CHICAGO--(BUSINESS WIRE)--In the course of routine surveillance, Fitch Ratings upgrades the rating on the Forest Preserve District of Cook County, Illinois' (the district) approximately $115 million in outstanding unlimited tax general obligation (GO) bonds to 'AA-' from 'A+'. The unlimited tax general obligation bonds are secured by the full faith and credit and unlimited taxing powers of the district. The Rating Outlook is Stable.
The upgrade to 'AA-' from 'A+' is based on the district's improved financial performance; management initiatives, including a 15% corporate fund unreserved fund balance policy, enforced by county ordinance; and low direct debt levels with no plans for additional debt. Financial results have improved since 2003, and the district has established a well-funded working cash fund. Additionally, management has the ability to control expenditures by adjusting staffing levels, reducing capital spending or trimming services if necessary to maintain its current level of financial flexibility. These credit strengths are somewhat offset by the currently weakened economic profile of Cook County (rated 'AA-' by Fitch), including a higher than average unemployment rate and significant subprime mortgage exposure. In addition, although Fitch recognizes the financial distinction between the district and Cook County, the district remains vulnerable to the decisions of the shared Board of Commissioners. A separation of the Board is currently under consideration by the Illinois Senate; Fitch believes this would allow great autonomy for the district, a positive credit factor. The district's ability to maintain its healthy financial resources is key to maintaining the rating.
The district, covering an area of about 68,000 acres, was formed in 1914 and is coterminous with Cook County providing parks and recreational facilities to its residents. The county's median household income is 105% of the national average. Although the county's economic profile has weakened with the national recession through both a stagnant housing market and increased unemployment, the local economy remains broad and diverse. Tax base growth has been strong over the past five years but is expected to slow significantly in the next three years. Unemployment, which typically slightly exceeds the Illinois average, has increased to 11% in July 2009, above the state and national rates of 10.5% and 9.7%, respectively, as employment in professional and business services as well as the financial sector have contracted in the past year.
Since the district's accountability and operating efficiencies were achieved in 2003 through stronger cost control and privatization of the golf courses, the district has produced operating surpluses; a substantial improvement from the negative $17.2 million fund balance (negative 41.9% of spending) in 2000. Audited fiscal 2007 results show an unreserved general fund balance of $9.9 million or 24% of total spending, compared to $5.2 million or 13% of spending in fiscal 2004, when Fitch last reviewed the credit. The working cash fund, which is designated for use by the district and Brookfield Zoo, reported an audited 2007 balance of $13 million, providing the district with increased financial flexibility. According to the district, the fiscal 2008 unreserved corporate fund balance increased 50% from the prior year to $19.8 million and fiscal 2008 ended in a surplus. In addition, according to management, 2009 spending is slightly under budget and the district expects to end the year with a small surplus.
The district's direct debt remains very low and equals just $23 per capita or 0.02% of market value. With the debt of overlapping taxing entities, including Cook County and the City of Chicago, overall debt rises to $4,318, or 4.07% of market value. The district does not anticipate issuing additional debt in the near future.