Correction: Fitch Rates Town of Prescott Valley MPC, Arizona Bonds 'AA-'.AUSTIN -- (This is an amended version of a press release issued today and contains a revised rating in the headline.) Fitch Ratings-Austin-December 6, 2004: 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. assigns an 'AA-' to the Town of Prescott Valley (the town), Arizona Municipal Property Corporation (MPC (1) (Mobile PC) A handheld or laptop computer. See handheld computer, laptop computer and Ultra-Mobile PC. (2) (MultiPath Channel) See multipath. , or the corporation) $14.2 million municipal facilities revenue bonds, second series 2004 (the bonds). Fitch also affirms the 'AA-' rating on the corporation's $30.6 million of parity municipal facilities revenue bonds outstanding. The Rating Outlook is Stable. The bonds are scheduled to sell the week of Dec. 6 via negotiation to Stone & Youngberg. Dated Dec. 1, 2004, the bonds will mature serially Jan. 1, 2006-2025. The bonds will be subject to optional redemption at par plus accrued interest Accrued Interest The interest that has accumulated on a bond since the last interest payment up to but not including the settlement date. There are two methods for calculating accrued interest: 1) 360-day year method, used for corporate and municipal bonds. as stated in the prospectus. The bonds will be repaid through rental payments from the town, and such rental payments will be secured by a pledge and lien lien, claim or charge held by one party, on property owned by a second party, as security for payment of some debt, obligation, or duty owed by that second party. on the town's excise taxes excise taxes, governmental levies on specific goods produced and consumed inside a country. They differ from tariffs, which usually apply only to foreign-made goods, and from sales taxes, which typically apply to all commodities other than those specifically exempted. . Bond proceeds will provide funds for the purchase of water rights. The 'AA-' rating reflects the financial strength of the town's general fund, the town's limited future general purpose debt needs, the overall vibrant local economy, and the alternate resources available for repayment of this debt. Also considered in the rating is the potential volatility inherent in the excise tax Excise Tax 1. An indirect tax charged on the sale of a particular good. 2. A penalty tax applied to ineligible transactions in retirement accounts. This penalty is assessed by and paid to the IRS. Notes: 1. pledge, as well as the slow amortization of the debt, although these items are offset by, respectively, significant financial reserves and matching water district revenues specifically dedicated to debt repayment. Solid financial operations and sizeable reserves are strong credit factors, with available unrestricted general funds equaling nearly one year's operating expenditures. Debt needs in the foreseeable future are manageable and may be addressed through a combination of capital contributions as well as financing. The town of Prescott Valley has experienced explosive population growth in the past decade. Several master planned residential developments and commercial and retail enterprises are underway to meet the needs of the populace and will provide a larger 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. foundation for the town. Economic development efforts are aimed at clean industry and retail establishments, with the retail component geared to stem leakage LEAKAGE. The waste which has taken place in liquids, by their escaping out of the casks or vessels in which they were kept. By the act of March 2, 1799, s. 59, 1 Story's L. U. S, 625, it is provided that there be an allowance of two per cent for leakage, on the quantity which shall appear to other communities. The primary economic sectors of the town include tourism, trade, services, and construction; however, a segment of the population commutes to nearby Prescott to work in its government, mining, and ranching economy. The town collects no property taxes for operations or debt service. Excise taxes are the predominant revenue source, consisting of local sales taxes, licenses and permits, fines and forfeits, and state shared sales and income taxes. Local sales tax collections for fiscal 2004 rose nearly 21% over the prior year's level, which was above the four-year average of about 13%. State shared sales tax revenues for fiscal 2004 rose 7.6% over the previous year's, below the four-year annual growth average of 11.7% but in line with budgeted projections forecasting a decrease in state shared sales tax revenues, due to a reduction in the percentage of revenues received by local municipalities in fiscal 2003 and 2004 because of a state budget shortfall. Projected maximum annual debt service (MADS) coverage on this issue and outstanding parity debt is a healthy 3.97 times (x) utilizing actual fiscal 2004 excise tax revenues. The town and the water district will enter into a ground lease, and the town and the Municipal Property Corp. (the corporation) will enter into a ground and town lease, essentially creating a lease and leaseback A transaction whereby land is sold and subsequently rented by the seller from the purchaser who is the new owner. arrangement. The corporation, a not-for-profit organized under Arizona law to assist the town in the acquisition and financing of municipal projects and facilities, will assign its interest in the rental payments to a trustee. The town will acquire, construct, equip and otherwise provide for the project. The rate covenant Rate covenant A provision governing a municipal revenue project financed by a revenue bond issue, which establishes the rates to be charged users of the new facility. rate covenant requires excise taxes to be retained at 2x rental payments for the current fiscal year and additional parity bonds Parity Bond Two or more bond issues with equal rights to bond payments. Notes: Also referred to as "part passu" or "pari passu" bonds, these types of fixed-income securities are commonly issued by municipalities as a way to gather finance capital. may be issued if preceding fiscal year collections are equal to at least 2.5x MADS. The reserve requirement is the lesser of 10% of the principal amount of the bonds, MADS, or 125% of average annual debt service. In priority order, the flow of funds Flow of funds In the context of municipal bonds, refers to the statement displaying the priorities by which municipal revenue will be applied to the debt. In the context of mutual funds, refers to the movement of money into or out of a mutual funds or between or among from the revenue fund is to the interest fund, bond retirement fund, and reserve fund. |
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