Correction: Fitch Rates Denver, Colorado's $15.4MM COPs Series 2002C 'AA-'.Business Editors SAN FRANCISCO--(BUSINESS WIRE)--Nov. 20, 2002 (This is an amended version of a press release dated Nov. 13, 2002, containing the revised 'AA-', not 'AA', rating on the 2002C COPs, as well as other revised information). The city and county of Denver, Colorado's $15,400,000 certificates of participation (COPs), series 2002C (taxable) are assigned an 'AA-' underlying rating by Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. . The certificates will be issued in a variable-rate mode and enhanced by an irrevocable Unable to cancel or recall; that which is unalterable or irreversible. IRREVOCABLE. That which cannot be revoked. 2. A will may at all times be revoked by the same person who made it, he having a disposing mind; but the moment the testator is direct pay letter of credit (LOC LOC - lines of code ) from JP Morgan Chase Bank. The certificates were sold through negotiation by JP Morgan Securities Inc. Nov. 19. The rating based LOC is 'A+/F1. The 'AA+' rating on $315.2 million in outstanding city general obligation bonds and $208.1 million in outstanding Denver board of water commissioners' general obligation bonds are affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. by Fitch. The 'AA-' underlying ratings reflect Denver's sound economy, moderate debt burden and strong financial position along with a good lease structure. As both a regional economic center and the state capital, Denver's (the city) economic base is diverse, although currently is experiencing significant recessionary weakness. Through 2000, development was substantial, resulting in strong assessed value growth. Retail sales activity also showed consistently strong gain. Management's response to weak sales tax sales tax, levy on the sale of goods or services, generally calculated as a percentage of the selling price, and sometimes called a purchase tax. It is usually collected in the form of an extra charge by the retailer, who remits the tax to the government. collections has been effective to date, with sufficient corrective actions A corrective action is a change implemented to address a weakness identified in a management system. Normally corrective actions are instigated in response to a customer complaint, abnormal levels if internal nonconformity, nonconformities identified during an internal audit or taken to preserve good year-end reserves. Bond proceeds will be used to finance the city's purchase of two buildings and five land parcels. The city intends to build a justice center on these sites, but needs voter approval to fund the construction with general obligation bonds. A $325 million bond authorization for this purpose was rejected by voters. If approval can't be obtained, the city intends to use these sites for new city office space, replacing leased quarters. In the interim, the purchased properties will be subleased to the current owner. Lease features are similar to other financings, with the city's stating in the lease its need for these assets and its intent to continue to appropriate for the lease payment. The city will purchase the assets then sell them to a settler who in turn will assign all its rights to a special purpose trust established for this financing under the indenture An agreement declaring the benefits and obligations of two or more parties, often applicable in the context of Bankruptcy and bond trading. The term indenture primarily describes secured contracts and has several applications in U.S. law. . City lease payments are subject to annual appropriation The designation by the government or an individual of the use to which a fund of money is to be applied. The selection and setting apart of privately owned land by the government for public use, such as a military reservation or public building. , and an appropriation for 2003 is included in the city's proposed budget. Denver's economic indicators Economic indicators The key statistics of the economy that reveal the direction the economy is heading in; for example, the unemployment rate and the inflation rate. show a reversal of several years of very high growth. Job gains in the five-county metropolitan area slowed to 0.2% in 2001, and unemployment rates, 5.2% in September (preliminary) for the area and 6.1% in the city, are well ahead of September 2001's 3.9% and 4.8% respectively. The city's rate now exceeds the national average, in contrast to prior years. From 1995-2000, employment in the area rose a strong 20.7%. Retail activity, important for Denver because of its reliance on sales tax revenue, has slowed dramatically, with sales tax collections in 2001 down 1.4% from 2000. Projections for this year show a small 0.8% decline. In contrast, assessed value gains have been sizable siz·a·ble also size·a·ble adj. Of considerable size; fairly large. siz  a·ble·ness n. , rising 57% in the last five
years.
Financial operations remain satisfactory despite weakness in the city's major revenue source, the sales tax. Results for 2001 show a moderate operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. but preserve a prudent general fund balance, $156.2 million or 20% of expenditures and transfers out. Historically, financial operations have benefited from the city's economic growth and diversity, with prior years' balances ranging from 21%-25%. Also, revenue flexibility was eased by the voter-approved partial exemption from the TABOR tax growth limitations. With operations reliant on sales tax revenue, the city revised its projections twice during 2001, and limited spending to below budgeted amounts. To date, weaker than budgeted revenue performance is evident for 2002 as well. In response, the city reduced spending 2% from budget allocations, but still will use about $30 million reserves for operations. The ending fund undesignated fund balance is expected to remain adequate and in line with the city's 10% policy. Strong financial management, marked by early recognition of below budget tax collections and effective spending controls, should continue to assure financial stability. Denver has issued debt frequently in the past several years, using both general obligation bonds and lease financings. The debt burden remains moderate. The justice center project, including a jail to relieve overcrowding overcrowding overcrowding of animal accommodation. Many countries now publish codes of practice which define what the appropriate volumetric allowances should be for each species of animal when they are housed indoors. Breaches of these codes is overcrowding. at the existing facility, top the city's capital needs, with other requirements manageable. |
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