RATING ASSIGNMENT AND AFFIRMATION AFFECTS $59.2 MILLION IN OUTSTANDING PARITY DEBT, INCLUSIVE OF THE CURRENT SALE
Combination Tax and Limited Pledge Revenue Certificates of Obligation, Series 2011
Expected Sale Date
General Obligation Limited Tax
NEW YORK, Aug 16, 2011 -- Moody's Investors Service has assigned a Aa3 underlying rating to the City of
Haltom City's (TX) $2.3 million Combination Tax and Limited Pledge Revenue
Certificates of Obligation, Series 2011. Concurrently, we have affirmed the Aa3
on the city's outstanding parity debt affecting $56.8 million. Proceeds from the
sale of the certificates will be used to make various public
improvements throughout the city.
SUMMARY RATINGS RATIONALE
The certificates are secured by an annual ad valorem tax, levied on all taxable
property within the city, within the limits prescribed by law. The certificates
are additionally secured by a limited tax pledge on the net revenues derived
from the operation of the city's combined utility system in an amount not to
exceed $1,000. The rating assignment and affirmation reflects the city's
moderately sized base located favorably in the Dallas/Fort Worth metropolitan
area, a history of strong financial management marked by healthy reserves
and manageable debt burden.
Favorable location in the Dallas/Fort Worth metropolitan area
Sound financial management marked by healthy reserves
Recent decreases in assessed valuations
Higher direct debt burden than rating median with future debt plans
DETAILED CREDIT DISCUSSION
FAVORABLE LOCATION CLOSE TO FORT WORTH; 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 total
taxable values in fiscal year 2011. The city is bisected by Highways 121, 183,
and 377 and Interstate 820. A large area of 820, within the city limits, has not
been developed, given limited access on and off the interstate. A state project
is underway that will expand I-820, by 2015, turning it into the North Tarrant
Express and the city's economic development corporation is focused on developing
back roads to provide access to the lots in order to spur future commercial and
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. Taxable values appear to be stabilizing as preliminary values for
fiscal year 2012 indicate an increase of 0.5%, revised from a prior expectation
of a 2.5% - 3.1% decline. 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, and there are currently no
plans to reduce 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 by $103,000 to $6.7 million, revised from a
prior expectation of $6.9 million due to the trend of sales tax collections.
Property taxes comprise about one-third - 32.8% of General Fund revenues and
22.9% of revenues is derived from sales taxes. Officials reported that sales tax
revenues are 2.1% ahead of the revenue projections for fiscal year 2011 as of
July, moderated from the 7.1% reported in 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 2.7% (excluding water and sewer self supporting debt)
and the overall debt burden of 6.5% is higher primarily due to overlapping debt
of local school districts. Following this issuance, the city has approximately
$13.8 million in authorized but unissued debt. Additional general
obligation bond issuances are planned through 2020 but are not expected to
exceed $3 million annually. With future debt plans, the debt burden 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
Preliminary 2012 Full valuation: $1.6 billion
2000 Population: 39,018
2012 Full value per capita: $36,570
2000 Per Capita Income: $17,740 (82.2% of US)
2000 Median Family Income: $42,706 (85.3% of US)
Direct debt burden: 2.7%
Overall debt burden: 6.5%
Payout (10 years): 62.8%
2010 General Fund balance: $6.7 million (33.4% of General Fund revenues)
Outstanding parity debt: $59.2 million
The principal methodology used in this rating was General Obligation
Bonds Issued by U.S. Local Governments published in October 2009. Please see the
Credit Policy page on www.moodys.com for a copy of this methodology .
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relation to the provisional rating assigned, and in relation to a
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Moody's Investors Service
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MOODY'S ASSIGNS Aa3 RATING TO THE CITY OF HALTOM CITY'S (TX) $2.3 MILLION COMBINATION TAX AND LIMITED PLEDGE REVENUE CERTIFICATES OF OBLIGATION, SERIES 2011
Moody's Investors Service, Inc.
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New York, NY 10007