NEW YORK - (Business Wire) Fitch Ratings has assigned an 'AA-' rating to Pitt County, North Carolina's (the county) estimated $35.1 million limited obligation bonds (LOBs), series 2009. The LOBs are scheduled to price via negotiated sale on Nov. 10, 2009. Fitch also affirms the following outstanding ratings for the county: -- $1.5 million general obligation (GO) bonds at 'AA';
-- $123.6 million certificates of participation (COPs) at 'AA-'.
The Rating Outlook is Stable.
The 'AA-' rating on the LOBs reflects the county's underlying credit characteristics, solid legal provisions, the essentiality of the financed projects and the fact that LOB payments are subject to annual appropriation. The 'AA' rating on the county's outstanding GO bonds reflects moderately low debt levels, solid reserves at policy level, and sound economic fundamentals, although unemployment rates have climbed to above average levels. The Stable Outlook reflects Fitch's expectation that the county will maintain reserves at policy levels over the long term and future debt needs will remain manageable.
Debt service payments for the LOBs are subject to annual appropriation. As security for the bonds, the county will deliver a deed of trust granting a lien on mortgaged property, including a new elementary school and an existing high school, whose essentiality provides sufficient incentive to appropriate. The county will grant to the trustee for the benefit of bondholders all rights, title, and interest to the deed of trust. The county will lease the premises to the board of education, with a lease term concurrent with final bond maturity. The board can elect to purchase the premises upon expiration of the lease.
Located 90 miles from Raleigh, Pitt County is a retail, commercial, health care, and education center for northeastern North Carolina. The county projects that its 2008 population of 156,081 will increase by 50% by 2030. Affordable land, the potential for significant rural development, and a good transportation system in the southern part of the county should help spur residential growth. Government jobs account for 25% of employment, about double the national average, and retail trade coupled with education and health services cumulatively encompass an additional 25% of the workforce. The county's two largest employers, Pitt County Memorial Hospital and East Carolina University, recently opened a $150 million jointly funded Cardiovascular Institute, and plans are underway to develop a dental school on the same campus. Much of the county's other economic growth results from the expansion of existing industry, with major expansions and new investments equaling under $10 million annually for the past two years. At 10.4%, the county's August 2009 unemployment rate exceeds the national averages of 9.6% but is slightly below the state's 10.7%. Wealth indicators hover at around 80%-85% of state and national averages.
Reserve levels have stabilized at sound levels, after high reserves early in the decade attributable to a one-time cash infusion were depleted by planned draw-downs for both operating and capital expenses. The fund balance draw-down in fiscal 2009 was directed to one-time expenses and yielded an unreserved fund balance slightly above county policy at 18.7% of expenditures and equal to 17.6% of expenditures, transfers out, and other uses, the measure Fitch commonly uses. The county has stated its intention to limit fund balance use to one time expenses, although the fiscal 2010 budget includes fund balance appropriation for a final debt service payment. The county projects concluding fiscal 2010 with unreserved fund balance equal to 18.4% of expenditures.
Overall debt levels are moderately low at approximately $1,175 per capita and 1.5% of market value. The fiscal 2010-2014 $72 million capital improvement program (CIP) primarily funds school and community college needs. Collections resulting from a November 2007 1/4% local option sales tax increase are earmarked for debt service for the current issue and for an upcoming $27 million issuance for the community college. The county is attempting to identify funding sources for additional school renovation and construction that has not yet been incorporated into the CIP.
Additional information is available at 'www.fitchratings.com'.
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Fitch Ratings
Cindy Stoller, +1-212-908-0526 (New York)
cindy.stoller@fitchratings.com
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