Printer Friendly

Fitch Affirms Glendale Financing Authority, California COPs at 'AA-'; Outlook Stable.

NEW YORK -- In the course of routine surveillance, Fitch Ratings has affirmed the City of Glendale Financing Authority, California's variable-rate demand certificates of participation (COPs) at 'AA-' (2000 police building project). The Rating Outlook is Stable.

The COPs' full rating is 'AA-/F1+'. The 'F1+' short-term rating is based upon a standby purchase agreement (SPA) provided by JPMorgan Chase Bank, National Association. The 'F1+' rating is not affirmed in conjunction with this press release.

The 'AA-' rating reflects the city of Glendale's (the city) sound financial management, high fund balance levels, low debt burden and significant financial flexibility. The city's solid management practices are evidenced by very high reserve levels supported by a strong policy, conservative budgeting, and regular financial reporting. The city's strong debt service cash balance offsets the risk posed by the COPs' interest rate volatility. Fitch views the city's maintenance of high reserve levels as offsetting concerns regarding the economic sensitivity of a sizable share of general fund revenues.

According to 2009 unaudited operating results, the city continues to maintain sound general fund reserves, providing substantial financial flexibility. For fiscal 2009, the city estimates its unreserved general fund balance at $55.1 million, a very high 38.1% of spending and up slightly from fiscal 2008's $52 million or 37.6%. During fiscal 2009, the city reduced expenditures in response to below budget revenue performance by delaying capital projects, implementing a hiring freeze and selectively filling critical positions. Fitch views management's demonstrated ability to recognize this budget variance and respond with effective mitigation as a credit positive. The city expects to end fiscal 2010 with an operating surplus despite an anticipated decline in sales tax and other economically sensitive revenue.

Glendale is located between Pasadena and Burbank in economically diverse Los Angeles County. The city has a significant tax and employment base of its own, including about one-third of the county's entertainment related jobs and an established retail sales tax base. Glendale's wealth levels are below the state average but trend above the county and national levels. The area's housing market decline and the national recession have had a somewhat moderate impact on Glendale, with assessed value (AV) increasing modestly for fiscal 2010 and the unemployment rate remaining below that of the county and state.

The city's unemployment rate has risen dramatically, though, reaching 11% in August 2009. The city expects AV to increase again in 2011, benefiting from the AV gain limitation imposed by Proposition 13 and the older age of many residential properties and the city's relatively low exposure to subprime mortgages. Nonetheless, Fitch notes that the city's exposure to negative amortization mortgages is above average, which could present vulnerability for AV in fiscal 2011. Also, Fitch believes the current national recession is starting to impact commercial values which also could impact future city AV. Glendale's top ten taxpayers comprise 9.7% of total fiscal 2008 AV, indicating moderate taxpayer concentration.

Debt levels remain low at $1,755 per capita and 1.6% of market value including overlapping debt. Amortization is about average with 46% repaid in 10 years.

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

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 2009 Business Wire
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2009 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:Business Wire
Geographic Code:1U2NY
Date:Nov 9, 2009
Words:611
Previous Article:PCM Fund, Inc. Reports Results for the Fiscal Quarter and Nine Months Ended September 30, 2009 and Restated Ratios in June 30, 2009 Semi-Annual...
Next Article:Ciena Receives HSR and Canadian Competition Act Clearance for Proposed Acquisition of Nortel's Optical and Carrier Ethernet Assets.
Topics:


Related Articles
Fitch Surveillance: Fitch Ratings Affirms Four Lease Ratings, Upgrades Two.
Fitch U.S. Public Finance Surveillance: Various Ratings Affirmed.
Fitch Assigns 'A-' to WellPoint's Senior Debt Issuance.
Fitch U.S. Public Finance Surveillance: Various Ratings Affirmed.
Fitch Affirms Glendale Financing Auth, California COPs at 'AA-/F1+'.
Fitch Takes Various Rating Actions on Lloyd's Enhanced Variable-Rate Muni Bonds.
Fitch Takes Various Rating Actions on Enhanced Variable Rate Muni Bonds.
Fitch Downgrades 14 and Affirms 12 Single-Name Credit-Linked Notes.

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