Fitch Rates Greenwich, CT GOs 'AAA' and BANs 'F1+'; Outlook Stable
MarketWatch (press release)
(BUSINESS WIRE) -- Fitch Ratings has assigned the following ratings to Greenwich, CT (the town): --$16.5 million unlimited tax general obligation (ULTGO) bonds rated 'AAA'; --$40 million bond anticipation notes (BANs) rated 'F1+'. The bonds and notes are expected to sell competitively on Jan. 18. In addition, Fitch has affirmed the following rating: --$72.3 million outstanding ULTGO bonds at 'AAA'; The Rating Outlook is Stable. SECURITY The bonds and notes are general obligations of the town and are secured by the town's full faith and credit and unlimited taxing power. KEY RATING DRIVERS SUPERIOR ECONOMIC PROFILE: Superior wealth levels and a breadth of regional employment opportunities underscore Greenwich's economy and exceptionally high tax base. SOPHISTICATED FINANCIAL MANAGEMENT: The town's recent implementation of a debt and reserve policy augment its already sophisticated, prudent, and conservative financial management. STRONG BALANCE SHEET RESOURCES: Surplus operations in fiscal 2011 increased the town's general fund levels again and provide for a strong level of financial flexibility. LOW LONG-TERM LIABILITIES: The town's debt ratios are expected to increase as it implements its 15-year capital improvement plan; nevertheless, ratios are expected to remain in the low to moderate range. Other post-employment benefits (OPEB) and pension liabilities are prudently managed. EXPECTATIONS FOR STRONG MARKET ACCESS: The 'F1+' rating reflects Fitch's expectation for strong market access given Greenwich's superior long-term credit fundamentals. CREDIT PROFILE SUPERIOR ECONOMIC PROFILE Greenwich is located in south-western Connecticut approximately 28 miles from New York City and is one of the most affluent communities in the nation. Many of the town's 61,171 residents are executives and professionals, easily accessing New York City and southern Fairfield county labor markets. November 2011 unemployment was 5.7%, down from 6.3% a year prior and well below the regional, state, and national averages, reflecting both the desirability of Greenwich residents as employees and the depth of the region's employment base. The town's grand list of $30.4 billion (2010) is the largest of any Connecticut municipality and is predominantly residential (80% of value) with a small commercial real estate presence representing office space and high-end retail. The town's October 2010 revaluation resulted in a modest 11.6% decline having last been revaluated in 2005. The average home price in Greenwich was $2.1 million in 2011, which was down 3.8% from the prior year, further evidencing the town's wealth. STRONG FINANCES AND MANAGEMENT The town's financial strength is derived from its deep, stable resources as well as strong financial management and conservative budgeting. In fiscal 2008, the town moved from a modified pay-as-you-go method of financing capital projects through borrowing from its general fund, to a more traditional capital borrowing practice. As a result, its negative fund balance position was reversed. In fiscal 2011 the town adopted an unassigned general fund reserve policy of 5%-10% of budgeted expenditures and a 5%-10% balance on a budgetary basis. The town outperformed its budget for fiscal 2011 and experienced a surplus after transfers of $16.7 million. The town implemented Governmental Accounting Standards Board 54 reporting rules in fiscal 2011 and reported a total unrestricted fund balance (committed, assigned and unassigned) of $19.3 million, or a modest 5.8% of general fund spending. The unassigned general fund balance totaled $7.7 million or 2.2% of spending. Such balance is expected by management to meet its newly enacted fund balance policy within the next two years. Fitch believes that through continued conservative budgeting practices the town will be able to achieve this target. The town's fiscal 2012 budget increased spending by 5.1%, and was largely driven by increases in employee fixed costs, debt service, and capital spending. Year-to-date operations show the town's spending to be flat to last year and, should spending continue at such levels, Fitch views management's expectation for surplus results by fiscal year-end, leading to growth in its fund balance, as reasonable. LOW LONG-TERM LIABILITIES The town's credit profile benefits from a history of pay-as-you-go capital financing which helped keep its debt burden manageable. Town debt is moderate on a per capita basis ($2,341), but extremely low at 0.3% as a percentage of taxable market value, the latter ratio underscoring the very high wealth level of the town. Fitch expects debt ratios will increase as a result of the town's planned borrowing through 2020 related to its $520 million, 15-year capital plan, but remain at low to moderate levels. Debt amortizes rapidly, with all general fund supported debt retired in five years, consistent with the town's policy. On a combined basis, 91% of all debt retires in ten years. The town's single-employer pension plan has historically been fully funded as per town charter but funding levels have declined as a result of significant market losses in 2008 and 2009. The unfunded liability totaled $78 million at July 1, 2010, the most recent valuation date, equivalent to a still adequate 81% funding level. The town's actuarially required contribution (ARC) totaled $10.7 million in fiscal 2011, but increased considerably in fiscal 2012 to $14.5 million, equivalent to a manageable 4.1% of 2012 spending. The town's credit profile further benefits from forward-funding of its OPEB liability for the past ten years and the establishment of an irrevocable trust in 2008, which totals $17.8 million and is 28% funded as of July 1, 2011. Additional information is available at ' www.fitchratings.com '. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings. In addition to the sources of information identified in Fitch's Tax-Supported Rating Criteria, this action was additionally informed by information from Creditscope, S&P/Case-Shiller Home Price Index, IHS Global Insight, Zillow.com, and National Association of Realtors. Applicable Criteria and Related Research: --'Tax-Supported Rating Criteria' (Aug. 15, 2011); --'U.S. Local Government Tax-Supported Rating Criteria' (Aug. 15, 2011). Applicable Criteria and Related Research: Tax-Supported Rating Criteria http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=648898 U.S. Local Government Tax-Supported Rating Criteria http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=648842 ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS . IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE ' WWW.FITCHRATINGS.COM '. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. ...
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