Fitch Rates Bloomington, MN's $7.9MM GOs 'AAA'; Outlook Stable

CHICAGO--(BUSINESS WIRE)--Fitch Ratings has assigned an 'AAA' rating to the City of Bloomington, Minnesota's (the city) $7.9 million general obligation (GO) permanent improvement revolving fund bonds of 2009, series 43. The bonds will sell competitively on Nov. 16, and are secured by unlimited ad valorem taxes as well as special assessments against the benefited properties pledged to the bonds. The bonds will finance various improvements including road improvements. In addition, Fitch has affirmed the 'AAA' rating on the city's approximately $44.3 million of outstanding GO debt. The Rating Outlook is Stable.

The 'AAA' is based on the city's strong financial performance supported by conservative management practices and solid reserve levels, a diverse and wealthy economic base, and affordable debt levels and manageable borrowing plans. Financial performance continues to be favorable, and the city continues to maintain sizable reserves. As expected, fiscal 2008 resulted in another operating surplus. Declining revenues will pressure the budget in the near term, but the city has taken steps to maintain fiscal balance, and reserves are expected to remain healthy.

Located in Hennepin County (GO bonds rated 'AAA', Stable Outlook by Fitch), approximately 11 miles from Minneapolis, Bloomington has a 2008 estimated population of 81,280 residents. In addition to participating in the expansive Minneapolis metropolitan economy, the city's own economic base is broad and includes a mix of industry, including large technology, health care, and manufacturing concerns. The city's unemployment rate has increased recently and equaled 7.5% as of September 2009, up from 5.4% when Fitch last rated the city in October 2008, but remains well below the national rate of 9.5%. The Mall of America (MOA), the largest shopping center and entertainment complex in the United States, is located within the city and comprises 8.7% of the city's total assessed valuation. Wealth indicators and taxable market values per capita are well above average.

The combination of historically strong economic growth and manageable budgetary increases has contributed to a strong financial position. For the close of fiscal 2008, the city posted a $661,000 general fund surplus. For the close of fiscal 2008, the city's unreserved general fund balance was a substantial $19.4 million, representing 37% of expenditures and transfers out. City officials project break-even operating results for fiscal 2009, primarily through cost-saving measures, and expect to achieve the goal of annually maintaining one-half of property tax collections for working capital. Property taxes account for approximately 60% of general fund operating support, and the city is anticipating increasing the levy by about 3% or $1.3 million for fiscal 2010 to help offset revenue declines. Overall, the measured pace of budgetary expansion combined with the discretionary nature of significant portions of the budget and maintenance of ample reserves provides the city with considerable financial flexibility.

Low direct debt ratios are a product of high internal funding for capital projects. The direct debt burden is just 0.6% of market value or $844 on a per capita basis. Overall debt levels are more moderate at 2.2% of market value or $3,181 on a per capita basis, reflecting the relatively sizable issuances by Hennepin County and Bloomington School District. Payout is well above average with approximately 82% of debt retired within 10 years. The city's 2009-2013 capital improvement plan (CIP) totals $398 million, with the largest component for road and street improvements. The CIP is reportedly flexible, and is expected to have a limited effect on property-tax-supported debt issuance.

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