AUSTIN, Texas - (Business Wire) As part of ongoing surveillance, Fitch Ratings affirms the 'BBB+' rating for the Town of Parker, Arizona's approximately $1 million in outstanding street and highway revenue bonds. The Rating Outlook is Stable. The 'BBB+' rating reflects the town's stable overall financial performance, an absence of additional borrowing plans with no other outstanding bonded debt, and still solid debt service coverage levels that have declined slightly since Fitch's last rating. Also considered in the rating is the uneven growth of pledged revenues, a narrow local economy, dependency on economically volatile sales tax for general operations, and minimal formal financial controls. The pledged revenues are derived from taxes, fees, charges, and other moneys levied on motor vehicle fuel and registration that are collected by the State of Arizona and distributed to the town for street and highway purposes. Maintaining solid levels of reserves will be a key rating driver, given the current revenue pressures associated with the weakened Arizona economy and more recently competitive local retail environment.
Located on the east bank of the Colorado River, the small town of Parker (with an estimated population of 3,200) is located approximately 170 miles west of the Phoenix metro area, south of Lake Havasu. Parker's economy is based primarily on tourism, retail trade, and services, which reportedly remains resilient despite the overall economic downturn. The 16-mile strip of the Colorado River, between Parker Dam and Headgate Rock Dam, provides many water-based recreational activities and makes the town a destination point for tourist and winter visitors. The nearby Blue Water Resort and Casino is another area attraction and major local employer. The town is the county seat for La Paz County, and also serves as the trade and business center for the Colorado River Indian Reservation and area small towns.
The town continues to maintain solid general fund reserve levels as a percentage of spending, although in absolute terms, balances are relatively small. Since the town does not currently levy a property tax, revenues are highly dependent on economically volatile sales tax (both state-shared and local). The town reported an unreserved general fund balance of approximately $2.1 million or a very high 74% of spending at the close of fiscal 2008. According to town management, fiscal 2009 results are projected to remain stable and operating results will generate a modest addition to reserves. In light of overall economic conditions and a large Wal-Mart recently opening immediately outside city limits, town management has budgeted sales tax revenues conservatively for fiscal 2010 and is monitoring its impact on the budget.
Reflective of a more recently weakened Arizona economy, state-shared highway user revenues totaled almost $1.2 million in fiscal 2008, which was a decline of about 12% from the prior year. Despite an additional decline of around 7% in fiscal 2009 that brought state-shared highway user revenues to $1.1 million on an unaudited basis, coverage of maximum annual debt service in fiscal 2012 (and the final maturity) was still a solid 2.9 times. The town has no other street and highway revenue bonds outstanding.
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Fitch Ratings, Austin
Rebecca Moses, 512-215-3739
Steve Murray, 512-215-3729
or
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