following Dublin, Ohio general obligation (GO) bonds:
--$10.9 million GO (limited tax) various purpose improvement and refunding bonds, series 2012.
The bonds are expected to price the week of Sept. 17. Proceeds will finance certain permanent improvements, and will refund a state infrastructure bank loan for present value savings.
In addition, Fitch affirms the following ratings:
--$46 million limited tax GO (LTGO) and unlimited tax GO (ULTGO) bonds at 'AAA'.
The Rating Outlook is Stable.
SECURITY
The city's ULTGOs (series 2004A, 2009A) are payable from unlimited ad valorem taxes levied on all taxable property within the city which expire when debt is paid in full.
The city's LTGOs (series 2004B, 2009B, 2009C, 2012) are payable from ad valorem taxes levied on all taxable property within the 10-mill limitation imposed by Ohio law.
KEY RATING DRIVERS
RESILIENT ECONOMY, AFFLUENT RESIDENTS: The city benefits from an affluent, well-educated population, a diverse corporate presence, and proactive economic development policies.
WELL-MANAGED, HEALTHY FINANCES: The city's conservative budgeting and prudent fund balance policies have resulted in substantial reserves and ample financial flexibility. Exposure to income tax volatility is mitigated by maintenance of ample reserves as well as the city's demonstrated ability to closely monitor prudent revenue forecasting and willingness to adjust costs to offset shortfalls.
DEDICATED TAX REVENUE BENEFITS DEBT PROFILE: The city has managed well its strong population growth and resultant demands on the city's infrastructure by pay-as-you-go capital financing with voter-mandated dedicated income tax revenue, resulting in lower debt levels.
LIMITED PENSION AND OPEB OBLIGATIONS: The city benefits from low pension and other post-employment benefit (OPEB) liabilities through its participation in well-funded state multi-employer cost-sharing plans.
LTGO AND ULTGO RATINGS ON PAR: Fitch makes no rating distinction between the ULTGO and LTGO ratings, due to the city's significant financial flexibility.
CREDIT PROFILE
Dublin is located in central Ohio, 16 miles northwest of Columbus (GO bonds rated 'AAA', Stable Outlook by Fitch), Ohio's state capital and largest city. Dublin's location at the intersection of transportation networks servicing Columbus's northwestern suburbs has led to rapid population growth and residential and commercial development over the past decade.
RESILIENT ECONOMY, AFFLUENT RESIDENTS
Dublin benefits from a well-diversified economy, anchored by financial services, telecommunications, and healthcare. Key employers include Nationwide Insurance Enterprises, Cardinal Health, Inc., Medco Health Solutions Inc., and Cellco/Verizon Wireless. The city's aggressive economic development program and highly educated residents have helped strengthen the city's employment profile. Notably, Alcatel-Lucent relocated approximately 540 jobs to the city and The Wendy Co. has announced the relocation of its corporate headquarters, and 250 jobs, from Atlanta to Dublin.
At 5.1%, the city's June 2012 unemployment rate is down from the prior year and compares favorably with state and national averages (7.4% and 8.4%, respectively).
The city's affluence is evidenced by its wealth indicators, with per capita income approximately twice the state average. The city has weathered the economic downturn relatively well; income tax receipts have recovered to more than pre-recession levels, while assessed valuation recorded its first decline (a mild 4.4%) in fiscal 2012, a sexennial reappraisal year.
PRUDENT MANAGEMENT AND SOUND FINANCES
The city's conservative budgeting and prudent financial policies contribute to its strong financial position. The city's financial operations are highly reliant on a permanent 2% income tax, which provides 89% of operating revenues. Fitch believes that the city's conservative budgeting of income tax revenues and the maintenance of ample reserves mitigate concerns about the economic sensitivity of this revenue source.
In 2011, income tax receipts were up 4.0% from the prior year, which helped the city record a net operating surplus, after transfers, of $4.9 million. The 2011 year-end unrestricted general fund balance of $44.6 million represented an ample 84.6% of spending, well in excess of the city's stated policy of 50%.
For 2012, management conservatively budgeted flat income tax receipts, but recently revised that expectation to a 3% increase. This move was based upon July year-to-date figures showing 5.7% growth year over year. The city anticipates adding a modest $250,000 to general fund balance in 2012, although continued favorable revenue trends may improve that figure by year-end.
PAY-GO FINANCING STRENGTHENS DEBT PROFILE
The city's debt profile benefits from the voter-mandated dedication of 25% of city income tax receipts for capital improvement projects, which has helped manage the city's aggressive population growth of 33% over the past 10 years. The city's five-year capital improvement plan calls for $132.3 million of investment, primarily for street and interchange improvements around areas the city has designated for economic development. Only $17.4 million of this total is anticipated to be debt-financed.
The debt burden is moderate at 3.5% of market value or $4,647 on a per capita basis. Amortization is rapid, with approximately 81% retired in 10 years. Debt service costs equaled an affordable 11.3% of general fund spending in fiscal 2011.
Pension and OPEB liabilities are manageable; the costs for participating in the well-funded state-run plans represented 7.7% of general fund spending in fiscal 2011.
Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.
In addition to the sources of information identified in Fitch's Tax-Supported Rating Criteria, this action was additionally informed by information from Creditscope, University Financial Associates, S&P/Case-Shiller Home Price Index, IHS Global Insight, National Association of Realtors, Underwriter, Bond Counsel, and Financial Advisor.
Applicable Criteria and Related Research:
--'Tax-Supported Rating Criteria' (Aug. 14, 2012);
--'U.S. Local Government Tax-Supported Rating Criteria' (Aug. 14, 2012).
Applicable Criteria and Related Research:
Tax-Supported Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=686015
U.S. Local Government Tax-Supported Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=685314
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