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13 Sep 2010
AFFIRMS Aa2 G.O. RATING ON $25.1 MILLION OUTSTANDING LONG TERM DEBT
General Obligation Bonds, Series A of 2010
Expected Sale Date
NEW YORK, Sep 13, 2010 -- Moody's Investors Service has assigned a Aa2 rating to the Municipality of
Monroeville's (PA) $7.6 million General Obligation Bonds, Series of 2010.
Concurrently, Moody's has affirmed the Aa2 rating on the municipality's $25.1
million of outstanding parity general obligation unlimited tax debt. Proceeds
will refund all of the municipality's Series of 2005 bonds for an expected net
present value savings of 3% of refunded principal, with no extension of
The Aa2 rating reflects the municipality's moderate tax base, stable financial
operations with healthy reserves, and manageable debt position.
RESERVE LEVELS EXPECTED TO REMAIN SOUND
Moody's anticipates the municipality will maintain sound financial
operations, given healthy reserves and conservative budgeting practices.
Historical results show the municipality maintaining a healthy General Fund
balance greater than 50% of General Fund revenues over the past five
fiscal years, despite recent budgetary structural imbalances. In fiscal 2009
(year-end Dec. 31), the municipality's General Fund balance declined by $4.7
million to $12.7 million (a healthy 55% of revenues) from $17.4 million (an
ample 72% of revenues) in fiscal 2008. The draw on reserves is mainly driven by
the creation of an Other Post Employment Benefit trust, funded at $ 2.2 million.
In addition, the municipality appropriated $2.5 million from Fund Balance for
At mid-year 2010 (unaudited), the municipality is projecting budgeted
expenditures and revenues to remain on target. The budget was reduced by 6% in
2010 mainly driven by cuts in discretionary spending. Monroeville appropriated
approximately $2 million from fund balance and is not anticipating replenishing
appropriations, reducing fund balance to $15.7 million (still a sound 57% of
reserves). Going forward, the maintenance of healthy reserve and liquidity
levels will remain a critical rating factor. Revenues are derived from a variety
of sources, including Business Privilege and Mercantile Taxes (27%), Earned
Income Taxes (26%), and Real Estate Taxes (17%).
MATURE AND DIVERSE TAX BASE
Monroeville's moderately sized $2.4 billion tax base will experience modest
future growth given limited available land for development. Located 10 miles
east of the City of Pittsburgh (G.O. rated A1/stable outlook) in Allegheny
County (rated A1/positive outlook), the municipality is primarily residential
(53% of assessed valuation) with a significant commercial component (42.3% of
assessed valuation), consisting of the large Monroeville Mall (7.7% of assessed
valuation) and other significant retail centers and office buildings. Assessed
valuation growth averaged a modest 1.4% annually from 2004 to 2009, reflecting
the mature nature of the community, while full valuation growth averaged a
slightly higher 3.1% over the same time period. Despite the fact that the
municipality is largely built out, commercial redevelopment efforts continue.
Construction is currently underway on a 120 bed hospital on 17 acre parcel, with
expected completion in June 2012. The municipality is currently in discussions
with developers on whether the hospital will be added to the tax roll or
structure a PILOT program. In addition, smaller rebuilds and additions to
existing office buildings are currently under construction. Income levels exceed
both state and national medians, while full value per capita is below average at
$83,372 (72% of the state median).
MANAGEABLE DEBT POSITION
The municipality's debt position is expected to remain manageable, given a
modest net direct debt burden of 1% of total full value and lack of medium-term
borrowing plans. Principal is retired at a rapid rate of 80.9% in the next 10
years. When taking into consideration the overlapping debt of Allegheny County
and Gateway School District, the township's adjusted debt burden rises to a
still manageable 4% of total full value. Debt service costs are a high but
manageable 9.2% of fiscal 2009 expenditures.
2009 population: 29,349
2009 full valuation: $2.4 billion
2009 Full value per capita: $83,372
1999 Per Capita Income (as a % of PA and US): $24,031 (115.1% and 111.3%)
1999 Median Family Income (as a % of PA and US): $53,474 (108.7% and 106.8%)
Direct Debt burden: 1%
Overall Debt burden: 4.1%
Payout of principal (10 years): 80.9%
FY09 General Fund Balance: $12.7 million (55% of General Fund revenues)
FY09 Unreserved General Fund Balance: $7.2 million (31% of General Fund
FY09 Unreserved, Undesignated General Fund Balance: $5.4 million (23.4% of
General Fund revenues)
Post-sale parity debt outstanding: $25.1 million
The principal methodology used in rating Monroeville (Municipality of) PA 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
Information sources used to prepare the credit rating are the following: parties
involved in the ratings, parties not involved in the ratings.
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.
Public Finance Group
Moody's Investors Service
Jessica A. Tevebaugh
Public Finance Group
Moody's Investors Service
Senior Credit Officer
Public Finance Group
Moody's Investors Service
Journalists: (212) 553-0376
Research Clients: (212) 553-1653
MOODY'S ASSIGNS Aa2 RATING TO MUNICIPALITY OF MONROEVILLE'S (PA) $7.6 MILLION GENERAL OBLIGATION BONDS, SERIES OF 2010
Moody's Investors Service
250 Greenwich Street
New York, NY 10007
No Related Data.
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