Fitch Rates Fairfax County Redvel & Hsg Auth (Virginia) Revs 'AA'; Outlook Stable.
The 'AA' rating on the series 2006 bonds is based on Fairfax County's (the county) obligation to make basic and additional contract payments (referred collectively as contract payments) under an installment purchase contract with the RHA. The county's obligations under the contract, while subject to annual appropriation by its board of supervisors, are otherwise absolute and unconditional. There is no security interest in the projects being financed and thus no recourse for bondholders against the properties being acquired. Also, no debt service reserve fund will be established. However, Fairfax County is an experienced issuer of appropriation-backed obligations and payment of debt is centrally administered. The county also has a long history of timely budget adoption.
Fairfax County's 'AAA' rating reflects its strong, diverse economic base, with high wealth levels and low unemployment, excellent financial planning and management, and a low debt burden. Benefiting from its location near Washington, D.C., a highly educated regional labor force, and increasing international investment, the county is one of the nation's major suburban office markets. Sector strengths include health care, telecommunications, general government and defense contracting, and related professional services. Recent Base Realignment and Closure (BRAC) commission announcements will bring approximately 21,300 jobs to Fort Belvoir which lies within the county. Housing demand remains strong, leading to a sixth consecutive year of double-digit property assessment growth. Significant road and transit investments planned over the next several years support future development prospects.
The county's finances are well managed, adhering to long-standing policy guidelines, and include detailed planning for capital and operating needs. Audited fiscal-year (FY) 2005 results reflect continued operating gains and healthy increases to reserves from previous years. For the period, the county recorded a $43 million general fund surplus, up almost $4 million from the prior year, and maintained an unreserved general fund balance of 7.5% of total expenditures and transfers out, compared to a 6.2% balance recorded in FY2004. While audited figures are not yet available, the county expects positive operations for FY2006 and anticipates meeting its goal of maintaining at least $90 million in its revenue stabilization fund. The FY2007 budget, which reflects general fund expenditure growth of 3.75%, lowers the property tax rate to $0.89 from $1.00 per $100 of assessed valuation (AV) to offset rapid AV growth.
County debt levels are low and amortization is rapid. Annual general obligation borrowing is limited by debt affordability guidelines to $1.0 billion over five years, or $200 million annually, an amount that is currently weighted two-thirds to school projects. A temporary increase of $75 million per year through 2011 will fund rising construction costs. Overall debt levels are a low 0.9% of market value, or $2,131 on a per capita basis. Amortization is also favorable, with 69% of all outstanding tax-supported debt retired within the next 10 years.
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|Date:||Aug 1, 2006|
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