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MOODY'S ASSIGNS INITIAL A1 RATING TO GRADY COUNTY'S (GA) $15 MILLION REVENUE BONDS (GRADY COUNTY RECREATIONAL FISHING LAKE PROJECT), SERIES 2010, ISSUED THROUGH SOUTH GEORGIA GOVERNMENTAL SERVICES AUTHORITY, GA

18 Oct 2010

Grady (County of) GA
County
GA

Moody's Rating

ISSUE

RATING

Revenue Bonds Bonds (Grady County Recreational Fishing Lake Project), Series 2010

A1

  Sale Amount

$15,000,000

  Expected Sale Date

10/26/10

  Rating Description

General Obligation

 

Opinion

NEW YORK, Oct 18, 2010 -- Moody's Investors Service has assigned an initial A1 rating to Grady County's (GA) $15 million Revenue Bonds (Grady County Recreational Fishing Lake Project), Series 2010, issued through the South Georgia Governmental Services Authority, GA.

RATINGS RATIONALE

Pursuant to an intergovernmental contract, the 2010 bonds are secured by the county's absolute and unconditional pledge to levy a property tax, without limit as to rate or amount, to cover debt service on the bonds. Bond proceeds will be used to construct a recreational lake within the county. The A1 rating reflects the county's moderately sized, rural tax base with significant taxpayer concentration, ample reserve levels, and an average debt burden.

RURAL TAX BASE; SIGNIFICANT TAXPAYER CONCENTRATION

Grady County, located in the southwestern corner of Georgia (G.O. rated Aaa/stable outlook), is approximately 20 miles north of Tallahassee, Florida and is largely undeveloped, with approximately 47% of county land reserved for conservation. The county has experienced moderate tax base expansion over the last five years with full property valuation increasing to $1.9 billion in fiscal 2010. Similarly, assessed valuation growth has averaged 4.8% over the same period, which includes a 1.5% decrease in fiscal 2010 due to the effects of Act 163 (House Bill 233) and Senate Bill 55. Act 163 (House Bill 233) was approved by the General Assembly during the 2009 legislative session and establishes a three-year moratorium on growth during which time no increase in assessed value of real property (tax years 2009-2011) is permitted. The law specifically allows assessed values to decline, a factor that is compounded by Senate Bill 55, which requires foreclosures to be counted as fair market sales for property reappraisal beginning with tax year 2009. County officials expect to see a slight decline in assessed values in fiscal 2011, driven by declining residential property values. The county has significant taxpayer concentration, with the top ten taxpayers accounting for 25.4% of 2009 assessed values. The largest taxpayer (7.5%) and second largest employer (376 employees) is Monrovia Growers, a wholesale nursery. Other top taxpayers include Timken Corporation (Senior unsecured Baa3/stable outlook), Grady Electrical Membership Corporation and Higdon Grocery IRA, who comprise 11% of assessed value. Management reports that taxpayers are stable and do not report any issues with timeliness of property tax payments. Countywide unemployment as of August 2010 was a low 9.1%, below the 10.3% statewide rate. Full value per capita is in line with the national median, but below the state, at $76,854.

STRONG FINANCIAL POSITION

Moody's believes that the county's strong financial position will be maintained given management's conservative budgeting practices. Officials have an informal target of maintaining fund balance equal to 3 months (25%) of operating expenditures. However, due to the county's dependence on property tax revenues, reserves have historically been well in excess of this target given that the majority of property taxes are collected in the last two months of the county's fiscal year. The county reported three consecutive years of operating surpluses, increasing General Fund balance to $11.4 million (an ample 103.9% of revenues) in fiscal 2009 from $8.5 million (73.6% of revenues) in fiscal 2007. The surplus of $1.3 million in fiscal 2009 (ended December 31) was driven by expenditure savings. The fiscal 2010 budget is relatively level to the prior year's budget and was balanced without the appropriation of fund balance. Officials are projecting a decline in fund balance, to approximately $8.6 million (a still-ample 78.6% of projected revenues) due to $2.9 million in capital outlay associated with the current lake project. Bond proceeds include funds to reimburse the county for this one-time expense. Going forward, the fiscal 2011 budget is balanced with the use of $600,000 of fund balance and includes a 1.5% increase in expenditures over the prior year.

CAPITAL PROGRAM SUPPORTED BY DEDICATED SPLOST REVENUES

Moody's expects the county's debt burden to remain manageable, given the absence of near-term borrowing plans and the use of a voter-approved 1% SPLOST to fund debt service and a majority of future capital needs. The county's direct debt burden is an average 1% of full valuation. The county's overall debt burden of 2.5% includes the overlapping debt of the countywide school district and various municipalities.

In March 2007, voters authorized the county to renew its SPLOST program as of April 1, 2008, which is expected to deliver up to $16 million in dedicated sales tax revenues to the county through March 2014. Officials will likely issue a referendum to renew the SPLOST in advance of its expiration. Amortization of outstanding principal is below average, with 41.4% retired within 10 years, and all general obligation debt will be retired within 20 years. All of the county's debt is fixed rate and the county is not party to any swap agreements. No future borrowing is planned at this time.

WHAT COULD MOVE THE RATING UP

-Substantial tax base growth and an improved demographic profile

-Diversified tax base

WHAT COULD MOVE THE RATING DOWN

-Significant deterioration of reserves

-Declines in tax base values pressuring the county's primary operating revenue

KEY STATISTICS

2007 population: 25,042 (5.8% increase since 2000)

2010 full valuation: $1.9 billion

2010 full valuation per capita: $76,854

1999 Per Capita Income: $14,278 (67.5% of state, 66.1% of nation)

1999 Median Family Income: $34,253 (69.5% of state, 68.4% of nation)

Debt Burden: 1.0%

Payout (10 years): 41.4%

FY 2009 General Fund balance: $11.37 million (103.9% of fund revenues)

Post-sale parity debt outstanding: $18.6 million

The principal methodology used in rating the County of Grady (GA) was General Obligation Bonds Issued by U.S. Local Governments, rating methodology published in October 2009. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found on Moody's website.

REGULATORY DISCLOSURES

Information sources used to prepare the credit rating are the following: parties involved in the ratings, 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

Lauren Von Bargen
Analyst
Public Finance Group
Moody's Investors Service

Cesar Avila
Backup Analyst
Public Finance Group
Moody's Investors Service

Julie Beglin
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 INITIAL A1 RATING TO GRADY COUNTY'S (GA) $15 MILLION REVENUE BONDS (GRADY COUNTY RECREATIONAL FISHING LAKE PROJECT), SERIES 2010, ISSUED THROUGH SOUTH GEORGIA GOVERNMENTAL SERVICES AUTHORITY, GA
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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