Aa2 ISSUER RATING ASSIGNED; RATINGS AFFECT $3.8 MILLION IN DEBT, INCLUDING CURRENT OFFERING
Full Faith and Credit Obligations, Series 2010
Expected Sale Date
Full Faith and Credit Obligations
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.
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
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
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
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.
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.
Public Finance Group
Moody's Investors Service
Matthew A. Jones
Public Finance Group
Moody's Investors Service
Journalists: (212) 553-0376
Research Clients: (212) 553-1653
MOODY'S ASSIGNS Aa3 RATING TO BENTON COUNTY (OR) $3.8 MM FULL FAITH AND CREDIT OBLIGATIONS, SERIES 2010
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