04/09/2019 (2) - Laserfiche WebLink

Home Browse Search

Fiscal 2018 results ended with approximately $50 million in unrestricted reserves, equal to about 46% in total general fund spending, reflecting continued growth in property tax and sales tax revenues and lower than budgeted spending, specifically in the areas of transportation and culture and recreation. The fiscal 2019 adopted budget is balanced and represents an approximate 3.5% increase from the 2018 original budget, reflecting an increase in the tax base, no millage rate increase, new positions, and various capital improvements and technology upgrades. DEDICATED TAX CREDIT PROFILE The spring training facility revenue bonds are payable from combination of a first lien on certain statutorily defined payments received from the State of Florida for professional sports facilities, the proceeds from the fourth cent TDT revenues levied by the county and 86% of the local government half -cent sales tax distributed to the county by the state. The lien on the TDT and half -cent sales tax will automatically release after April 1, 2021 (the final maturity date of the bonds is April 1, 2031). The state distribution payment is derived from the state general revenue fund. Fitch calculates the pledged revenue CAGR for the 10 year period ending fiscal 2018 at less than 3%. Pledged revenues, comprised largely of sales tax revenues, were adversely impacted by the outsized effects of the great recession, resulting in a 20% decline over from 2005 to 2010. Fitch expects future revenue growth to track the rate of inflation over time, due to economically sensitive nature of sales tax revenues and the county's continued growth in population and development. To evaluate the sensitivity of the dedicated revenue stream to cyclical declines, Fitch considers both revenue sensitivity results (using a 1% decline in national GDP stress scenario) and the largest consecutive decline in revenues. Based on the pledged revenue history, FAST generates a 3.7% revenue decline in a -1 % U.S. GDP decline scenario. The largest decline in historical revenues was equal to a steep 20% from fiscal 2005 to fiscal 2010. Fiscal 2018 pledged revenues of approximately $10 million provided very high MADS coverage of roughly 20x. MADS has been reduced to an amount that is just below the $500,004 annual state payment following a series of early bond redemptions from surplus funds. The current structure could tolerate a 96% decline in pledged revenues before MADS coverage reaches 1.0x. This level of tolerance is equivalent to almost 26x the FAST result and about 5x the worst historical loss during the time series of data reviewed by Fitch. Fitch considers these results to be consistent with an 'aaa' assessment. Although not expected, an increase in leverage to the 1.25x coverage requirement of the ABT would dilute the structure's resilience to potential revenue stress through the economic cycle, and would lead to a downgrade of the rating on the spring training facility revenue bonds. The ABT is based on a 1.25x coverage requirement from historical half -cent sales tax revenue alone, and is structured in a manner that limits risk to overleveraging given the release of the lien on such revenue in 2021. At that point in time, bondholders will only be backed by a lien on the statutory annual distribution of funds from the State of Florida general revenue fund. As noted above, the annual debt service on the bonds will be just below the amount of the state payment. EXPOSURE TO ISSUER OPERATIONS Fitch believes the pledged revenues would not meet the requirements set out in Fitch's criteria for treatment as "pledged special revenue" under section 902(2) of the bankruptcy code. Given the bond structure and the release of the lien on TDT and half -cent sales tax revenues, the rating on the bonds is capped by both the county's IDR and the rating that is one -notch below the state's IDR. Contact: Primary Analyst Grace Wong Director +1-212-908-0652 Fitch Ratings, Inc. 33 Whitehall Street New York, NY 10004 Secondary Analyst Kevin Dolan Director +1-212-908-0538 Committee Chairperson Michael Rinaldi Senior Director +1-212-908-0833 In addition to the sources of information identified in Fitch's applicable criteria specified below, this action was informed by information from Lumesis. Media Relations: Sandro Scenga, New York, Tel: +1 212 908 0278, Email: sandro.scenga@thefitchgroup.com 8