Fitch Rates Roanoke, Virginia's $12.5MM GOs 'AA'; Stable Outlook.NEW YORK -- Fitch Ratings assigns an 'AA' rating to the City of Roanoke Roanoke, city, United StatesRoanoke (rō`ənōk), city (1990 pop. 96,397), independent and in no co., SW Va., on the Roanoke River; settled c.1740, inc. 1882. It is situated between the Blue Ridge and Allegheny Mts., at the southern end of the Shenandoah valley., VA's approximately $12.5 million in general obligation (GO) public improvement refunding bonds, series 2006C. The bonds will be sold through negotiation with a syndicate led by Morgan Keegan and Company. Fitch also affirms the 'AA' rating on the city's approximately $268 million in outstanding GO bonds. The Rating Outlook is Stable.The 'AA' rating on Roanoke's GO debt reflects its diversified economic base, conservative financial management, and moderate debt levels. Roanoke is the commercial, medical, and retail center of western Virginia, serving a population far exceeding that of just the city. Recent modifications to internal financial policies are viewed favorably by Fitch as they not only improve the transparency of the city's discretionary reserves Discretionary reserves Balance sheet accounts representing temporary accumulations of earnings from the current year or the recent past. but also incorporate a reserve floor and a replenishment mechanism in the event general fund balances are drawn below policy minimum. The city's above-average amortization of outstanding debt and adherence to strong internal debt policies are likely to maintain manageable debt levels throughout the current capital plan. Roanoke, with a 2005 estimated population of 92,600, is the largest city in the commonwealth west of Richmond. Roanoke's largest employers are diverse, and the city's retail trade activity is strong with per capita retail sales double state and national figures. The city's major economic development efforts focus on downtown redevelopment, attracting new businesses to the city's industrial parks, and tourism development. One of the larger projects is the Riverside Centre for Research and Technology, a 110-acre technology park, which will be anchored by the Carilion Biomedical Institute, a partnership between the Carilion Health System, Virginia Tech, and the University of Virginia. The project will represent $175 million in capital investment and is projected to create 2,500 jobs over the next 15-20 years. Per capita income levels lag those of the commonwealth and nation, and unemployment is above the state rate but lower than the national rate. Financial performance is stable and the revenue base is diverse, enabling the city to benefit from its status as a regional center through various taxes and fees. During fiscal 2005, the city tightened its general fund balance policy, resulting in a sizable transfer from the debt service fund, where the city historically held its discretionary reserves, to the general fund. The new policy requires a reserve floor of 5% of the adopted general fund expenditure budget, with a target of 8%; the city is currently at 7%. Exclusive of the transfer from the debt service fund, the general fund would have recorded a $1 million surplus for fiscal 2005. The fiscal 2006 budget includes a 5.7% increase in general fund expenditures over the fiscal 2005 budget, primarily due to retirement and health care costs, school operations, and debt service. Property tax rates were held constant but a 1% increase in the prepared-meal tax was approved to offset the growing expenditure needs. Management reports that fiscal 2006 results through February 2006 show most revenues exceeding expectations while expenditures are slightly below expectations, and officials project a slight surplus at fiscal year end. Debt levels are moderate at $2,616 per capita and 3.7% of market value. The city's adherence to its sound debt affordability policies helps to keep the debt burden manageable. Including the current issuance, debt is retired at a rapid 69% in 10 years. The fiscal years 2006-2010 capital improvement plan (CIP) totals $264 million and will be funded by bonds (43% of total sources), intergovernmental funds (34%), state literary fund loans (14%), and pay-as-you-go sources (9%). Fitch's rating definitions and the terms of use 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 are also available from the 'Code of Conduct' section of this site. |
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