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MOODY'S ASSIGNS A1 RATING TO PORT OF WALLA WALLA (WA) $2.0 MM LIMITED TAX G.O. REFUNDING BONDS, 2010

26 Oct 2010

RATING AFFECTS $4.8 MM IN PARITY DEBT, INCLUDING CURRENT OFFERING

Ports
WA

Moody's Rating

ISSUE

RATING

Limited Tax General Obligation Refunding Bonds, 2010 (AMT)

A1

  Sale Amount

$1,975,000

  Expected Sale Date

10/27/10

  Rating Description

General Obligation Limited Tax

 

Opinion

NEW YORK, Oct 26, 2010 -- Moody's Investors Service has assigned an A1 rating to the Port of Walla Walla, Washington Limited Tax General Obligation Refunding Bonds, 2010 (AMT) in the approximate amount of $2.0 million. At this time Moody's has also affirmed the A1 rating on the port's $2.8 million in outstanding limited tax general obligation bonds. The general obligation bonds are secured by the full faith and credit of the port within the constitutional and statutory limitations of non-voter approved debt. Proceeds of the current offering will refinance certain maturities of the port's Limited Tax General Obligation Bonds, 1999 Series B.

RATING RATIONALE

The A1 rating reflects the port's moderately-sized, rural tax base, average wealth levels, stable finances and manageable debt levels.

STABLE, AGRICULTURAL AND TOURISM ECONOMY

Coterminous with the County of Walla Walla (UTGO rated Aa3) in southeastern Washington, the port benefits from an agricultural economy, large government employers and three higher education institutions. Residents of the port also benefit from employment opportunities in wood and paper industries, as well as a growing wine-region and tourism industry. Taxable values averaged 7.0% annual growth from 2005 to 2010; this moderate growth rate includes a 3.5% decline in 2010 to $4.7 billion, reflecting a correction to housing growth-related growth realized in prior years. The port does not expect any declines in AV. Moody's expects future tax base growth to remain at similar levels, driven primarily by residential development, particularly in and around the City of Walla Walla (UTGO rated Aa3). Wealth and income levels are below the state average, but are negatively skewed by the large student population. Socioeconomic indicators also reflect the impact of seasonal employment. Full value per capita is relatively low for Washington at $78,884 in 2010.

FINANCIAL OPERATIONS ARE SATISFACTORY; KEY REVENUES FLUCTUATE SOMEWHAT

Relatively stable financial operations are supported by airport operations, supplemented by the port's numerous and diversified tenant base, as well as moderate tax base growth. Port operations are funded primarily by airport revenues (29% of fiscal 2009 gross revenues), followed by several industrial park lease revenues (13%). Passenger traffic grew steadily from 24,700 (2005) to 33,430 (2009), but are expected to decline by approximately 7.5% in 2010, but management expects steady flight operations and increased traffic to return as an economic recovery develops. Airport revenues have increased due to a combination of an increase in the number of passengers, an increase in airport fees and new airport lease contracts. Lease revenue benefits from a stable base of tenants, but declined in 2009 due to the purchase of two facilities by two separate tenants. Property taxes represented about 19% of fiscal 2009 gross revenues. The port district is currently levying $0.38 per $1,000 assessed valuation, which is close to the $0.45 maximum allowed to port districts for operations. The port's cash balances were drawn down in fiscal 2009 to pay off some debt, but continue to provide a satisfactory level of short term liquidity. Net working capital in fiscal 2009 was about 20.7% of gross revenues ($2.0 million); management expects fiscal 2010 cash levels to improve due to the tenant's property purchases ($2.9 million) and an insurance settlement ($1.2 million). Going forward, management projects that a small portion of cash reserves may fund industrial park improvements, but that economic recovery will drive debt issuance.

DEBT LEVELS TO REMAIN MANAGEABLE

Overall debt burden of 1.3% is moderate. Payout over ten years is above average at 88.8%. Direct debt levels are extremely modest, at 0.12% of assessed valuation reflecting the port's limited operational role and the relatively narrow debt authorization for ports in Washington. The port has no borrowing plans in the near-term until economic recovery could support debt issuance for industrial park improvements. All of the port's debt consists of fixed-rate obligations.

What could move the rating - UP

- Trend of significant tax base growth

- Substantial appreciation of wealth measures

What could move the rating - DOWN

- Significant deterioration of financial position

- Protracted decline in assessed valuation

KEY STATISTICS

2010 issuer-estimated population: 59,600

1999 per capita income: $16,509 (71.9% of state)

1999 median family income: $44,972 (83.6% of state)

2010 assessed valuation: $4.7 billion

Growth in full valuation, 2005-2010: 7.0%

Direct debt burden: 0.1%

Overall debt burden: 1.3%

Principal payout, LTGO debt (10 years): 88.8%

PRINCIPAL METHODOLOGY AND LAST RATING ACTION

The last rating action with respect to Port of Walla Walla, Washington was on July 6, 2007 when a municipal finance scale limited tax general obligation bonds rating of A3 was assigned to the Port of Chelan County, Washington. The rating was subsequently recalibrated to A1 on April 23, 2010.

The principal methodology used in rating Port of Walla Walla, WA was General Obligation Bonds Issued by U.S. Local Governments rating methodology published in October 2009. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found on Moody's website.

REGULATORY DISCLOSURES

Information sources used to prepare the credit rating are the following: parties involved in the ratings and public information.

Moody's Investors Service considers the quality of information available on the credit satisfactory for the purposes of assigning a credit rating.

MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Please see ratings tab on the issuer/entity page on Moodys.com for the last rating action and the rating history.

The date on which some Credit Ratings were first released goes back to a time before Moody's Investors Service's Credit Ratings were fully digitized and accurate data may not be available. Consequently, Moody's Investors Service provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see the Credit Policy page on Moodys.com for the methodologies used in determining ratings, further information on the meaning of each rating category and the definition of default and recovery.

Analysts

Justin Resuello
Analyst
Public Finance Group
Moody's Investors Service

Dan Steed
Backup Analyst
Public Finance Group
Moody's Investors Service

Matthew A. Jones
Senior Credit Officer
Public Finance Group
Moody's Investors Service

Contacts

Journalists: (212) 553-0376
Research Clients: (212) 553-1653


Moody's Investors Service
250 Greenwich Street
New York, NY 10007
USA

MOODY'S ASSIGNS A1 RATING TO PORT OF WALLA WALLA (WA) $2.0 MM LIMITED TAX G.O. REFUNDING BONDS, 2010
No Related Data.
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