AUSTIN, Texas--(BUSINESS WIRE)--Fitch Ratings has affirmed the 'AA' rating assigned to the following obligations issued by Tamarac, FL:
--Approximately $2.6 million outstanding stormwater system revenue note, series 2009.
The Rating Outlook is Stable.
SECURITY
The note is payable from gross stormwater system revenues, a covenant to budget and appropriate non-ad-valorem revenues (CB&A), if such revenues are insufficient, and moneys on deposit in the various funds created pursuant to the master resolution. While Fitch recognizes the CB&A as a credit strength, the rating is based on the net stormwater system revenues.
KEY RATING DRIVERS
CONSISTENTLY STRONG FINANCIALS: The stormwater system's (the system) strong financial performance is supported by strong debt service coverage (DSC) and exceptional liquidity. Fiscal 2015 finished with all-in DSC of 5.1x and days cash of 1,438, respectively. These numbers compare favorably to Fitch's 'AA' medians of 1.7x and 485.
LOW DEBT BURDEN: The system's debt burden is very manageable. Fiscal 2015 finished with about $2.8 million in debt, which translates to an extremely low debt-per-customer of $151.
REVENUE STABILITY: Stormwater utility charges are levied as a special assessment levied on the tax bill. This billing structure provides a high degree of revenue stability.
WELL-MANAGED SYSTEM: Fitch views the city's various formal policies, comprehensive rate and capital planning, and ongoing system reinvestment positively.
LIMITED ECONOMY: The city is primarily residential with modest economic development opportunities.
RATING SENSITIVITIES
STABILITY EXPECTED: Given the strength of its financial and debt profile, Fitch's rating assigned to Tamarac, FL's stormwater system revenue bonds is expected to remain stable.
CREDIT PROFILE
The city of Tamarac (population of approximately 64,000) was created as a retirement community and, despite some recent diversification, remains primarily residential. Tamarac's stormwater system protects against flooding by establishing and maintaining stormwater collection, routing, and pumping infrastructure while also keeping waterways free of debris and excessive aquatic vegetation.
FINANCIAL PROFILE REMAINS STRONG
The system's liquidity, equal to $13.6 million at the end of fiscal 2015, has remained exceptionally strong over the past several years, resulting in sufficient cash to cover more than 1,000 days of operations since 2011. In addition, low debt service costs and rate increases implemented in fiscal 2013 have resulted in strong all-in DSC. All-in DSC has been greater than 3.2x since fiscal 2011.
The system's rate ordinance allows for annual rate increases tied to the higher of the consumer price index (CPI) or 3%. Current rates are low at less than 0.3% of median household income. In Oct. 2013, the city transitioned the stormwater billing from the water bill to the tax bill as a special assessment to improve collection rates. Collections are now at 100%, thereby providing revenue stability.
CAPITAL NEEDS, DEBT MANAGEABLE
The system's five-year capital improvement plan (CIP) totals a very manageable $2.5 million. The focus of the CIP is on capital maintenance and improvements, and all needs are anticipated to be funded with surplus revenues.
System outstanding debt totals just $2.6 million (series 2009 notes) and matures in 2024. Debt amortization is rapid with principal payout at 100% in 10 years. Debt-to-net plant assets is solid at 32% and, at just $151, estimated debt-per-customer is very low.
LIMITED BUT IMPROVED LOCAL ECONOMY
The city's demographics continue to shift to a younger population, although the average age is still above the U.S. median. While the city remains primarily residential, recent economic developments have begun to diversify the tax base. In addition, the area benefits from its proximity to the Fort Lauderdale/Miami employment centers.
Additional information is available at 'www.fitchratings.com'
Applicable Criteria
Revenue-Supported Rating Criteria (pub. 16 Jun 2014)
https://www.fitchratings.com/site/re/750012
U.S. Water and Sewer Revenue Bond Rating Criteria (pub. 03 Sep 2015)
https://www.fitchratings.com/site/re/869223
Additional Disclosures
Dodd-Frank Rating Information Disclosure Form
https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1014867
Solicitation Status
https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1014867
Endorsement Policy
https://www.fitchratings.com/regulatory
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