Fitch Affirms Jupiter, FL's GO Bonds at 'AAA'; Outlook Stable
Fitch Ratings has affirmed its 'AAA' rating on the following general obligation (GO) bonds for Jupiter, FL (the town):
--$6.36 million GO bonds, series 2001;
--$12.29 million GO bonds, series 2005.
The Rating Outlook is Stable.
The bonds are secured by the full faith, credit, and taxing power of the town.
STRONG FINANCIAL MANAGEMENT: The town benefits from an experienced and prudent management team evidenced by consistently positive operating results.
HIGH LEVEL OF FINANCIAL FLEXIBILITY: Robust general fund reserves combined with revenue raising capabilities provide more than ample financial flexibility.
EXPANDING LOCAL ECONOMY: Economic indicators are favorable and the traditionally limited local economy has shown signs of diversification.
LOW DEBT LEVELS AND CARRYING COSTS: The town's debt burden is low and characterized by rapid amortization. Carrying costs including pension and other post-employment benefits (OPEB) are manageable.
Jupiter is located on the eastern coast in Palm Beach County (GO rated 'AAA' by Fitch) and has an estimated year-round population of 55,000.
CONSISTENTLY POSITIVE OPERATING RESULTS
The town has consistently achieved positive operating results despite some revenue pressures due to declines in property tax revenues. Fiscal 2011 audited results indicate a $500,000 (1.3% of expenditures) use of general fund balance which was due to a planned one time transfer for capital improvements. Despite the small use of reserves, unrestricted general fund balance remains ample at $15.6 million or 38% of total expenditures. Town management used proactive expenditure reductions to mitigate revenue losses and as such did not find it necessary to increase the operating millage rate above the currently low 2.5 mill levy.
Unaudited fiscal 2012 results indicate little to no changes in reserve levels and the 2013 budget was balanced without the use of fund balance or one time revenue sources. It is reasonable to believe that reserves will be maintained at or near the current level given management's history of conservative budgeting and proactive fiscal measures.
STRONG, GROWING LOCAL ECONOMY
Recent notable growth in both the biotech and aerospace industries has diversified the somewhat narrow economy, which has traditionally been based in tourism, healthcare and retail. The Max Planck Institute for Neuroscience opened a permanent facility in late 2012 and Parametric Solutions (Aerospace) recently announced an expansion and an addition of approximately 130 new jobs over a two year period.
Town wealth levels are above average with per capita income 162% of the state and 155% of the national levels. Unemployment was a low 6% in November 2012, well below state (8.2%) and national (7.4%) rates during the same month.
Like much of the state, Jupiter experienced a total assessed value (AV) decline of 24% in fiscals 2008 through 2010. Fiscal 2011 was flat and there was a marginal (0.3%) decline in 2012. Management is expecting measured growth going forward which is reasonable given recent economic developments.
LOW, MANAGEABLE CARRYING COSTS
The town's overall debt levels are moderate on a per capita basis ($4,201) but low as a percentage of full market value (2.7%). The debt is characterized by rapid amortization with nearly 90% of principal retired within 10 years; there are no plans to issue additional debt in the near term.
Pensions are provided both through the state run Florida Retirement System (FRS) and the town administered Municipal Police Officers Retirement Trust (MPORT). Total annual pension contributions are manageable at 11% of general fund expenditures and are not expected to increase materially in the immediate future. FRS is well funded at 80%; however, at 66% MPORT is funded at a below average level (using Fitch's conservative 7% rate of return).
OPEB is currently funded on a paygo basis and the unfunded liability represents a very low 0.01% of market value. Carrying costs including debt service, pension and OPEB were a very manageable 15% of total fiscal 2011 expenditures.
Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.
In addition to the sources of information identified in Fitch's Tax-Supported Rating Criteria, this action was additionally informed by information from Creditscope, University Financial Associates, S&P/Case-Shiller Home Price Index, IHS Global Insight ,and National Association of Realtors.
Applicable Criteria and Related Research:
--'Tax-Supported Rating Criteria' (Aug. 14, 2012);
--'U.S. Local Government Tax-Supported Rating Criteria' (Aug. 14, 2012).
Applicable Criteria and Related Research:
Tax-Supported Rating Considerations for 2010
U.S. Local Government Tax-Supported Rating Criteria
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
Elizabeth Fogerty, +1-212-908-0526 (New York)