Fitch Rates Columbia County, GA's GOs 'AAA'; Outlook Stable

NEW YORK--()--Fitch Ratings has assigned the following rating to Columbia County, GA (the county) general obligation (GO) bonds:

--$15 million GO sales tax bonds, series 2015 'AAA'.

Bond proceeds will be used to fund various capital projects. A competitive sale is scheduled for July 7, 2015.

In addition, Fitch affirms the following ratings:

--$65.4 million outstanding GO bonds, series 2007A, 2007B and 2009 at 'AAA'.

The Rating Outlook is Stable.

SECURITY

The GO bonds carry the county's full faith and credit and unlimited taxing power. The 2015 and outstanding series 2009 bonds are payable first from the proceeds of a 1% special purpose local option sales tax (SPLOST) collected within the county.

KEY RATING DRIVERS

SOUND FINANCIAL MANAGEMENT: Financial operations are characterized by consistent operating surpluses, robust reserve levels and conservative financial policies.

STABLE ECONOMY: The local economy has remained relatively stable and is anchored by a strong and growing military presence. Relatively low unemployment, above-average wealth levels and minimal housing pressures support stability.

FAVORABLE DEBT POSITION: Debt-funded future capital needs are limited, debt levels are modest, amortization is rapid and costs for long-term obligations related to pension and other post-employment benefits (OPEB) are low.

RATING SENSITIVITIES

STABLE CREDIT PROFILE: The rating is sensitive to shifts in fundamental credit characteristics including the county's strong financial management practices. The Stable Outlook reflects Fitch's expectation that such shifts are highly unlikely.

CREDIT PROFILE

The county is located on the border of North Carolina, just north of Augusta (rated 'AA'; Stable Outlook by Fitch). The county's 2014 population was 139,257. Population growth has been strong, outpacing the region, state and nation.

STRONG FISCAL MANAGEMENT MARKED BY HEALTHY RESERVES

The county's financial position is characterized by conservative budgeting practices and robust reserve levels. The county consistently follows its fund balance policy which calls for a minimum fund balance of 27% of general fund spending and requires reserves over 50% to be used for debt reduction. The county posted a $28 million unrestricted general fund balance in fiscal 2014, a very strong 43.8% of general fund spending. Year-to-date county projections show an addition of $3 million-$3.5 million to fund balance at year-end 2015. Positive budget variances reflect personnel variances, budgeted contingencies and conservative revenue estimates. Given the county's historically strong performance these projections appear to be reasonable.

The county generates the majority of its revenues from property taxes. There are no statutory or charter caps or restrictions on tax levy or tax rate growth. While the average tax bill for county residents is comparably higher than neighboring counties this is reflective of the more robust home values.

ROBUST SPLOST REVENUES

Strong SPLOST revenues have allowed the county to cover debt service on the GO sales tax bonds as well as the GO bonds. SPLOST requires voter renewal every five years. The current $144 million SPLOST program was renewed by referendum on Nov. 5, 2014. Coverage of maximum annual debt service (MADS) from the county's share of SPLOST revenues remained strong at 1.9x in calendar 2014. Projected calendar 2015 revenues are 2% above the prior year, which is reasonable given recent trends.

STABLE LOCAL ECONOMY

Military, health care, and manufacturing serve as the major economic sectors with some representation from leisure activities. The county's major employers continue to expand within the county. QuadGraphics, the county's fourth largest employer with 700 employees, will be adding an additional 100 employees between August and February. Georgian Iron Works (GIW), a slurry pump manufacturer and the county's seventh largest employer with 350 employees, will be completing a $40 million expansion project adding 53 new jobs.

Fort Gordon is partially located within the county. It is the world's largest military communications and information technology training center and has a large National Security Agency presence. In 2013, it was announced that Fort Gordon would be the new army cyber-command headquarters, bringing 4,000 active-duty military, government civilian and contract personnel jobs to the area. Currently, federal employment accounts for a modest 8% of the labor force.

The county's unemployment rate as of March 2015 was 5% which is well below both state and national levels. Wealth levels in the county are above average with median household income equal to 141% of the state average and 131% of the national average.

MODEST DEBT BURDEN

The county's total debt burden is low at $711 per capita and 0.56% of market value and approximately 100% of total principal is amortized within seven years. The debt burden is expected to remain modest as there are no immediate plans for additional issuance.

MANAGEABLE PENSION & OPEB

The county and its qualified employees participate in the Columbia County Money Purchase Retirement Plan, a defined contribution retirement plan. The fiscal 2014 county contribution was a manageable 2.5% of total governmental spending. Other post-employment benefits are provided on a pay-go basis and accounted for less than 1% of total expenditures is 2014.

Additional information is available at 'www.fitchratings.com'.

In addition to the sources of information identified in Fitch's 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, National Association of Realtors.

Applicable Criteria

Tax-Supported Rating Criteria (pub. 14 Aug 2012)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=686015

U.S. Local Government Tax-Supported Rating Criteria (pub. 14 Aug 2012)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=685314

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=986589

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=986589

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

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Contacts

Fitch Ratings
Primary Analyst:
Evette Caze, +1-212-908-0376
Director
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst:
Nicole Wood, +1-212-908-0735
Director
or
Committee Chairperson:
Laura Porter, +1-212-908-0575
Managing Director
or
Media Relations:
Sandro Scenga, New York, +1 212-908-0278
sandro.scenga@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst:
Evette Caze, +1-212-908-0376
Director
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst:
Nicole Wood, +1-212-908-0735
Director
or
Committee Chairperson:
Laura Porter, +1-212-908-0575
Managing Director
or
Media Relations:
Sandro Scenga, New York, +1 212-908-0278
sandro.scenga@fitchratings.com