Fitch Rates Parish of Terrebonne, Louisiana GOs 'A+'; Initial 'A+' to Sales Tax Bonds.AUSTIN, Texas -- Fitch assigns an 'A+' rating to the $4.5 million general obligation (GO) refunding bonds refunding bond A bond that is issued for the purpose of retiring an outstanding bond. Issuers refund bond issues to reduce financing costs, eliminate covenants, and alter maturities. See also crossover refunding bonds, prerefunding. , series 2005, and an initial 'A+' rating to the $9 million public library 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. refunding bonds, series 2005, and $7.5 million public improvement bonds, series ST-2005 of the Parish of Terrebonne, Louisiana. Additionally, Fitch affirms the 'A+' rating on the $6.7 million in parish GO bonds outstanding and assigns an 'A+' rating to the $20.7 million public improvement sales tax bonds (PIBs) and $10.7 million in library sales tax bonds outstanding. The Rating Outlook is Stable. The new issues are scheduled to sell on Aug. 10 via competitive bid. Fiscal Services in New Orleans New Orleans (ôr`lēənz –lənz, ôrlēnz`), city (2006 pop. 187,525), coextensive with Orleans parish, SE La., between the Mississippi River and Lake Pontchartrain, 107 mi (172 km) by water from the river mouth; founded is financial advisor to the parish. The GO bonds are payable from the annual levy and collection of unlimited ad valorem taxes Ad Valorem Tax A tax based on the assessed value of real estate or personal property. In other words ad valorem taxes can be property tax or even duty on imported items. Property ad valorem taxes are the major source of revenues for state and municipal governments. on all taxable property within the boundaries of the parish and proceeds will be used to refund debt outstanding for interest cost savings. The PIBs are payable from two separate sales tax levies, a 1/3 portion of the general 1% parish levy and a 1/4% capital improvement levy, and proceeds will be used for bridge, dredging dredging, process of excavating materials underwater. It is used to deepen waterways, harbors, and docks and for mining alluvial mineral deposits, including tin, gold, and diamonds. , and drainage improvements, as well as a city court building. The library sales tax bonds are payable from a 1/4% sales tax levy and proceeds will be used to refund debt outstanding for interest cost savings. The 'A+' GO rating is based upon the low property tax supported debt burden, stable and growing tax base, and sound financial position of the parish. Also considered in the rating is the somewhat concentrated tax base of the parish in oil and gas and pipelines and the dependence upon sales and use tax Sales and use tax refers to:
The 'A+' rating on the sales tax bonds reflects the historical stability of revenue generation, including modest growth in recent years, solid legal provisions, and strong debt service coverage. Sales tax revenue growth has averaged 2% to 3% annually over the past four years, with a 5% rise projected for fiscal 2005. Coverage of maximum annual debt service is 3.4 times (x) on the PIBs and 3.9x on the library sales tax bonds. The Parish of Terrebonne is located on the Gulf of Mexico Noun 1. Gulf of Mexico - an arm of the Atlantic to the south of the United States and to the east of Mexico Golfo de Mexico Atlantic, Atlantic Ocean - the 2nd largest ocean; separates North and South America on the west from Europe and Africa on the east in southern Louisiana with an approximate population of 107,000 in 2004. It is the second-largest parish in the state at approximately 2,080 square miles A square mil is a unit of area, equal to the area of a square with sides of length one mil. A mil is one thousandth of an international inch. This unit of area is usually used in specifying the area of the cross section of a wire or cable. , with just under half of the area being land and the remainder under water in the Gulf of Mexico. The parish is a consolidated government created in 1984 through the merger of the city of Houma and the Terrebonne Parish Police Jury. Major industries within the parish include oilfield, seafood, marine transportation, shipbuilding, and medical. The agricultural component consists of sugar, farming, and cattle. The tax base has demonstrated steady, stable growth over the past five years, averaging about 7% annually. The value of new commercial and residential construction has been consistent as well. The top 10 taxpayers comprise 18% of the total assessed value, with seven entities in this category representing oil and gas and pipeline companies. While the general fund provides for the basic service delivery for the parish, several essential services are recorded in special revenue funds. The general fund provides support to many special revenue funds including the public safety fund, road and bridge fund, civic center fund, and capital projects fund. Conservative revenue estimating and prudent use of one-time revenues led to positive financial performance through fiscal 2001. However, to reduce the large fund balances, the parish intentionally reduced tax levies. Still, the general fund ended fiscal 2004 with a sizeable total fund balance of $13.2 million, representing over 57% of expenditures and transfers out for the year, and an undesignated fund balance of $9.5 million or 41% of expenses and transfers out. The parish has historically outperformed its budget both in revenues and expenses, so despite a budgeted operating deficit of $1.1 million for fiscal 2005, conservative property and sales tax revenue estimation and transfers for capital projects should act as buffers to offset any further declines. The total budgeted fund balance of $6.1 million projected for fiscal year-end Fiscal Year-End The completion of a one-year, or 12-month, accounting period. Notes: The reason that a company's fiscal year often differs from the calendar year and does not close on Dec 31, is due to the nature of company's needs. 2005 will still be adequate to mitigate any revenue shortfall or expenditure contingencies that may arise. However, preliminary projections for the year anticipated a sizeable operating surplus Operating surplus is an accounting concept used in national accounts statistics (such as United Nations System of National Accounts (UNSNA) and in corporate and government accounts. It is also used in macro-economics as a proxy for total pre-tax profit income. , due in part to healthy sales tax collections. In addition, the parish maintains a dedicated emergency fund that maintains a minimum of $2 million. Earlier this year, the parish issued a $5 million first installment from a $20 million new GO bonds authority approved by parish voters in November 2004. The remainder will be issued annually over the next few years. The tax rate impact of the entire authorization is expected to be 2.23 mills. Currently, property tax supported debt is rapidly amortized and debt service carrying charges Payments made to satisfy expenses incurred as a result of ownership of property, such as land taxes and mortgage payments. Disbursements paid to creditors, in addition to interest, for extending credit. Consumer Protection laws require full disclosure of all carrying charges. are low, as is the direct debt burden. Although property tax supported debt is modest, the use of sales tax secured debt financing Debt Financing When a firm raises money for working capital or capital expenditures by selling bonds, bills, or notes to individual and/or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise to repay has been utilized significantly over the past decade through incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. voter-approved dedicated sales tax propositions. The latest will fund the parish's portion of a hurricane protection project that will consist of an 80-mile series of levees, floodgates, dams and lock system in the Houma Navigation Canal. It will be a $600 million project completed over 15 years and jointly funded by state and federal agencies. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, 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 Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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