AUSTIN, TEXAS PUBLIC IMPROVEMENT BONDS RATED 'AA' BY FITCH -- FITCH FINANCIAL WIRE --
AUSTIN, TEXAS PUBLIC IMPROVEMENT BONDS RATED 'AA' BY FITCH
-- FITCH FINANCIAL WIRE --
NEW YORK, Feb. 19 /PRNewswire/ -- Austin, Texas' $147 million (estimated) Public Improvement Refunding Bonds, Series 1992 are rated "AA" by Fitch. The bonds will be sold through negotiation by a syndicate led by Merrill Lynch within the next few weeks, pending market conditions. The credit trend is stable.
Austin's credit strength lies in the economic importance of the state capital and the University of Texas, and the stability each provides, as well as recent evidence of economic recovery. Monthly data through October, 1991 suggests a fourth year of job growth, with employment increasing 1.0 percent-1.5 percent. The unemployment rate rose to 5.1 percent in November, though the rate remains well below that of the state and the U.S. Retail trade activity improved significantly as well, with 1991 marking a fourth year of positive growth, following two years of declines.
Austin's real estate market is also showing signs of recovery, though new building activity is minimal. Office vacancy rates in the downtown area fell to 19 percent in the third quarter of 1991, down from a 34 percent peak. Home sales activity increased in 1991 for the fifth consecutive year, and the average home price rose for the first time since 1986. Despite the growth experienced in some sectors of the real estate market, the city's total taxable property base has declined for four consecutive years, as growth in some sectors has been more than offset by losses in others, and also by changes in the tax base made statewide. The recently announced closing of Bergstrom Air Force Base is likely to have a dampening effect on the recovery.
The city's financial operations continue to be strong despite declines in the property tax base. Unaudited results for the general fund in fiscal 1991 indicate a moderate operating deficit, drawing down the ending fund balance to $23.1 million, still a very sound 10.2 percent of expenditures. The 1992 budget includes a tax rate increase, which more than compensates for the assessed value decline. Sales tax revenue is budgeted to grow by 6.4 percent, and actual performance to date is on target with this projection through December, 1991.
Austin's overall debt levels are high, with debt service expense representing nearly 20 percent of the operating budget. Overall debt is $2,257 on a per capita basis and 6.0 percent of property value. Property tax-supported future issuance will be held to $25 million annually, as has been the practice historically.
/CONTACT: Amy S. Doppelt of Fitch, 212-908-0514/ CO: Austin, Texas ST: Texas IN: SU: RTG SH -- NY031 -- 0375 02/19/92 11:03 EST