Fitch Rts Metro Nashville, Tenn $58MM GOs 'AA+', Neg Outlk.Business Editors NEW YORK--(BUSINESS WIRE)--May 12, 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 a 'AA+' rating to The Metropolitan Government of Nashville and Davidson County Davidson County is the name of two counties in the United States:
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 2004. The bonds are scheduled to sell competitively on May 18. Fitch affirms the 'AA+' rating on Metro's $1.1 billion in outstanding general obligation bonds. The Rating Outlook is Negative. The 'AA+' rating is based on Nashville's broad and diverse economy, the Metropolitan Government of Nashville and Davidson County's (Metro's) historically sound financial performance, management's efforts to increase the efficiency of component unit operations Unit operations A structure of logic used for synthesizing and analyzing processing schemes in the chemical and allied industries, in which the basic underlying concept is that all processing schemes can be composed from and decomposed into a series of , and moderate debt levels. The Rating Outlook is Negative due to what appears to be a weakening trend in financial performance. The general fund balance in fiscal 2003 declined substantially. A sizeable drawdown Drawdown The peak to trough decline during a specific record period of an investment or fund. It is usually quoted as the percentage between the peak to the trough. Notes: is budgeted in fiscal 2004, although officials have indicated that they expect the fund balance to decrease less than budgeted. Expenditure pressures are considerable at a time when revenues are projected to be flat to slowly increasing. Officials expect to address the imbalance between revenue and expenditure growth in the upcoming two fiscal years (2005 and 2006), and maintenance of the 'AA+' rating will depend on their success in doing so. Nashville benefits from a diversity of economic sectors, including finance, health care, retail, manufacturing, services, and agriculture. Metro's credit profile is enhanced by the stability of its substantial government and education employment. As a consolidated city/county government, Metro benefits from the combination of resources of urban and suburban areas. Growth has been sluggish in recent years, but appears to be strengthening. The county's and metropolitan statistical area's (MSA (Metropolitan Service Area) An urban area with at least 50,000 people plus surrounding counties. There are 306 MSAs and 428 RSAs (rural service areas) in the U.S. MSAs and RSAs are used to allocate cellular licenses. ) unemployment rates are well below state and national averages, although the number of jobs in the MSA declined slightly from 2000-2002. Some 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. , including job creation and retail sales, show recent signs of improvement. Income levels and per capita [Latin, By the heads or polls.] A term used in the Descent and Distribution of the estate of one who dies without a will. It means to share and share alike according to the number of individuals. retail sales are well above the state's and exceed national averages. Although Metro has minimized or eliminated two of its major budgetary risks -- subsidies to the Nashville Thermal Transfer See thermal wax transfer printer and direct thermal printer. Corporation (Thermal) and two Metro-owned health care facilities -- financial flexibility appears to have decreased. Fiscal 2003 ended with a general fund balance drawdown of $30.2 million to a balance of $79.1 million, or 11.6% of expenditures and transfers out. The unreserved balance of $31.4 million was 4.6% of fiscal 2003 spending, down from 10.1% in fiscal 2002. The fiscal 2004 budget appropriates $42.4 million of the general fund balance, or 6.2% of budgeted expenditures. Property taxes were raised significantly in fiscal 2002 but expenditure growth has outpaced revenue gains. Property and 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. revenues were weak in fiscal 2002 and 2003 and are projected to remain flat in fiscal 2004. Officials expect the fiscal 2005 budget to be balanced without the use of fund balance and with conservative revenue growth assumptions. Assessed valuation has been flat in the last two fiscal years. Once a January 2005 revaluation Revaluation A calculated adjustment to a country's official exchange rate relative to a chosen baseline. The baseline can be anything from wage rates to the price of gold to a foreign currency. In a fixed exchange rate regime, only a decision by a country's government (i.e. is completed, officials expect to adjust the tax rate to enhance reserves, providing financial flexibility for subsequent fiscal years. Competitive property tax rates remain a credit strength. Financial flexibility is enhanced by a special revenue fund in which Metro maintains a reserve for capital equipment equal to 4% of general service district, or countywide, general fund local revenues. In addition, Metro has generally maintained debt service fund balances equal to annual debt service costs. Current debt levels are moderate at 3.3% of market value, and officials expect the debt burden to remain fairly constant in the future. A six-year capital improvement plan reflects a comprehensive list of requested projects, which is annually refined to fit into available funding sources. General obligation bond-funded capital projects for fiscal 2005 are projected to be in the range of $120 million - $140 million. |
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