NEW YORK--(BUSINESS WIRE)--In the course of routine surveillance, Fitch Ratings has taken the following rating action on the town of Jupiter, Florida's (the town) bonds:
--$21.2 million general obligation (GO) bonds, series 2001 and 2005 affirmed at 'AAA'.
The Rating Outlook is Stable.
RATING RATIONALE:
--Financial management is strong with consistent operating results and ample reserve levels.
--The economy continues to expand from a residential community to include biotech and engineering sectors.
--Economic indicators remain favorable with high wealth levels.
--Debt levels are low with rapid amortization.
--The town's police pension plan remains below average in its funding ratio despite recent increases. However, overall pension costs continue to be moderate and manageable given the town's overall strong financial profile.
KEY RATING DRIVERS:
--Sustained financial flexibility by a continued ability to solve budgetary gaps despite potential future softening of revenues.
--The town's ability to successfully manage its pension obligations.
SECURITY:
The bonds are secured by the full faith, credit and taxing power of the town.
CREDIT SUMMARY:
Jupiter, located on the eastern coast of Florida in Palm Beach County (GO rated 'AAA' by Fitch), has continued to expand its economy in recent years, including a notable biotech sector. In addition to the Scripps Research Institute, which has had a presence in the town since 2005 and moved into a permanent facility in the town in 2009, the Max Planck Institute has also recently selected Jupiter to act as the base of its U.S. operations. The Max Planck Institute has begun operations in the town and expects to open a permanent facility next year. Both institutes expect to increase employment over the next few years. Other recent economic developments include G4 Wackenhut's, an international security firm, movement of its North American headquarters to the town as well as growth in the industrial and aerospace engineering sectors, as the town benefits from its location roughly 20 miles for the Palm Beach County International Airport. The unemployment rate has decreased to 8.9% for December 2010 from 9.4% a year prior, remaining below the state average and comparable to that of the nation. Wealth levels remain quite high with per capita money income at approximately 150% of both state and national levels.
Financial management is strong with consistent operating results and ample reserve levels. The town has been effective in curtailing spending in recent years to match declining revenues due to losses in the tax base and other economically sensitive revenues. Fiscal 2009, the last audited year, ended with a $2.6 million surplus, increasing the unreserved fund balance to $14.6 million, equal to a robust 36.6% of spending. Unaudited fiscal 2010 results indicate roughly a $1 million surplus while the town plans to use approximately $0.3 million of reserves in fiscal 2011. The town expects its reserve levels and overall financial profile to remain relatively stable over the next few years and will continue to make budget adjustments as necessary.
Direct debt levels remain quite low, increasing to moderate when overlapping debt is layered in. Amortization is rapid with roughly 75% of principal being retired in 10 years. There is no variable rate or derivative risk. The town's fiscal 2011-2015 capital plan totals a moderate $33 million with no plans for additional debt.
Jupiter administers a single-employer defined benefit pension plan for sworn police officers while all other town employees are eligible for the state-administered multiple-employer cost-sharing public employee pension plan, the Florida Retirement System (FRS). The town continues to make 100% of its annually required contribution to both plans, equal to a moderate combined 11% of general fund spending. While pension costs for non-police have remained relatively stable, pension payments for police have increased rapidly in recent years from $1.9 million in fiscal 2006 to $3.1 million in fiscal 2011. However, the MPORT funding ratio, while still below average at 68.4% as of the latest actuarial valuation (Oct. 1, 2009), has increased from its prior level of 57.3% at the beginning of fiscal 2006. The town's goal is to achieve an 80% funding level. Other post-employment benefits (OPEB) are limited to an implicit subsidy and continue to be pay go funded at roughly $78,000 annually.
Additional information is available at 'www.fitchratings.com'
In addition to the sources of information identified in the Tax-Supported Rating Criteria, this action was additionally informed by information from Creditscope, University Financial Associates and LoanPerformance, Inc.
Applicable Criteria and Related Research:
--'Tax-Supported Rating Criteria', dated Aug. 16, 2010;
--'U.S. Local Government Tax-Supported Rating Criteria', dated Oct. 8, 2010.
For information on Build America Bonds, visit www.fitchratings.com/BABs.
Applicable Criteria and Related Research:
Tax-Supported Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=548605
U.S. Local Government Tax-Supported Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=564566
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE '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.