Fitch Affirms (North Jeffco) Apex Park and Recreation District, CO's ULTGOs at 'AA+'; Outlook Stable

This is a reprint from Bussiness Wire:

NEW YORK–(BUSINESS WIRE)–Fitch Ratings affirms the ratings on the following North Jeffco Park & Recreation District, Colorado (also known as Apex Park & Recreation District) bonds, as part of its continuous surveillance effort:

–$3.045 million general obligation bonds, series 1998, affirmed at ‘AA+’.

The Rating Outlook is Stable.

SECURITY

The bonds are general obligations of the district, payable from unlimited ad valorem taxes.

KEY RATING DRIVERS

–Special purpose district with strong operating performance and ample financial flexibility.

–Demonstrated voter support.

–Above average income levels.

–Relatively stable service-based economy and part of the Denver metro area.

–Moderately high overall debt and manageable capital needs.

CREDIT PROFILE

Covering 75 square miles, the district is a single purpose entity providing park and recreation services to residents in northern Jefferson county (the county), with a small portion in the City and County of Denver. The district primarily serves the city of Arvada (the city) and unincorporated areas of the county. Population growth for the county was 1.3% between census years 2000 and 2010. Housing market weakness is evident but declines have been below management’s budget projections. Fiscal 2011 taxable value declined 1.8% compared to fiscal 2010, which was down 0.7% from fiscal 2009, and compared favorably to the district’s projections for a 5-7% decline.

The economy is largely service-driven with the top employers including the city of Arvada and various retail stores. Employment in both the city and county dropped 0.4% from June 2010 to June 2011 but with a 0.7% decline in the labor force, the unemployment rate declined slightly over the same period. The 9.5% June 2011 unemployment rate for the city was well above the county’s 8.3% and just above the national average of 9.4%. City and county wealth levels are comfortably above average.

Financial performance is strong. The district has a history of maintaining solid available reserves in the general fund while continuing to spend operating revenue on pay-go capital financing. Financial performance is also supported by conservative budgeting, inherent expenditure and capital flexibility associated with these special district services and voter support. General fund operating revenues over the last six years grew an average 6.9% annually, outpacing operating expenditure growth of 5.1% over the same period. The fiscal 2011 budget included a freeze on wages and salaries as well as no additional positions. The district reports that year to date results are in line with budget.

The fiscal 2010 unreserved balance was very high due to a collection of resources to be spent in fiscal 2011 on the construction of the $9 million Apex Field House (a new turf arena). The district financed the project through a combination of debt, asset sales and dedicated reserves. The planned draw on reserves for fiscal 2011 results in an estimated unreserved fund balance of $1.9 million, or 31% of general fund spending, net of the large capital expenditure and below the fiscal 2009 unreserved balance of $4.3 million (or a high 65% of spending).

Fitch views the use of fund balance for capital as prudent and current unreserved levels as strong for the rating category. The district plans to slowly build the unreserved balance to higher levels, consistent with prior years, by combating lower property tax revenues with increased fees generated from the new field house facility. Property taxes and fees in fiscal 2011 approximate 58% and 34% of general fund revenue, respectively.

District operations also benefit from strong voter support and a self-imposed $1 million operating reserve which represents 17% of fiscal 2011 estimated operating expenditures. In addition to a permanent exemption from state-wide revenue restrictions, voters also approved a 2006 ballot measure for an additional 1-mil levy to equally fund capital and operations.

The district’s debt burden is moderately high at $5,351 per capita and 5.1% of taxable market value but mitigated by above average income levels. The debt service burden on the budget is low at 3.5% for fiscal 2011 and pensions are not a credit concern as all programs are defined contribution.

There was misinformation in the orginal article. A 2014 election has not been planned.