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MOODY'S ASSIGNS Aa3 RATING TO THE TOWN OF TELLURIDE, COLORADO, GENERAL OBLIGATION BONDS, 2010

12 Oct 2010

$10.0 MILLION OF DEBT AFFECTED

Municipality
CO

Moody's Rating

ISSUE

RATING

Tax-Exempt General Obligation Bonds Series 2010A

Aa3

  Sale Amount

$1,690,000

  Expected Sale Date

10/27/10

  Rating Description

General Obligation Bonds

 

Taxable General Obligation Bonds (Direct Pay Build America Bonds) Series 2010B

Aa3

  Sale Amount

$8,310,000

  Expected Sale Date

10/27/10

  Rating Description

General Obligation Bonds

 

Opinion

NEW YORK, Oct 12, 2010 -- Moody's Investors Service has assigned a rating of Aa3 to the Town of Telluride, Colorado, Tax-Exempt General Obligation Bonds, Series 2010A and Taxable General Obligation Bonds (Direct Pay Build America Bonds), Series 2010B expected to be issued in the aggregate amount of approximately $10.0 million. The bonds are secured by an unlimited property tax pledge and the full faith and credit of the city. Bond proceeds will be used to construct water facilities for the town.

RATINGS RATIONALE

The Aa3 rating is primarily reflective of a relatively small local economy which benefits from year-round tourist related activity but has been affected by the recession somewhat in the short-term, a somewhat small, but wealthy tax base, and historically well-maintained financial operations with healthy general fund balances despite the recession, and moderate debt burden.

SMALL, AFFLUENT MOUNTAIN RESORT TOWN LOCATED IN SOUTHWEST COLORADO

The Town of Telluride is a small, affluent ski resort-based city located in southwest Colorado and serves as the seat of San Miguel County. Since the 2000 census, the town's population has increased only 6% to an estimated 2,348 permanent residents. During peak ski season the town's day population reportedly increases to nearly 11,000. Large employers within the county are primarily comprised of resort related entities as well as local government and healthcare. As of August 2010, the town's unemployment rate increased to 11.5% compared to 8.0% for Colorado and 9.5% for the U.S.

Growth in the town's estimated full value has averaged 9.4% annually over the last five years, reaching an estimated $2.42 billion in 2011. According to the 2000 census, Telluride's wealth indices compared favorably to the state with per capita and median family income levels at 162% and 118% of state levels, respectively. Further, full value per capita is very strong at $1.03 million.

FAVORABLE FINANCIAL POSITION

Moody's expects that the town's financial position will remain healthy given conservative budgeting practices and a history of steady general fund reserves despite the recent downturn in primary operating revenues. The town's primary operating revenues source for the general fund are sales taxes (26% in FY09) and transfers-in from the capital improvement fund (25%) which are also largely derived from consumer activity. Between fiscal 2005 and fiscal 2008 the town's total general fund balance averaged a healthy 24.1% of general fund revenues ($1.8 million). Although general fund sales tax revenues declined slightly in FY08 and about 10% in FY09 management was able to offset the decline in revenue by cutting some general expenditures and delaying discretionary capital projects. As a result, the transfer-in amount from the capital improvement fund was below the prior year and the FY09 total general fund balance increased slightly to 28.4% of general fund revenues ($1.9 million). Management notes roughly $2 million of capital improvement fund balance is legally available to the general fund further bolstering available reserves if necessary.

According to management, a combination of controlled expenditures from the prior year and a recent improvement in year to date sales tax receipts, the FY10 and budgeted FY11 total general fund balance should at least mirror or likely improve relative to FY09 reserve levels. The Town's most recent collections (August, 2010) are up 18% year-over-year. As a result, Moody's expects that the town's finances will remain generally sound, supported by the town's prudent budgeting practices to match spending increases with recurring revenues.

MODERATE DEBT BURDEN

The town's direct and overall debt burden are moderate at 1.1% and 1.3% respectively. The town has no plans to go back to voters for additional borrowing authorization in the next five years. Payout of the current sale is below average at 44.2% in ten years.

What would make the rating go - UP

- Significant and sustained increases in assessed value

- Maintenance of healthy general fund reserves

- Improvement in socioeconomic indices

What would make the rating go - DOWN

- Steady decline in assessed value

- Deterioration of financial operations and general fund reserve levels

- Decline in socioeconomic indices

KEY STATISTICS:

Estimated population, 2009: 2,348

2011 Full value: $2.42 billion

Full value per capita: $1.03 million

1999 census per capita income: $38,832 (161.5% of state)

1999 census median family income: $66,136 (118.3 of state)

FY09 total General fund balance: $1.94 million (28.4% of revenues)

FY09 Unreserved and undesignated GF balance: $1.60 million (23.3% of revenues)

Direct debt burden:1.1%

Overall debt burden: 1.3%

Payout of principal (10 years): 44.2%

The principal methodology used in rating the Town of Telluride, Colorado, Tax-Exempt General Obligation Bonds, Series 2010A and Taxable General Obligation Bonds (Direct Pay Build America Bonds), Series 2010B was General Obligation Bonds Issued by U.S. Local Governments rating methodology published in October 2009 which can be found at www.moodys.com in the Rating Methodologies sub-directory under the Research & Ratings tab. Other methodologies and factors that may have been considered in the process of rating the current offering can also be found in the Rating Methodologies sub-directory on Moody's website.

The last rating with respect to the Town of Telluride, Colorado, was on August 3, 2010 when a Aa3 Issuer Rating and A1 lease revenue bond rating were assigned.

REGULATORY DISCLOSURES

Information sources used to prepare the credit rating are the following: parties involved in the ratings, public information, confidential and proprietary Moody's Analytics' 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

Dan Steed
Analyst
Public Finance Group
Moody's Investors Service

Patrick Ford
Backup Analyst
Public Finance Group
Moody's Investors Service

Matthew A. Jones
Senior Credit Officer
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 TOWN OF TELLURIDE, COLORADO, GENERAL OBLIGATION BONDS, 2010
No Related Data.
© 2019 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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