Fitch Ratings, an international ratings agency headquartered in New York and London, assigns an 'A+' rating to Alachua County, FL's approximately $15 million gas tax revenue bonds, series 2006. The bonds, expected to be insured by an 'AAA' rated bond insurer, are scheduled to price competitively on March 28. Proceeds from the 2006 bonds will be used to fund County road improvements.
The 'A+' rating on the gas tax revenue bonds is based on the relatively stable nature of the pledged revenue stream, ample coverage by pledged revenues, and satisfactory legal provisions. The rating also takes into consideration the County's general credit characteristics, including a stable economy anchored by higher education and healthcare, low debt levels, and consistently sound financial performance. Credit risks include below average wealth levels and a high tax rate, the latter providing limited financial flexibility under the state’s permitted 10-mil cap.
The gas tax revenue bonds are secured by three different gas taxes: the County gas tax, the constitutional gas tax, and the ninth cent gas tax. While gas tax revenues are prone to some fluctuation relative to economic factors and the price of fuel, the essential nature of the commodity in large part mitigates this concern. In addition, strong population growth in the state and County has resulted in increased fuel consumption, adding strength to credit quality.
For the past five fiscal years, pledged revenue has grown at an average annual rate of 3.6%, including 5.5% in fiscal 2005. There is no expiration date for any of the pledged gas taxes. The County tentatively plans to issue an additional $15 million of parity bonds in fiscal year 2007.
Located halfway between the Gulf and Atlantic Coasts in north central Florida, Alachua County's economy is focused around a fairly stable government employment base. Major employers include the University of Florida (18,000 employees and 46,000 students), Shands Healthcare (7,500 employees) and the Florida Department of Children and Family (2,100 employees). The County's unemployment rate is historically lower than state and national levels and was a relatively low 3.4% in 2004. Income indicators are below state and national averages due in part to the large student population.
The County's debt and financial characteristics are sound. The general fund has benefited from positive operating results since fiscal year 2003, increasing the unreserved fund balance to $13.6 million, equal to 15% of spending, a strong reserve level for a Florida County. County officials report that year-to-date results in the general fund indicate balanced operations with no draw on reserves. County debt levels are very low. Including this issue, overall debt is $526 per capita and 1.64% of taxable assessed value (TAV). The County tax rate is a high 8.9887 providing little taxing flexibility under the state’s 10-mill cap.