CHICAGO - (Business Wire) Fitch Ratings assigns an 'A+' rating to Manhattan, Kansas' (the city) special obligation revenue bonds as follows: --$20,500,000 North Project Area - Downtown Redevelopment Project, series 2009A senior lien bonds;
--$16,655,000 sales tax revenue bonds (Downtown Redevelopment Project), series 2009-1;
--$33,345 taxable sales tax revenue bonds (Downtown Redevelopment Project), series 2009-2 (Build America Bonds - Direct Pay to Issuer).
The bonds will sell via negotiated sale on or about Nov. 17, 2009. The Rating Outlook is Stable.
The 'A+' rating is based on the city's pledge to consider annual appropriations of debt service costs within its annual budget and to appropriate all legally available funds for debt service. The city's finance director is obliged to include in the budget proposal a request for appropriation of debt service. The rating is also based on the city's overall credit quality as reflected in the city's 'AA' general obligation (GO) rating by Fitch. The GO rating considers the city's stable economy, solid general fund reserve levels, strong financial management, and a very sizeable debt burden, including the current issuance. For additional information on the city of Manhattan's general obligation bond rating, please see Fitch's press release 'Fitch Downgrades Manhattan, Kansas' GOs to 'AA'; Outlook Stable' dated Nov. 3, 2009.
The series 2009A bonds are secured by all incremental property taxes in the development site, local sales tax revenues derived from the northern portion of the project area, and a cash funded debt service reserve fund; series 2009-1 and 2009-2 bonds are secured by a separate trust indenture and are additionally secured by all state sales taxes within the project area, the local sales tax within the southern portion of the project area, and a cash-funded debt service reserve fund. Bondholders do not have a mortgage claim on any facilities in the project area. Series 2009A bonds and series 2009-1 and 2009-2 bonds will finance improvements within the northern and southern portion of the project area, respectively.
While sales and property tax revenues derived from the project area are pledged to bondholders, Fitch's rating reflects the city's covenant to consider annual appropriations for debt service on the bonds in every annual budget until the bonds have fully matured. The budget process begins six months prior to the beginning of each fiscal year, and the city covenants and agrees that the city's director of finance will include debt service on the bonds in each budget proposal submitted to the legislature for each fiscal year that the bonds are outstanding. Further, the city and the trustee acknowledge that the debt service requirement will constitute budgeted expenditures for the city. If, in any year, funds derived from the project are deemed to be insufficient, the city has already appropriated necessary funds within its annual budget to make up any deficiency.
The project is the long-planned development of a downtown site. It includes the construction of the Discovery Center Museum, a Flint Hills and Tallgrass Prairie attraction; retail establishments such as various big box retail chains and restaurants; and mixed use development to eventually incorporate housing, hotel and conference center areas, parking, and theatres. The northern portion of the development area is more fully developed, with several stores currently opened; incremental, captured local sales taxes and property taxes within the north area are anticipated to fund debt service. The southern portion is less developed.
Additional information is available at www.fitchratings.com.
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Fitch Ratings
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or
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(Media Relations, New York)
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