NEW YORK - (Business Wire) Fitch Ratings assigns an 'A-' rating to Orangeburg County, South Carolina's approximately $9.7 million general obligation (GO) bonds, series 2008. The bonds are scheduled to sell competitively on June 18. Bond proceeds will be used for general county purposes including the purchase of public safety vehicles and two parcels of land. This is Fitch's first rating on the county's GO bonds. The Rating Outlook is Stable.
The 'A-' rating is based on the county's rapid debt amortization, limited future capital needs and below average economic indicators. Reserve levels remain adequate for the rating category despite recent planned drawdowns and are expected to remain at current levels over the next few years. The rating also incorporates ongoing economic development in the county which should continue to diversify the county's economy and help strengthen assessed valuation (AV), which has been flat to declining in recent years.
Orangeburg County is in the Lower Savannah section of South Carolina, about midway between Charleston and Columbia. The county's employment has historically been concentrated in manufacturing, although the county has begun to attract distribution centers due to its location at the intersection of Interstate Highways 95 and 26 and eight federal highways. Dubai World, an international holding company, recently purchased over 130 acres in the county for a new logistics park to form an eastern gateway to the United States for its subsidiary, the Jebel Ali Free Zone Authority (JAFZA, LLC). Dubai World has already invested $10 million in the park and expects to provide between 6,000 and 10,000 jobs and $600 million in direct investment in the county over the next five to 10 years. The county also serves as a regional service center, housing the area's largest acute care medical center, four colleges and universities with an aggregate enrollment of over 10,000 students, and the region's largest shopping mall.
Economic indicators for the county are below average. While annual unemployment rates have been declining from the high of 9.9% in 2003 to 8.5% in 2007, they are still markedly above that of the state and nation at 5.9% and 4.6%, respectively, in 2007. The county continues to experience moderate seasonal fluctuations in unemployment due partially to its concentration in the manufacturing of lawn mowers which have higher demand in the spring and summer. Monthly unemployment data shows an increase to 7.9% in April 2008 from 7.0% a year before. The county has a notable concentration in its tax base with the top tax payer, South Carolina Energy and Gas (rated 'A+' by Fitch) a fossil-fired electric generation plant, accounting for 11.6% of AV in fiscal 2007. AV declines due to reduced assessment ratio for motor vehicles and appeals.
Wealth levels are low with per capita income for 2006 at 58.8% of the national average. Per capita retail sales for 2006 are slightly higher at 74.9% of the nation due partially to the mall located in the county which attracts visitors from neighboring counties.
Orangeburg County's financial position remains sound despite recent drawdowns in fund balance. Fiscal 2006 and fiscal 2007 results included planned decreases of fund reducing the unreserved fund balance from its peak of 35.3% at the end of fiscal year 2005 to its current level of 18.2%. Fiscal 2008 projections report a minimal surplus of $11,000. The county maintains an unofficial fund balance target of 20%-25% of spending.
Overall debt levels are moderate on a per capita basis at $2,426 but above average as a percent of market value at 5.31% due to the county's low market value. This is partially mitigated by the county's very rapid amortization of 97.1% over 10 years. The majority of the county's capital projects are financed through the local option one cent sales tax. Future debt plans for the county are minimal.
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.
Fitch Ratings, New York
Rachel A. Barkley, 212-908-0514
Amy R. Laskey, 212-908-0568
or
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