Printer Friendly

Fitch Affirms Boulder Central Area General Improvement GO Bonds at 'AA-'; Outlook Stable.

SAN FRANCISCO -- As part of its continuous surveillance efforts, Fitch Ratings takes the following rating action on Boulder Central Area General Improvement (CAGID) general obligation (GO) bonds:

--$16.5 million GO bonds affirmed at 'AA-'.

The Rating Outlook is Stable.

RATING RATIONALE:

--The rating reflects strong financial management, with a history of balanced budgets and a solid unreserved fund balances.

--The district's tax base remains concentrated with the top ten tax payers comprising approximately 24% of the area's taxable assessed valuation.

--Due to the limited tax base, debt levels for the district are very high with direct and overlapping debt equal to approximately 16.8% of assessed value.

--The credit weaknesses stated above are mitigated, to some extent, by the bonds' security of unlimited ad valorem property taxes and by the use of operating revenues to help pay annual debt service.

--While outstanding bond principal amortizes rapidly, annual debt service consumes a substantial portion of CAGID revenues.

--The local economy, which fundamentally drives demand for parking in CAGID managed facilities, appears to be stabilizing after experiencing a decline in 2009 and 2010 reflected by increased year-over-year sales tax revenue in the CAGID, renewed demand for long-term parking permits, and on-street parking revenue, which outperforms year-to-date targets.

--The service area benefits from its location in downtown Boulder near the Pearl Street Mall and in close proximity to the University of Colorado's main campus.

KEY RATING DRIVERS:

--Maintenance of strong unreserved fund balance to offset concentration risk and the cyclicality of parking revenues.

SECURITY:

The bonds are secured by the full faith and credit of CAGID to make payments from all available funds and by unlimited ad valorem taxes on all property located within CAGID boundaries.

CREDIT SUMMARY:

Boulder's Central Area General Improvement District (CAGID) was established in 1970 to provide parking services and related improvements to an approximately 30 square block area in downtown Boulder. CAGID manages and operates five parking garages, three permitted surface lots, and one metered parking lot. In addition, CAGID's area includes approximately 810 street metered parking spaces, revenues from which are collected by the city and distributed monthly to CAGID.

CAGID's financial profile is sound with balanced budgets and solid unreserved fund balances. After experiencing a decline in operating revenue in 2009, CAGID's operating income in 2010 ($3.8 million, unaudited) has rebounded to near 2008 ($3.9 million) levels due to higher parking rates and renewed demand for long and short-term parking. The unreserved fund balance at the end of fiscal 2010 was $2.0 million (unaudited), which is a solid 24% of total spending. CAGID expenditures remained elevated in 2009 and 2010 due to on-going capital improvements being made to the five garages with final completion for the projects expected in 2011. Management stated that a planned fiscal deficit and drawdown of unreserved fund balance is expected in 2011 as the final costs for the capital improvements are realized. Financial projections show a still adequate unappropriated fund balance of $1.5 million at the end of fiscal 2011, which equals 17.7% of budgeted spending. Fitch expects balanced financial performance to resume in fiscal 2012 with expenditures reverting to more baseline levels.

CAGID's debt profile and tax base reflect the district's limited geographical area. Debt ratios for the district are very high with direct and overlapping debt at 16.8% of assessed value. Management stated that no additional debt issuance is planned and capital needs after 2011 will be met through annually budgeted funds. The area's tax base, which comprises primarily commercial property, has grown every year since fiscal 2006 at an annual average rate of 7.7%. Preliminary information, however, points to a modest 1.5% to 3% contraction in assessed values for fiscal 2012. The tax base remains concentrated with the top ten tax payers accounting for approximately 24.0% of the area's total assessed valuation.

The service area benefits from its location in downtown Boulder, which includes significant commercial activity along with the popular Pearl Street Mall. Boulder's local economy softened during the national economic downturn but remains fundamentally sound. The city's unemployment reached a high of 8.2% in 2010, but has remained below state and national levels (8.9% and 9.6%, respectively). Socioeconomic indicators for the city and county point to wealth levels that are above state and national averages with respect to both per capita income and median household income, although this is somewhat mitigated by Boulder City's high individual poverty rate. Additionally, the presence of the University of Colorado's main campus in the downtown area attracts visitors to the vicinity.

Additional information is available at 'www.fitchratings.com'.

In addition to the sources of information identified in the Tax-Supported Rating Criteria, this action was additionally informed by information from Creditscope, University Financial Associates, S&P/Case-Shiller Home Price Index, IHS Global Insight, Zillow.com, National Association of Realtors.

Applicable Criteria and Related Research:

--'Tax-Supported Rating Criteria' (Aug. 16, 2010);

--'U.S. Local Government Tax-Supported Rating Criteria' (Oct. 08, 2010).

Applicable Criteria and Related Research:

Tax-Supported Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=548605

U.S. Local Government Tax-Supported Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=564566

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE '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.
COPYRIGHT 2011 Business Wire
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2011 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:Business Wire
Geographic Code:1U9CA
Date:Jun 23, 2011
Words:1095
Previous Article:Southern California Edison Declares Dividends.
Next Article:Fitch Affirms and Downgrades GMAC 2000-C3; Revises Outlooks & LS Ratings.

Terms of use | Privacy policy | Copyright © 2018 Farlex, Inc. | Feedback | For webmasters