Fitch Rates Virginia Biotech Authority's $36.8MM Bonds `AA+'; Outlook Stable
NEW YORK-(Business Wire)-September 29, 2009 - Fitch Ratings assigns its 'AA+' rating to approximately $36,820,000 Virginia Biotechnology Research Partnership Authority, Commonwealth of Virginia lease revenue refunding bonds (consolidated laboratories project), series 2009. The bonds are expected to be offered through negotiation on or about Oct. 8, 2009. Additionally, Fitch affirms the 'AA+' rating on the authority's outstanding lease revenue bonds. The Rating Outlook is Stable.
The bonds are limited obligations of the authority, payable from payments of basic rent made by the Commonwealth of Virginia, acting by and through its department of general services, under a lease agreement. Rental payments are subject to annual appropriation by the general assembly. Additionally, the authority provides a mortgage on the project. The payments are limited to $4.8 million annually for debt service, nearly all of which will be so utilized.
Lease provisions are strong, with the Commonwealth of Virginia required to make rental payments, subject only to legislative appropriations, for a laboratory facility and related parking for certain state agencies. The facility is part of a significant state and local economic development project in Richmond, the state capital. At present, the Virginia Biotechnology Research Park is home to 62 scientific entities employing more than 2,000 researchers, scientists and engineers in over 1.1 million square feet of laboratory and office space. Bond proceeds will refinance certain outstanding Commonwealth of Virginia lease revenue bonds issued in 2001. Those bonds financed the Biotech Six project, which developed laboratory space for two Commonwealth of Virginia agencies. The city of Richmond is responsible for a portion of the parking facility that does not constitute part of the project.
The Commonwealth of Virginia 's 'AAA' rating reflects its substantial economic resources, conservative approach to financial operations, which include periodic revenue forecast updates, and careful attention to the level of its debt obligations. While the national recession has affected state revenues, resulting in downward revisions totaling $5.6 billion over the course of the 2008-2010 biennium, Virginia has implemented balancing measures which include appropriation cuts, the replacement of pay-as-you-go capital spending with bonding, staff reductions, use of portions of federal stimulus monies for Medicaid and state fiscal stabilization, and a withdrawal of $490 million from the revenue stabilization fund in fiscal 2009. An additional withdrawal of $283 million was recently proposed, though legislative approval will be necessary. At the end of fiscal 2010, the fund is expected to hold approximately $300 million after the draw, representing 2.1% of fiscal 2010 revenues, down from $575 million at the end of fiscal 2009.
Additionally, Fitch has affirmed the outstanding Commonwealth of Virginia appropriation-backed 'AA+' ratings for the following:
—Virginia Port Authority state appropriation bonds;
—Fairfax County Economic Development Authority state appropriation bonds;
—Norfolk Industrial Development Authority state appropriation bonds;
—Newport News Industrial Development Authority state appropriation bonds;
—Big Stone Gap Redevelopment & Housing Authority state appropriation bonds.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, 'www.fitchratings.com'. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE.
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