General Obligation Limited Tax Police and Fire Building Construction Bonds, Series 2011
Expected Sale Date
General Obligation Limited Tax
NEW YORK, Sep 1, 2011 -- Moody's Investors Service has assigned an initial A1 rating to City of Bryan's
(OH) $5.0 million General Obligation Limited Tax Police and Fire Building
Construction Bonds, Series 2011.
SUMMARY RATINGS RATIONALE
The Series 2011 bonds are secured by the city's general obligation limited tax
pledge, subject to the ten-mill limitation. Proceeds of the bonds will finance
the majority of costs associated with the construction of a new public safety
building. Total project cost is $7 million and the city will finance the
remaining portion with $2 million in public safety reserves. Assignment of the
A1 general obligation rating reflects the city's modestly sized tax base
located 50 miles west of Toledo (general obligation rated A2/stable);
stable financial operations that are heavily dependent upon economically
sensitive income tax receipts; and affordable debt burdens with no
concrete plans to issue new debt in the near term.
-Stable and healthy reserve levels
-2011 assessed valuation increased, reversing a multi-year trend of tax base
-Reliance on economically sensitive revenues
-Multi-year trend of significant declines in assessed valuation from 2008 to
DETAILED CREDIT DISCUSSION
MODESTLY SIZED TAX BASE LOCATED 50 MILES WEST OF TOLEDO
We expect the city's modest $502 million tax base will remain relatively stable,
following three years of sizeable declines, given a recent increase in assessed
valuation in 2011. Comprising 5.5 square miles, the city is the county seat of
Williams County. Residential values declined from 2008 through 2010, with
annual assessed valuation declines of 5.3%, 3.6% and 8.0% respectively.
Favorably, in 2011, assessed valuation increased by 2.8%. Officials report the
city's largest employers are stable and some are expanding operations within the
city. The city's tax base is predominantly residential, and commercial.
Residential properties comprised 61.95% of the city's assessed valuation in
2011, while commercial properties comprised 37.18%. The city's largest employer
is the Bryan Community Hospital and Wellness Center, which is
currently undergoing a $62 million expansion project. The city has seen some
declines within the manufacturing sector. In 2010, New Era of Ohio, a local pump
manufacturer employing 138 people, closed its doors. Additionally, Global
Suspension Systems, LLC, an automotive stamping company that employs 143 people
at its Bryan plant recently announced the company will close its plant in
the city. Favorably, Ruralogic, a local company dedicated to repatriating
information technology, set-up headquarters in the city in 2010 and has a
business plan that estimates the company will bring 363 new jobs to the area.
Officials report that several local businesses including Spangler Candy Company,
Chase Brass, 20/20 Custom Plastics, and Altenloh-Brinck & Co. U.S. Inc. are
also planning expansions to existing local facilities.
The city's population increased by 2.5% from 2000 to 2010. The city's tax base
is somewhat concentrated as the ten largest tax payers accounted for 9.8% of
total assessed valuation in 2010. At 11.6% in June 2011, the unemployment rate
for Williams County is elevated, tracking just well-above state (9.2%) and
national (9.3%) levels for the same period. Wealth indices for the city track
below national levels, with median family income and per capita income at 91.8%
and 90.1% of national levels, respectively. We expect the city's tax base to
remain stable as the result of the stabilization of residential property values.
STABLE FINANCIAL POSITION SUPPORTED BY SATISFACTORY RESERVES;
SIGNIFICANT RELIANCE ON ECONOMICALLY SENSITIVE REVENUES
We believe the city's financial operations will remain stable as the result of
prudent budgeting practices, despite a considerable reliance on income tax
revenues, which comprised 75.2% of total General Fund revenues in fiscal 2010.
In 2009, the city's primary operating funds were its General Fund, 1% Income Tax
Fund and a portion of its Other Governmental Funds. The city ended 2009 with a
healthy total operating fund balance of $6.8 million (or 83.9% of total
operating revenues). In fiscal 2010, the city implemented GASB 54 and combined
the 1% Income Tax Fund and a portion of its Other Governmental Funds into
the General Fund, ending the year with a General Fund balance of $7.6 million
(or 90.7% of total General Fund revenues). The increase in the General Fund in
fiscal 2010 was largely attributable to a 4% increase in income tax revenues.
Income tax receipts peaked in 2007 at $6.8 million. Subsequently, the economic
recession drove receipts to decline in 2008 and 2009 by 2.7% and 8.5%,
respectively. The recovery in 2010 brought receipts back up to $6.3 million,
just short of pre-recession levels.
Officials expect the General Fund to end fiscal 2011 with a year-end General
Fund balance of $6.3 million (or 75% of 2010 level General Fund revenues). This
projected decrease is attributable to conservative income tax projections, an
unplanned capital expenditure (the purchase of a new garbage truck) and an
anticipated reduction in state aid of $73,000. Officials budgeted for a
10% reduction in income tax revenues in 2011, but report YTD receipts are
trending at approximately 2% above 2010 levels. In 2012, the city is projecting
General Fund reserves to remain at 2011 levels. The city does not have a formal
fund balance policy, but officials abide by an informal guideline of maintaining
a minimum General Fund balance of $1.5 million, a level the city has exceeded
AFFORDABLE DEBT BURDEN WITH NO ADDITIONAL NEAR-TERM BORROWING PLANNED
We believe the city's debt burden will remain affordable due to a lack of
near-term borrowing plans and affordable debt levels. At 1.5% of full value, the
city's direct debt burden tracks above state and national medians. At 1.7%, the
city's overall debt burden tracks below state and national medians. Principal
amortization is slow, with 41.9% of principal retired in ten years. Officials
report the city has no concrete plans to issue additional debt in the near-term,
though the city is considering a potential lease option in the long-term
in connection with a renewable energy project. Given affordable debt levels and
a lack of near-term borrowing needs, we expect the city's debt profile will
remain manageable. All of the city's outstanding debt is fixed rate and the city
is not party to any interest rate swap agreements.
WHAT COULD CHANGE THE RATING UP:
-Significant expansion and diversification of the city's tax base
-Substantial improvement in socio-economic indices and significant reduction in
WHAT COULD CHANGE THE RATING DOWN:
-Significant erosion of the city's tax base and/or weakening of socio-economic
-Deterioration in General Fund reserves to a level inconsistent with similarly
Census 2010 population: 8,545 (2.5% increase from 2000 population)
2011 estimated full market valuation: $502 million (2.5% average annual decrease
Estimated full value per capita: $58,748
Per capita income as % of U.S. (1999): 90.1%
Median family income as % of U.S. (1999): 91.8%
Williams County Unemployment rate (June 2011): 11.6%
FY 2010 General Fund balance (GAAP): $7.6 million (90.7% of total General Fund
Debt burden: 1.7% (1.5% direct)
Principal amortization (10 years): 41.9%
Post-Sale GOLT debt: $5.0 million
PRINCIPAL METHODOLOGY USED
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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Public Finance Group
Moody's Investors Service
Public Finance Group
Moody's Investors Service
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MOODY'S ASSIGNS INITIAL A1 RATING TO CITY OF BRYAN'S(OH) $5.0 MILLION GOLT POLICE AND FIRE BUILDING CONSTRUCTION BONDS, SERIES 2011
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