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New Issue:

MOODY'S ASSIGNS Aa3 RATING TO BENTON COUNTY (OR) $3.8 MM FULL FAITH AND CREDIT OBLIGATIONS, SERIES 2010

22 Nov 2010

Aa2 ISSUER RATING ASSIGNED; RATINGS AFFECT $3.8 MILLION IN DEBT, INCLUDING CURRENT OFFERING

County
OR

Moody's Rating

ISSUE

RATING

Full Faith and Credit Obligations, Series 2010

Aa3

  Sale Amount

$3,800,000

  Expected Sale Date

01/03/11

  Rating Description

Full Faith and Credit Obligations

 

Opinion

NEW YORK, Nov 22, 2010 -- Moody's Investors Service has assigned a Aa3 rating to the Benton County, Oregon, Full Faith and Credit Obligations, Series 2010 in the approximate amount of $3.8 million. In conjunction with this transaction Moody's has also assigned a Aa2 Issuer (GO implied) rating to the county. The current offering is secured by the county's full faith and credit pledge, which is not subject to appropriation. Bond proceeds will finance the acquisition and modification of an office park and office building, in order to consolidate disparately located county offices that are currently leased.

RATINGS RATIONALE

The Aa3 rating primarily reflects the legal security of the bonds and the general credit characteristics of Benton County, including a stable economy which revolves around the City of Corvallis (UTGO rated Aa2), a favorable financial position and management, and low debt levels with no immediate borrowing plans.

WILLAMETTE VALLEY COUNTY 45 MILES FROM EUGENE, 100 MILES FROM PORTLAND

The county is located approximately 100 miles south of the City of Portland and includes the City of Corvallis, which benefits from the stabilizing presence of Oregon State University. Real market value growth in the county is slightly below the median for the all state counties, but averaged 7.8% annual growth from 2005 through 2010, with extraordinary single-year increases of 16.7% (2007), 8.2% (2008), and 8.4% (2009) that reflect the strong building activity of a few years ago. This growth rate slowed recently and for the 2011 collection year, real market value declined by 5.0% from the prior year to $9.4 billion. Officials do not expect that real market values will decline in the next revaluation cycle (2012). 2011 full value per capita of $109,123 approximates the state county median.

HEALTHY GENERAL FUND RESERVES REMAIN HIGHER THAN MOST OREGON COUNTIES

County financial operations have been historically well-maintained and have reflected generally conservative budgeting practices. From fiscal 2004 to 2008, total general fund balance has been maintained at a healthy annual average level of approximately 28.0% of general fund revenues ($10.2 million). In fiscal 2009, the general fund balance was a solid 37.3% of general fund revenues ($10.7 million). Including both the Local Option Levy and Adult Corrections funds, total available fund balance increases to approximately 47.0% of general fund revenues ($17.1 million).

Property taxes comprise 46.4% of fiscal 2009 general fund operating revenues, followed by intergovernmental revenues (36.8%) and charges for services (10.3%). Despite the weak housing market, property tax revenues are expected to continue to grow by 3% per year as allowed under the state constitutional amendment (Measure 50), as long as assessed value is below real market value. Currently, assessed value as a percentage of real market value is roughly 71.0%, providing a significant margin for most property types. The exceptions are centrally assessed industrial or manufacturing properties, utility properties, business personal property and manufactured structures assessed as personal property. These properties' assessed values are equal to their market values and are, therefore, more volatile. However, the district's tax base is primarily residential in nature and diverse, with the top ten taxpayers representing 9.2% of total assessed value.

For fiscal 2010, the county anticipates that ending general fund balance will decline slightly to approximately $9.4 million (33% of unaudited general fund revenues) due to increasing health insurance expenses; however, the county was able to renegotiate with its labor groups to provide a $750 subsidy in lieu of COLA; the COLA is anticipated to be provided in 2011.

In 2007, county voters approved a five-year local option levy, the maximum length allowed by the state constitution (Measure 50). The levy provides additional unused taxing capacity to fund operations and are collected in the Local Option Levy Fund. The county expects to seek renewal of the local option levy in 2012.

MANAGEABLE DEBT LEVEL

Net of pension bonds, the county's overall debt burden remains modest at 1.8% and, typical of Oregon counties, direct debt represents a much lower 0.0%. Principal payout on all obligations is rapid at 100.0% in ten years. Bond proceeds will finance the acquisition and modification of an office park and office building, in order to consolidate disparately located county offices that are currently leased. Peak debt service for the county's Full Faith and Credit Obligation, Series 2010 is $483,133 in 2018, which represents a minimal 2% of fiscal 2009 general fund revenues.

The County's long term capital needs include the construction of a new jail facility. The county is exploring whether to seek voter approval for this project. No timetable has been established but if voter approval were sought it would occur within the next five years. All of the county's debt consists of fixed-rate obligations.

What could move the rating-UP

- Trend of significant growth in full valuation

- Significant improvement in socioeconomic measures

- Trend of significantly improved and maintained general fund reserve levels

What could move the rating-DOWN

- Significant deterioration in the district's financial position

- Protracted decline in the district's full valuation

KEY STATISTICS

Estimated population 2009: 86,120

1999 per capita income: $21,868 (104.4% of state)

1999 median family income: $56,319 (115.7% of state)

2011 real market valuation: $9.4 billion

2011 full value per capita: $109,123

Average annual growth in Measure 5 RMV, 2006 to 2011: 5.4%

Direct debt burden (net of pension bond debt): 0.0%

Overall debt burden (net of pension bond debt): 1.8%

Lease burden (lease obligations as a percentage of operating revenues): 2.0%

Payout of principal (all obligations), 10 years: 100.0%

Fiscal 2009 general fund balance: $10.7 million (37.3% of general fund revenues)

The principal methodology used in this rating was General Obligation Bonds Issued by U.S. Local Governments published in October 2009.

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

Matthew A. Jones
Backup Analyst
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 Aa3 RATING TO BENTON COUNTY (OR) $3.8 MM FULL FAITH AND CREDIT OBLIGATIONS, SERIES 2010
No Related Data.
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