Fitch Affirms Johnson Cnty Park & Recreation Dist, Kansas COPs at 'AA'; Outlook Stable
Press Release
Source: Fitch Ratings
On Monday July 20, 2009, 5:02 pm EDT
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CHICAGO--(BUSINESS WIRE)--In the course of routine surveillance, Fitch Ratings affirms its 'AA' rating on Johnson County Park and Recreation District, Kansas' (the district) approximately $35.7 million in outstanding certificates of participation (COPs), series 2002A, 2003A, and 2003B. The Rating Outlook is Stable.
The certificates represent an undivided ownership interest in the right to receive base lease payments under the lease agreement. The COPs are payable solely from legally available funds of the district and are subject to annual appropriation by the district board. Annual appropriations by the district are further subject to approval by the Johnson County Board of County Commissioners.
The 'AA' rating on the district's COPs reflects satisfactory legal provisions, a strong incentive and intent from the district and county to make annual lease appropriations, and favorable general credit characteristics. These characteristics include a growing and diverse tax base, high wealth levels, a low debt burden, and balanced financial operations. The Johnson County Board of County Commissioners (the county board) passed a resolution stating its intent, subject to annual appropriations made by the district board, to approve future funding for the certificates until final maturity in 2023. The county board's authority to select the park district board members and approve all district appropriations potentially decreases non-appropriation risk in future years. Non-appropriation risks are also offset, to some extent, by the district's countywide importance and sizeable park constituency.
The certificates were issued pursuant to a lease purchase agreement between the district and the trustee, which also serves as the lessor. Legal provisions under the lease agreement, including the district's covenant to make timely budget requests to the district board for appropriation for the lease payments and a debt service reserve, enhance certificateholder security. Lease payments are paid from the general fund, which receives the majority of its operating revenues from property taxes. General fund performance, particularly for a single-purpose district, is balanced, with the district historically transferring unencumbered reserves to the capital projects fund. However, for fiscal 2008, the district recorded approximately $700,000 in unreserved funds (or 4.4% of expenditures and transfers out) as it intends to build a minimum 8% reserve in the general fund balance. Additional financial flexibility is provided by the maintenance of sizable reserves in the capital projects fund, which totaled $2.1 million for fiscal 2008 as well as the district's ability to hold capital spending, typically one of the largest expenditure line items in the general fund budget. Preliminary fiscal 2009 results are expected to show a surplus, which will be dedicated toward achieving the minimum general fund balance goal.
Coterminous with Johnson County (the county), the district is located in northeastern Kansas and directly west of Kansas City, MO. With an estimated 2009 county population of approximately 560,000 (up 24% since the 2000 census), the district encompasses more than 9,500 acres and generates over 6.6 million visitations annually, attesting to its stability and the sizable constituency. In addition to participating in the extensive Kansas City metropolitan employment base, the county's own economy is broad and diverse and includes government, telecommunications, health care, and engineering services. While the county has seen an increase in unemployment due to the ongoing recession, rates remain well below those of the metro area and nation. The May 2009 county unemployment rate was a relatively low 6.4%, up from 4.1% a year ago. The district's tax base continues to record steady gains, increasing 4.6% annually from 2005. Further, county wealth levels are well above the state-wide average.
Debt ratios are modest, given the district's infrequent borrowing, enterprise fund support for a portion of outstanding debt, and the magnitude of the district's tax base and population. All COPs are retired by 2023. The district is currently considering a small COP issuance for later this year to fund a portion of its capital plan.
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.
Contact:
Fitch RatingsMark Campa, 512-215-3727, AustinMelanie A.J. Shaker, 312-368-3143, ChicagoorMedia Relations:Cindy Stoller, 212-908-0526, New YorkEmail: cindy.stoller@fitchratings.com
AI
