Fitch Upgrades 4 Peoria, AZ Improv Dists to 'AA-'.
--District No. 8801 (North Valley Power Center--$2.5 million outstanding);
--District No. 8802 (Bell Road Improvements--$3.0 million outstanding);
--District No. 9601 (83rd Avenue Widening--$1.5 million outstanding);
--District No. 9603 (Arrowhead Fountains Center--$980,000 outstanding).
The bonds issued by these districts are secured by assessments levied against benefiting properties within the boundaries of the districts. Under state law, the city is required to make up any assessment delinquencies prior to scheduled debt service payments from the general fund. The Rating Outlook is Stable.
The upgrade to 'AA-' is based on the mature status of development in each of these districts, the pace of debt retirement, and overall financial strength of the city. Of the combined $16.7 million in debt originally issued by these districts $8.0 remains outstanding, with the amount outstanding for each district around 50% or less of the original par amount. The final maturity of the outstanding debt is in 2013.
Assessments are due semiannually on June 1 and Dec. 1, and the property of delinquent payers is subject to public auction not later than 40-45 days after the delinquency. If there is no other purchaser, the city is required to purchase the property from monies in the general fund or another fund (price includes penalties and the cost of all bonded and other improvements). Alternatively, the city may pay only the delinquent assessment installment to cover debt service due on the bonds. The assessments represent a first lien equal to the lien for general taxes.
Financial operations in the city continue to be sound. The general fund reported net income for the third consecutive year in fiscal 2006, posting a gain of $13.5 million. Revenue growth contributed significantly to the results, with sizeable gains in property tax, sales tax and franchise fee revenues; sales tax receipts, which jumped nearly 35% from the prior year, were aided by the new transportation sales tax. The fiscal 2006 unreserved general fund balance was a healthy $65.2 million, or more than 75% of spending and transfers out.
As is the case throughout the Phoenix metropolitan area, the pace of residential construction in Peoria has slowed considerably over the past six months. However, commercial development activity continues to expand and contributed to an increase in construction sales tax revenues for the first quarter of fiscal 2007. The city reports that more than 2 million square feet of office space either is under construction or in use, and numerous retail projects are underway in various parts of Peoria.
Despite capital and operating pressures stemming from growth, the city's practice of charging development fees for various services has generated significant amounts of funding for infrastructure and consequently has kept debt loads moderate. The ten-year general government capital plan is sizeable at more than $565 million, but the city expects that only 40% of project costs will be funded with general obligation (GO) bonds. Debt amortization of GO bonds is rapid, and the direct debt burden on citizens remains affordable.
Peoria, with an estimated population of 142,880 for 2006, has numerous master-planned residential communities underway, along with associated commercial ventures. Loop 101, a major regional thoroughfare in the Phoenix metropolitan area, runs through southern Peoria and numerous commercial projects have been developed along its frontages. Loop 303, which is the next 'outer loop' for Phoenix, will cross the northern part of the city upon its completion around 2012.
Tax base growth has averaged just over 13% annually for the past five fiscal years, and the increase for fiscal 2007 was more than 15%; estimated full cash value exceeded $10 billion for the year. Local unemployment rates historically have been well below regional, state and national averages, and county wealth levels are above average.
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|Date:||Feb 5, 2007|
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