$45.9 million of debt affected
New York, September 26, 2012 --
Moody's Rating
Issue: Certificates of Participation, Series 2012; Rating:
Aa1; Sale Amount: $34,345,000; Expected
Sale Date: 10/4/2012; Rating Description: Lease Rental:
Appropriation
Opinion
Moody's Investors Service has assigned a Aa1 rating to the City of Fort
Collins, Colorado Refunding Lease Certificates of Participation,
Series 2012 in the amount of $34.3 million. The certificates
of participation (COPs) are secured by base rental payments, subject
to annual appropriation, from the City of Fort Collins, under
a lease purchase agreement issued with U.S. Bank National
Association in its capacity as trustee that is subject to annual termination
at the city's option. At this time, Moody's has also assigned
the city a Aaa issuer rating and affirmed the Aa1 rating on the city's
outstanding essential COPs. Proceeds from the sale of the leased
assets will fully refund the city's outstanding Series 2004 COPs.
RATING RATIONALE
The Aaa issuer rating reflects a stable economy buttressed by the presence
of Colorado State University, sound wealth levels typical of a college
town, a large tax base, favorable debt levels, and sound
fiscal operations despite some recent declines.
The Aa1 COP rating reflects the City's strong incentive to make annual
lease payments given that the largely essential nature of the leased assets
(city police building, deicing facility and open space funded by
dedicated sales taxes) and relatively affordable lease debt burden.
The stable outlook incorporates the expectation that city financial performance
has stabilized as the city benefits from new voted sales tax revenues.
The outlook further reflects the expectation that the local economy will
resume growth in the medium term and continue to benefit from growth in
the higher education and brewery sectors.
STRENGTHS
- Large tax base with strong institutional presence
- Sound fiscal operations despite some recent declines
- Low debt and lease burdens
- Essential nature of pooled leased assets
- Track record of voter support for targeted sales tax increases
CHALLENGES
- Recent trend of declining general fund reserves against declining
sales tax receipts
- City wealth measures are well below Aaa city medians, but
somewhat understated due to large student population
Outlook
The stable outlook incorporates the expectation that city financial performance
has stabilized as the city benefits from new voted sales tax revenues.
The outlook further reflects the expectation that the local economy will
resume growth in the medium term and continue to benefit from growth in
the higher education and brewery sectors.
WHAT COULD MOVE THE RATING UP
- N/A
WHAT COULD MOVE THE RATING DOWN
- Significant deterioration in the city's financial position
- Protracted decline in the city's full valuation
- Protracted decline in the city's sales tax receipts
The principal methodologies used in this rating were General Obligation
Bonds Issued by U.S. Local Governments published in October
2009, and The Fundamentals of Credit Analysis for Lease-Backed
Municipal Obligations published in December 2011. Please see the
Credit Policy page on www.moodys.com for a copy of this
methodology.
REGULATORY DISCLOSURES
The Global Scale Credit Ratings on this press release that are issued
by one of Moody's affiliates outside the EU are endorsed by Moody's
Investors Service Ltd., One Canada Square, Canary Wharf,
London E 14 5FA, UK, in accordance with Art.4 paragraph
3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies.
Further information on the EU endorsement status and on the Moody's
office that has issued a particular Credit Rating is available on www.moodys.com.
For ratings issued on a program, series or category/class of debt,
this announcement provides relevant regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides relevant regulatory disclosures in relation
to the rating action on the support provider and in relation to each particular
rating action for securities that derive their credit ratings from the
support provider's credit rating. For provisional ratings,
this announcement provides relevant regulatory disclosures in relation
to the provisional rating assigned, and in relation to a definitive
rating that may be assigned subsequent to the final issuance of the debt,
in each case where the transaction structure and terms have not changed
prior to the assignment of the definitive rating in a manner that would
have affected the rating. For further information please see the
ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
Information sources used to prepare the rating are the following:
parties involved in the ratings, parties not involved in the ratings,
public information, confidential and proprietary Moody's Investors
Service's information, and confidential and proprietary Moody's
Analytics' information.
Moody's considers the quality of information available on the rated
entity, obligation or credit satisfactory for the purposes of issuing
a rating.
Moody's adopts all necessary measures so that the information it
uses in assigning a 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 the ratings disclosure page on www.moodys.com
for general disclosure on potential conflicts of interests.
Please see the ratings disclosure page on www.moodys.com
for information on (A) MCO's major shareholders (above 5%) and
for (B) further information regarding certain affiliations that may exist
between directors of MCO and rated entities as well as (C) the names of
entities that hold ratings from MIS that have also publicly reported to
the SEC an ownership interest in MCO of more than 5%. A
member of the board of directors of this rated entity may also be a member
of the board of directors of a shareholder of Moody's Corporation;
however, Moody's has not independently verified this matter.
Please see Moody's Rating Symbols and Definitions on the Rating Process
page on www.moodys.com for further information on the meaning
of each rating category and the definition of default and recovery.
Please see ratings tab on the issuer/entity page on www.moodys.com
for the last rating action and the rating history.
The date on which some ratings were first released goes back to a time
before Moody's ratings were fully digitized and accurate data may not
be available. Consequently, Moody's 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 www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Bryan A. Quevedo
Analyst
Public Finance Group
Moody's Investors Service, Inc.
One Front Street
Suite 1900
San Francisco, CA 94111
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Michael Wertz
Asst Vice President - Analyst
Public Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's assigns Aaa Issuer Rating and Aa1 Certificates of Participation rating to the City of Fort Collins, CO; Stable outlook assigned
