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MOODY'S ASSIGNS Aa3 RATING TO THE CITY OF HALTOM CITY'S $7.655 MILLION GO BONDS, SERIES 2011

31 Mar 2011

Aa3 RATING AFFECTS $7.9 MILLION IN DEBT, INCLUDING CURRENT ISSUE

Municipality
TX

Moody's Rating

ISSUE

RATING

General Obligation Bonds, Series 2011

Aa3

  Sale Amount

$7,655,000

  Expected Sale Date

04/01/11

  Rating Description

GOLT

 

Opinion

NEW YORK, Mar 31, 2011 -- Moody's Investors Service has assigned a Aa3 rating to the City of Haltom City's $7,655,000 General Obligation Bonds, Series 2011. At the same time, Moody's has affirmed the Aa3 rating affecting $250,000 in outstanding general obligation debt on Series 2002; the city has other outstanding general obligation debt not rated by Moody's.

RATING RATIONALE

Assignment of the Aa3 rating reflects the size of the city's tax base favorably located in the Dallas/Fort Worth Metroplex. The rating also reflects healthy reserves with a history of strong fiscal management and manageable debt burdens. The general obligation bonds are secured by an ad valorem tax levied with the limits prescribed by law on all taxable property within the city. Proceeds from the 2011 General Obligation bonds will be used to fund streets and parks improvements and to construct a fire station.

STRENGTHS

Location in the D/FW Metroplex

Healthy reserve levels supported by conservative budgeting

CHALLENGES

Recent decrease in assessed valuations

Higher direct debt burden than rating median with future debt plans

DETAILED CREDIT DISCUSSION

TAX BASE LIKELY TO DECLINE IN FYE 2012; FUTURE INTERSTATE EXPANSION COULD SPUR FUTURE ECONOMIC DEVELOPMENT

The City of Haltom City is located four miles northeast of the City of Fort Worth (Aa1/Stable) which provides close proximity to major employment centers. As a mature community, officials estimate that the city is approximately 80% built-out. The largest taxpayers are not concentrated comprising 10% of the total tax base. The city is bisected by Highways 121, 183, and 377 and Interstate 820. A large area of 820, in the city limits, has not been developed, given limited access on and off the interstate. A State project is underway that will expand 820, by 2015, turning it into the North Tarrant Express and the city's economic development corporation is focused on developing backage roads to provide access to the lots in order to spur future commercial and industrial development.

Between the 2005 and 2009 fiscal years, the city's tax base experienced steady growth averaging 4.6% annually. A modest increase of 0.7% in fiscal 2010 resulted in a $1.7 billion tax base. However, the 9% decrease in fiscal 2011 subsequently decreased the tax base to $1.5 billion. Despite $1.4 million in new construction for fiscal 2011, a 7.1% decrease in residential values and a 13% decrease in commercial/industrial values resulted in the overall decrease. Officials project no less than a 4.7% decrease in assessed valuations for fiscal 2012. The city socioeconomic profile is somewhat modest with a per capita income of $17,740 which was equal to 90.4% of the State and 82.2% of the US. Moody's believes that despite recent tax base declines, the size of the base remains consistent with the current rating.

HEALTHY RESERVES WITH ADOPTED GENERAL FUND BALANCE POLICY

The city has a formally adopted policy (by resolution in 2003) to maintain 20% of expenditures in the General Fund reserve. Moody's recognizes this policy is strong and is a favorable credit factor. The city consistently meets or exceeds this policy reflected in solid General Fund reserves. In fiscal 2010, the General Fund balance totaled $6.6 million, or 33.4% of General Fund revenues. Projections for fiscal 2011 indicate that the fund balance could increase to $6.9 million. Property taxes comprise 32.8% of General Fund revenues and 22.9% is derived from sales taxes. Officials reported that sales tax revenues are 7.5% ahead of the prior year-to-date collections as of February. Expenditure cuts have been made across-the-board although no significant cuts have been necessary to-date. Moody's believes the city maintains healthy reserves which are consistent with the current rating.

DEBT BURDENS MANAGEABLE

The direct debt burden is 2.1% and the overall debt burden of 5.9% is higher primarily due to overlapping debt of local school districts. The current issue was authorized by voters in November 2010. Additional general obligation bond issuances are planned through 2020 but do not exceed $3 million annually. With future debt plans, the debt burdens could increase if assessed valuations continue to decline or flatten. However, with a long term capital plan and conservative management, we believe the debt burdens will remain manageable. The city does not have any variable rate debt and is not party to any swap agreements.

WHAT COULD MAKE THE RATING GO UP

Significant increases in assessed valuations

Improvement in socioeconomic profile relative to the State and US

WHAT COULD MAKE THE RATING GO DOWN

Ongoing trend of significant decreases to assessed valuations

Decreases in General Fund balance to a level inconsistent with the rating

KEY STATISTICS:

Population: 39,600

2011 Full valuation: $1.5 billion

2011 Full value per capita: $39,380

2000 Per Capita Income: $17,740 (82.2% of US)

Direct debt burden: 2.1%

Overall debt burden: 5.9%

Payout (10 years): 69.8%

2010 General Fund balance: $6.6 million (33.4% of General Fund revenues)

Outstanding parity debt: $56.8 million

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

Kristin Button
Analyst
Public Finance Group
Moody's Investors Service

Adebola Kushimo
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 THE CITY OF HALTOM CITY'S $7.655 MILLION GO BONDS, SERIES 2011
No Related Data.
© 2020 Moody's Corporation, Moody's Investors Service, Inc., Moody's Analytics, Inc. and/or their licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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