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Home My WebLink About2001 09 06 Fitch IBCA Public Finance Report~°~ FITCH IBCA rn. m~.,~,row waor ne<~,r Public Finance ^ Risks • Residential-based economy focused on scrvicc sector. • Potential for declines in pledged rcvcnuc as a result of deregulation in electric utility industry, offset by essentiality and moderate rases. ^ Bond Provisions Security: The bonds are secured by public scrvire tax and franchise fee revenue. These two sources of revenue equal 25% of general fund revenue. Public service taxes are levied on the purchase of electricity, water, telephone, gas, and propane. Since taxes on electricity sales represent more than 70%. of total public service tax revenue, electric deregulation is a consideration. The essentiality of the scrvicc, along wish moderate rates in Florida, olTset the risk dcu funlm rcvcnuc growth will be negatively affected by incmased competition. Growth in public service tar revenue has averaged 9 % annual ly since 1990. The city also pledges the franchise fcc income received from Florida Power Corp., which is equal to 6%of all electrical energy sales within the city limits- Franchise fee revenue represents close to 40'% of the total pledged revenues. The current contract with Florida Power expires prior to maturity and the tcnns of a new agreement are uncertain at This time. II u favorable agreement cannot be reached, the city hus the option of purchasing the facilities and pledging any net revenues from such operations to the scrvicc of these bonds. In addition, the city maintains the ability to Icvy franchise fees on .any future electric scrvicc providers. Poblic service taxes alone provide adequate coverage of debt serviw and help lessors the impact of thepotenlial future lossof franchise fcc rcvcnuc. Coverage: Historical public service tax rcvcnucs provide coverage of MADS of 1.39x, which will occur in fiscal 2018. The additional franchise fee pledge boosts coverage of MADS in fiscal 1998 to 2.26x. Total rcvcnuc from both sources in fiscal It)98 was 52.7 million. Debt Statistics ($000, At Sept. 30, 19981 Revenue Bonds 72,325 This Issue 8,000 Less: Refunded Bonds 2 875 Total Direct Debt 17,450 Overlapping Debt 22424 Total Overall Debt 3g,g7q Debt Ratios Direct Debt Per Capita I$I` 614 As % of Markel Value" 1.60 Overall Debt Per Capita ($I` 1,404 As % of Market Value" 3.66 'Population: 28,40411998 estimates. "Market value: 81,089,684,000 Iliscal 19981. Reserve Rcyuirement: A suety bond provided by Ambac Assurance Corp, trill fully fund the reserve account Pursuant to the resolution, the level of funding in the reserve aaonnt in any bond year will be equal to the lesser of MADS or 12S°/, of average annual debt sen ice. :Additional Bonds: The bond resolution limits future issuance of bonds on parity The city may issue additional bonds on parity as long as coverage of outstanding and proposed debt scrvicc is at Icast equal to 1.25x. Limited capital needs and conservative management should limit funln leveraging of the pledged rcvcnuc,. ^ Debt Winter Springs maintains a very comervativc debt policy frith infrequent isstrancc and minimal capital needs. Direct debt is low, representing 5614 per capita and 1.60% of market value. Inclusion of overlapping debt I}om Seminole County and the county school board increases overall debt to 3.66°/~ of market value. ~°~ FITCH IBCA tn. m~.,~,ron,i aurae p'^q Public Finance intended for public use. A portion of the proceeds will fund the rehabilitation of housing units in an effort to uuns'lonn current rental apartments into condominiums. A small pan of the issue will provide money to d1c ~oasing authority. Future capital plans nee minimal Consistent with historical policy, the majority of capital needs, primarily for road improvements, will be funded on a pay-as-you-go basis. The city is currently considering participating in the constrction of a new town center as part of a dowmown development project Infrastructure and a small amount of financial support will be provided by the city to lay the foundation for private dcvclopment. ^ Finances Strong financial operations are highlighted by long- time stable management and lane fund balance levels. Conservative financial management has consistently resulted in operating surpluses and significant financial Flexibility. The undesignated general fund balance at fiscal year-end 1998 was equal to about 26% of expenditures and transfers, a slight decline from previous levels due to outlays for capital spending. Public safety expenditures account for more than 40% of general fund spendine, while debt service represents a modesl9%. Financial Performance" ($000, Fiscal Years Ended Sept. 301 1996 1997 1998 Taxes/Special Assessments 2,817 3,004 3,254 Public Service Tax Revenue 1,490 1,491 1,665 Electric Franchise Fees 928 919 1,032 Intergovernmental Revenue 1,9fi9 2,094 2,394 Other 1,600 1,662 1,845 Net Transfers In 139 94 123 Total Revenue/Transters In 8,943 9,264 10,313 The new issue of bonds will fiord recreational General Government Public Salety 1,517 3,667 1,741 4,054 2,322 4 662 facilities, public housing projects, and traffic control Debt Service 1,012 963 , 968 improvements. Some of the generated funds will Capital Outlay 265 387 877 upgrade and maintain a highly integrated tntil sysrcm Other 1790 1713 1854 Total Expenditures 8,201 8,858 10,683 Public Service and Franchise Fee Revenue ($000, Fiscal Years Ending Sept. 301 - 1995 1996 _ 1997 _ 1998 1999' ------ Pubslc Service Tax 7,307.1 1,485.1 1,485.1 1,676.6 1,671.4 Franchise Fees 845.7 931.9 918.3 1 037 0 988.8 Total 2,152.2 2,417.0 2,403.4 2,713.6 2,660.2 MADS Coverage lxl" 1.7g 2.01 2.00 2.26 2.21 MADS Coverage Wilhoul Franchise, Fees (xll 1 09 1.29 1 24 1.39 1.39 'Approved hudgel."Maximum annmil Buhl service IMAUtiI oaui~ in 201x. Illssume~ Irnnrbis~~ atlrecnienl with Flurida nowei Curp. is n,H renewed prior In maturity. MADS rrtnal.v $1.2 inilliun. Net Surplus/fDeficltl General Fund Balance Undesignated Fund Balance As %ol Expendituresl Transfers 880 500 (246) 2,720 3,159 2,711 2,657 2,806 2,517 36.56 35.5b 25.91 'Includes general, debt service, public s°rvice laa, end evcise tax funds. Nose: Numbers may not add due to rounding. Market Values and Construction i$000, Fiscal Years Ended Sept. 30) Residential Market Value Construction 1994 851,649 46,965 1995 901,713 44,425 1996 984,316 43,550 1997 1,028,389 50,428 1998 1,089,664 56,760 Strong gains in taxable property values have resulted in the maintenance of low tax rates. The city property tax rate of 3.6 mills is well below the state's 10-mill cap. Depending on the success of development programs and their impact on assessed valuation growth, tax rates are projected to remain stable. ^ Economy With its strong residential base, Winter Springs' economy is concentrated in the service sector. The city is located well north of the tourist attractions south of Orlando and is linked to a multilane restricted access road system (the Greene Way). Although not a major thruway, the Greene Way provides residents who commute with convenient acces's without bringing in the congestion of the major interstate systems, which are located to the east and west of the city. While the city does not realize the bene5ts that tourism provides to Orlando and the areas that directly surround it, it is able to avoid the strains on infrastmcture caused by a large influx of tourists. Population, estimated at 28,404 in 1998, has grown 28%a this decade. The city is more than 70°/ developed, and at the cument growth raft, city officials expect complete build-out by 2006. New residential construction has been strong, averaging 5% of market value every year for the past five years. The growth in the labor force has averaged 3.2% since 1991. The unemployment rate, at 2.4% in fiscal 1998, is below national, state, and Orlando area averages. Major employers in Seminole County include Publix Supermarkets (2,344 employees), Siemens Telecom Network (1,500), Florida Hospital- Altamontc (1,416), Seminole Community College (1,250), and the American Automobile Association (1,200). Per capita income in the county in 1997 was equal to $26,068, 105% and 103% of state and national averages, respectively. Winlcr Springs, Florida -- Winter Springs, Florida RECEIVED ~°~ FITCH IBCA Tk Inurn~,iwl Rainy Agmry Public Finance (~) FITCE-[IBCA ilie ln,cn~.~uonal R~nng Agenry sEP o s too Public Finance CITYH L tC ee~`eM1c~ Tax Supported Winter Springs, Florida New Issue Ratings ^ Outlook New Issue The underlying'A' rating reFlecis adequate debt service coverage from Improvcmcm Refunding Bonds, a fairly stable revenue base and positive overall credit factors. General Scrics I9')9* ..................._........__.._.....A credit characteristics include low debt levels and very minimal capital Outstanding Debt plans, strong financial management with ample flexibility, and a Improvcmcm Refunding Revenue service-based residential economy. Bonds. Scrics 1997 ........................._..._A rrh. M~na.:Ir<„a,~l,.l ~° n,• r„~•e non n.,~•a °° °° More than 70% of public service taxes and all franchise fees are ~, p°hq r ~,° nnm.~o ns„r,ll,r° c„m. wn°~ 11 ' related to the sale of electricity. The moderate residential electric rate clninu payin~ ahili,y is ~a,cJ 'Ann by Etch 16CA. The ~~ne~~ivn,a n rm.°6 r~nrrn n°°a ,°rnras »an°w stmeture of Florida utilities and the essential nature of the service °°~~+~a~~~.~~~~,~,~~rll,.• I~,~~°r~• mitigate the risk of substantial revenue declines that could result from increased competition after deregulation. Analysts Chad H. Farrington ^ Rating Considerations 212 9DR-ORRfi Primarily a residential community, Winter Springs is situated northeast cGnrington(n titchibca.C1°' of the Orlando metropolitan area in Seminole County. Because of the Jason F. Dickerson city's distance from the major tourist attractions, located south of 21Z908_gfigd Orlando, and its remote location from major thruways, the local jdickcrson(~iJitchibca.com economy is focused more on retail and services with a small presence in light manufacturing. Issuer Contact Ron McLemore Debt service for this issue and for all parity bonds will be paid from Oily M;magcr public service tax and franchise fee receipts. Coverage of maximum 4D7327-IRINI annual debt service (MADS) in fiscal 1998 was 2.26 times (x). The uncertainty of future franchise fee income after contract expiration is New Issue Details mitigated by sufficient coverage from public service tax revenue alone SR,DIJD,U00 Improvcncm Refunding Rcvcnue and the ability to levy franchise fees on future electric providers. bonds, Scrics I')99, are scheduled In be sold competitively on June 9. The bonds will City direct debt is low, with minimal future capital needs. mantrc serially Oct. I,1999-2D29. Infrastructure already in place has accommodated the growth the city Security: Public service tax revenue and experienced during this decade, and with more than 70% of the city franchise fees received from Florida Power already developed, future demand for city services is limited. Overall Cntp. secure Ihis bond issue, which is issued debt is moderate with the inclusion of outstanding school board debt. on parity with the series 1993 bonds. Purpose: proceeds will fund various capital improvement projects within the city, Financial flexibility is strong. Long-time stable management and including recreational facilities, public positive economic factors have resulted in large fund balance levels. housing prx,jemR, and uaffic control Together, public service tax and franchise fee revenue represent more improvcmcnt,c_ A pnuion of the proceeds will than 25°/a of general fund revenue. Growth in assessed values has he placed in an escrow account li,r the allowed property tax rates to remain well below the state's 10-mill cap. pllrry,,ac of rehmding uutscmding sciics 19X9 bonds. ^ Strengths • Good historical debt service coverage. • Moderate debt levels, with minimal capital plans. • Large fund balance and ample financial flexibility. • Abovcavemge income levels. t'npy,iRln r, I VIII Iry rii,~M1 In('A.lirc., Ilnr Sir tilnx, I'I:rin NY. NY tINNIJ r'I °Inn<. New Yi~M.I-MIMI~]S~~4X]0, 11121'NIM-°SIXII 12121 ~R~1-0El<,ll F II I 1 I I ~ 111.1. 'i~ldll lli, I.Jim.llll JJ lit VI~9212. ren1111CJ 111JI143A25 I. ~~iu,~,(~h11V51 dXJ ~,i1 ~11,I.~A~1~!, luM1i r~~nle ° M1l ,i,r. M'A~rnr Ulu dl. Il rue ~,. S h ,rlu k~vfi~. a~lo ll .~ i,~. ~l. tic iy ICI I iii. hl,invF ~i ICI .r I` r ,I I, I lin~iiun Al,n:µ,,:l~f~rll4,y, rlnanw l'p,°S: ndri War IEr%nrlnr+iv.lr M:n ,I~ .I FI.1 nE •~.Irn,~v nn. I nl.h 4tin.~,i~l :lnnr Y. P,ik, Y Psi, .Iiihii:J.vrl~iM I, IluM1rn RivnJai,-in~,ful~hnlni~E nriai:xn~hininlli Anx~rirm niml M:~ilfi+_Inr.NY.N1 I~~nJ H. .tir M1.il~ [ „~~,~ ~~, riicli lnl~r E. in h,: I.nnGn ,~h,J lio Acr~~hh1~• I ~.~ - Ilii,li ll~~, 1~~. lii ar ~ v li,~inl ny l~i,1 ,~Il, npe ,In~,l. µl,~.~exhl ,II.~ ~•I ~~ .. ~. .li. i. 1' ulxi .III ,I III ,y~~iiiy. N ~I~ I nlrl. .., ,n. ~ ~ ail' I y. , ~, hin,Y rIY nJc in lu iiyl I IIIA,u.~~~. I'„ .I. I.u n~ ... I1, .Wh ~,y n;I t~ rri I ~~l III 1 II ~, .II d II I. ..i I ii I I ,I iv k uel I ~.n 1 FI! ~ II I II. ., it I I rl ulw-, ~ ~~I vtl~~l Ir~.~l .r.. ~1 ~~~~~ ~.I 11 nN -, a+~~nl,iLlr iu,~l,r,n~uk anF~~iiM~i~ un4i~i il~ri~~ il,iy~ ~~i M1,~ ili.~o nniii.iiMiil~ri. nniv n. Winter Springs, Florida June 3, 1999 www lilchibca.com