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MOODY'S ASSIGNS Aa2 RATING TO BIBB COUNTY'S (GA) $11.11 MILLION REFUNDING REVENUE BONDS, SERIES 2010, ISSUED THROUGH MACON-BIBB COUNTY URBAN DEVELOPMENT AUTHORITY

20 Sep 2010

Aa2 RATING APPLIES TO $49.5 MILLION IN PARITY DEBT, INCLUDING THE CURRENT OFFERING

Bibb (County of) GA
County
GA

Moody's Rating

ISSUE

RATING

Refunding Revenue Bonds, Series 2010

Aa2

  Sale Amount

$11,110,000

  Expected Sale Date

09/21/10

  Rating Description

General Obligation

 

Opinion

NEW YORK, Sep 20, 2010 -- Moody's Investors Service has assigned a Aa2 rating to Bibb County's (GA) $11.1 million Refunding Revenue Bonds, Series 2010, issued through the Macon-Bibb County Urban Development Authority. At this time, Moody's also has affirmed the Aa2 rating on $49.2 million in outstanding parity debt, including county-backed bonds issued through the Urban Development Authority and the Macon-Bibb County Industrial Authority.

RATINGS RATIONALE

Pursuant to an intergovernmental contract with Bibb County, the bonds are secured by the county's unlimited ad valorem tax pledge. The Aa2 rating reflects the county's role as a regional economic and employment center, a sound financial position supported by healthy fund balance levels, and a low direct debt burden. Proceeds of the bonds will refund several outstanding series of bonds for an expected 12% net present value savings, with no extension of maturity.

REGIONAL ECONOMIC CENTER EXPECTED TO REALIZE TAX BASE GROWTH WITH COUNTYWIDE REASSESSMENT

Located at the crossroads of Interstates 75 and 16, Bibb County and the City of Macon (G.O. limited tax rated A1) serve as an economic and employment hub to central Georgia (G.O. rated Aaa/stable outlook). While the local economy historically relied on agriculture and traditional manufacturing, the region has diversified during the past decade to include sizeable retail, logistics, and advanced manufacturing sectors. Approximately 47% of the county's land area remains in agricultural uses, however, commercial and industrial properties now account for 44% of total assessed valuation. The full market value of the county's $10.4 billion tax base has increased by a limited 1% annually since 2003, a growth rate that solely reflects the impact of new construction. Officials report that existing properties were not reassessed on a timely basis during the same period, precluding any tax base growth related to appreciation. The county has completed a countywide reassessment for tax year 2009 (fiscal 2010 impact), the first such review since tax year 2001, at which time the county realized a 17% gain in market values. Notably, the 2009 reassessment is exempt from the first year of Act 163 (House Bill 233), a newly-enacted state law that establishes a three-year moratorium period during which no growth is permitted in the assessed value of real property (tax years 2009-2011). The law specifically permits assessed values to decline, a factor that is compounded by separate legislation (Senate Bill 55) requiring foreclosure sales to be included in market studies related to property reappraisal beginning with tax year 2009. Following the implementation of reassessment in 2009, management expects further tax base growth to be limited by the state legislation.

The county's employment base includes a diverse array of businesses, including the health care, manufacturing, insurance, retail and education sectors. In July 2006, R.J. Reynolds (Sr. Unsec. rated Baa3/stable) closed a major research, development and production facility in the county that previously employed 2,400 and served as the county's largest taxpayer. Notably, the county did not experience a significant surge in unemployment levels with the closure, due to various economic development initiatives that provided offsetting employment gains in other sectors. GEICO Corporation (Sr. Unsec. Aa3/stable outlook) currently serves as the largest private employer and recently added 300 workers to the existing 3,300 job base, with additional expansion expected. Countywide unemployment of 10.8% in June 2010 is above historical levels, reflecting recessionary contraction in the local job base. Resident wealth levels are slightly below statewide averages, with 2000 per capita income and median family income (U.S. Census) equal to 90% 88.2% of the state, respectively.

FORMAL FISCAL POLICIES AND CONSERVATIVE BUDGETING BENEFIT THE COUNTY'S SOLID RECORD OF HEALTHY RESERVE LEVELS

The county's sound financial position is supported by conservative fiscal management, multi-year financial planning, and healthy fund balance levels. By policy, the county is required to maintain a working capital designation within the General Fund balance equal to a minimum 12.3% (45 days) of annual budgeted expenditures. In practice, the county has maintained an unreserved fund balance at a stronger 30% of annual revenues for the past five fiscal years, including a 12.3% working capital designation and an undesignated portion equal to an average 12% of annual revenues. The county has recorded sizeable operating surpluses during three of the last five fiscal years, including $6.1 million in fiscal 2008 alone that boosted total General Fund balance to an ample $31.6 million (35% of revenues). Recent surpluses were driven by positive revenue variance and expenditure savings, factors that demonstrate the county's conservative approach to budget development, including full-year funding for 90% of all authorized positions and annual contingency funding of $250,000. Although the original fiscal 2009 budget did not appropriate from General Fund balance, county officials decided to provide relief to the tax payers by rolling back the tax rate and using SPLOST proceeds and $9 million of fund balance to balance the final budget. The county reported a $5.2 million decline in fund balance, which was largely driven by an advance payment toward the county's long-term OPEB liability ($5.5 million) and carry-forward expenses related to the reassessment ($1.5 million). The total $9 million appropriation was offset by over $5 million in expenditure savings. Total ending fund balance declined to a still-solid 30% of fund revenues, including the county's working capital requirement.

The fiscal 2010 budget was balanced with no appropriation of fund balance and represented a 16.2% decline in expenditures relative to the fiscal 2009 budget driven by a reduction in capital outlay, debt service and funding to outside agencies. Officials project the year end fund balance to increase to $30 million (34% of projected revenues), $8.8 million of which is undesignated (10% of projected revenues). The $3.6 million surplus is due to conservative budgeting for sales tax revenues and expenditure savings, including a hiring freeze and a reduction in capital projects. Going forward, the fiscal 2011 budget includes the appropriation of $9.4 million of fund balance and represents a 9.5% decline in expenditures compared to the prior year. While officials do not expect to use the full appropriation for operations, any savings will likely be used to fund the county's $5.6 million OPEB annual required contribution.

DEBT BURDEN EXPECTED TO REMAIN BELOW AVERAGE

The county's currently-low direct debt burden is expected to remain manageable given limited future borrowing plans. Including the current issue, the county's direct debt burden is equal to 0.5% of full valuation; the total debt burden of 0.9% includes the overlapping debt of the countywide school district and municipalities. Amortization of debt is average, with 74.2% repaid within 10 years, and debt service comprised 6.5% of fiscal 2009 operating expenses. The county's capital improvement program benefited from a 1% special purpose local option sales tax (SPLOST) program that generated $72 million for county capital projects during the 42-month period ended March 2009. Notably, a referendum to renew the SPLOST was defeated in July 2010. The next available date for a vote is November 2011, although no definite plans have been made at this time. Moody's believes the discontinued SPLOST has no near term credit implications, although if it is not reenacted over the medium term, the county's debt burden may rise. Approximately 22% of the county's total debt is in a variable rate mode, none of which is currently being held by the liquidity provider. Moody's considers the county's exposure to variable rate debt manageable given the county's strong cash balances. The county is party to one synthetic variable rate swap on $7.2 million in outstanding fixed-rate debt, which does not pose an immediate credit concern.

KEY STATISTICS

2009 population: 155,216

2010 full valuation: $12.2 billion

2008 full valuation per capita: $78,361

June 2010 unemployment: 10.8%

1999 Median Family Income: $43,479 (88% of state, 87% of nation)

1999 Per Capita Income: $19,058 (90% of state, 88% of nation)

FY 2009 General Fund balance: $26.4 million (30.5% of revenues)

FY 2009 Undesignated General Fund balance: $13.3 million (15.4% of revenues)

Overall debt burden: 0.9%

Payout of principal (10 years): 74.2%

Post-sale countywide G.O. debt outstanding: $49.2 million

The principal methodology used in rating Macon-Bibb County Urban Development Authority, GA 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

Lauren Von Bargen
Analyst
Public Finance Group
Moody's Investors Service

Cesar Avila
Backup Analyst
Public Finance Group
Moody's Investors Service

Julie Beglin
Senior Credit Officer
Public Finance Group
Moody's Investors Service

Contacts

Journalists: (212) 553-0376
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MOODY'S ASSIGNS Aa2 RATING TO BIBB COUNTY'S (GA) $11.11 MILLION REFUNDING REVENUE BONDS, SERIES 2010, ISSUED THROUGH MACON-BIBB COUNTY URBAN DEVELOPMENT AUTHORITY
No Related Data.
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