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Fitch Rates Boulder County, Colorado's Open Space Sales & Use Tax Bonds 'A+'; Outlook Stable
NEW YORK-(Business Wire)-October 3, 2008 - As part of its routine surveillance, Fitch Ratings has affirmed Boulder County, Colorado's (the county) $1.5 million open space sales & use tax revenue bonds, series 2000B at 'A+'. The Rating Outlook is Stable.
The bonds are special, limited obligations of the county, payable solely from and secured by an irrevocable first lien on 100% of the net revenues from the county's 0.25% sales and use tax, which is reserved for trails, open space acquisition and maintenance, and repayment of bonds for such purposes.
Boulder County's 'A+' rating reflects the dedicated use of the pledged revenue stream, strong debt service coverage for the 2000B bonds' remaining two maturities, favorable demographics, sluggish tax revenue growth and its past susceptibility to economic downturns. Additionally, the county maintains low debt levels and county officials do not plan further leveraging of this revenue stream. Strong financial planning and conservative management practices have contributed to the county's sound financial operations. The county is located in a competitive retail sales market, although a large, retail development has recently been completed in the city of Boulder, which Fitch anticipates will boost sales and use tax revenues over the near term.
Bonds are secured by a 0.25% sales and use tax first approved by voters in 1993. Originally set to end in 2009, the tax was extended to 2019. The majority of the pledged revenue is generated from its broad-based sales tax component. County tax collections have exhibited modest gains from historic levels; increasing slightly more than 2% annually since 2002. The departure of the city of Broomfield from Boulder County's tax base in 2001 to form a separate county had a larger negative impact on these revenues than previously anticipated, as revenues declined 21% from the prior year. In conjunction with the recessionary period that followed, sales & use tax revenues declined or made smaller than historic gains, and has only recently returned to more historic levels. Projected revenue gains over the near term remain modest, however, due to current economic conditions that are reflected in flat year-to-date results. Maximum annual debt service including these bonds and a 2006 issue on parity is covered a strong 4.0 times (x) based on conservative revenue estimates for 2008 and 2009, well above the 1.3x additional bonds test. Debt service was covered 4x by fiscal 2007 pledged revenues.
Well-regulated open space requirements and overall good quality of life characteristics have attracted a wealthy population base. Both wealth and employment levels exceed state and national average. With an estimated population of roughly 290,000 that includes around 30,000 students at the University of Colorado at Boulder, the county is located approximately 22 miles northwest of Denver and encompasses a large 733-square mile area bordering the eastern edge of the Rocky Mountains.
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.
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