NEW YORK--(BUSINESS WIRE)--In the course of routine surveillance, Fitch Ratings has taken the following rating action on the Dinwiddie County Industrial Development Authority (IDA), Virginia's bonds:
--$38.25 million lease revenue bonds, series 2004B affirmed at 'A+'.
In addition, Fitch has assigned an 'AA-' implied general obligation (GO) rating to the county.
The Rating Outlook is Stable.
KEY RATING DRIVERS:
-- Financial management is strong, highlighted
by ample reserve levels that continue to exceed adopted internal fiscal
policies and reflect conservative budgeting practices.
-- The debt
profile is affordable, consisting of a moderate debt burden, average
amortization, high annual debt service costs, and manageable future debt
plans.
--The county's tax base is moderately concentrated and has
below-average wealth levels and an improving unemployment rate.
--While
rent payments from the county for debt service are subject to annual
appropriation, the county and dependent school board have posted four
elementary schools as collateral.
SECURITY:
The bonds are limited obligations of the authority,
secured by a pledge of basic rent payments from Dinwiddie County, the
obligor; the rental payments, which are subject to annual appropriation,
are equal to debt service.
CREDIT PROFILE:
The county is located approximately 25 miles south
of Richmond, the state capital, with a population of just over 28,000
residents. A solid road network provides opportunities for continued
growth and development, which would add to the county's fairly limited
economy. Local employment options are somewhat narrow and concentrated,
with Southside Virginia Training Center, a public facility for mentally
impaired clients, and Wal-Mart, Inc.'s distribution center reported as
the two largest employers, accounting for 27% of total employment; the
top ten employers account for over 63% of county employment totals. The
county's fifth largest employer and largest taxpayer, Gerdau Ameristeel,
recently expanded their workforce to support a major new contract
related to the expansion of the Panama Canal. The county's unemployment
rate has historically been above the state but below the national
average; the county's April 2011 rate of 6.4% was above the state's 6.1%
rate but below the nation's 9% rate. Wealth levels in Dinwiddie County
are mixed relative to the national averages, with below-average per
capita income and slightly above-average median household income.
A conservative approach to financial management and budgeting has resulted in ample general fund balances. The county closed fiscal 2010 with a $1.1 million surplus after fully replenishing $3.8 million in appropriated reserves, increasing the unreserved general fund balance to $20.4 million or 50.2% of expenditures and transfers. County policy targets an unreserved fund balance of 15% of total budgeted expenditures, less debt service payments. Estimated results for fiscal 2011 include a net operating surplus of $200,000, compared to the budgeted use of $2.33 million in reserves, as mainly personal property tax revenues performed better than budget. After a $1.65 million re-appropriation to the school board, the fiscal 2011 year-end general fund balance is estimated at $18.8 million or 47% of projected expenditures. For the current fiscal 2012 budget year, revenues exceed expenditures by roughly $160,000; however, the county has budgeted to use $1.68 million of reserves to fund capital projects, which would reduce reserves to a still very strong $17 million or 42% of 2012 budgeted expenditures.
Overall debt ratios are moderate at 2.8% of taxable assessed value and $2,641 per capita. Amortization is average at about 58% of debt retired within ten years, although debt service as a percentage of general fund expenditures is a very high 21%. The county's five-year (2012-2016) capital improvement plan totals $59.48 million and will be mainly funded with debt planned for fiscal 2016. County employees participate in the state-administered Virginia Retirement System (VRS), and the county makes annual payments as determined by the state that equal its annual required contribution (ARC). The funding of the Virginia Retirement System has declined in recent years, and the June 30, 2009 funded ratio was 80.2%.
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, S&P/Case-Shiller Home Price Index, IHS Global Insight, Zillow.com, National Association of Realtors, Underwriter, Bond Counsel, Underwriter Counsel, Trustee, and US Federal Government.
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
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