The bond rating agencies Standard & Poor's, Fitch and Moody's have each assigned their top AAA rating to Hamilton County as the county prepares to price its biggest general obligation bond issue ever next month.
Andrew Hoffman, a director of government bond ratings at Fitch, said the county will have a manageable debt level even after issuing $195 million or more of general obligation bonds to finance various capital projects in local schools, jails and other county projects. The bonds will also repay an outstanding revolving credit agreement of $55 million.
Hamilton County commissioners authorized the bond sale of up to $200 million on Wednesday and Fitch said it expects the county to price the bonds on the market on March 6.
"Fitch views the county's growth prospects as strong," Hoffman said. "Fitch expects the county's revenue performance to outpace growth in national GDP (gross domestic product), driven by continued strong tax base growth."
The bond rating agency predicts county government spending "to be in line with or slightly exceed revenue growth trends."
"The county maintains solid expenditure flexibility, aided by the absence of collective bargaining." Hoffman said.
Hamilton County Mayor Jim Coppinger said the favorable bond ratings show that "Hamilton County has demonstrated its conservative fiscal approach" and has benefitted by the continued economic growth in the region.
"We're excited to be able to maintain these ratings after a comprehensive review by all three rating agencies," Coppinger said today when contacted about the bond ratings.
Hamilton County is one of the only counties in Tennessee to enjoy a AAA rating from all three major rating agencies.
In its rating, Fitch said the county's population grew by 6 percent from 2010 to 2016 to approximately 358,000, and the local jobless rate remains below the U.S. average. The reappraisal of local property last year showed a 12 percent gain in value from four years earlier.
""County tax base values were notably resilient through the recession," Fitch said in its report. "Home values continue to surge well beyond pre-recession highs, with growth expected to continue over the medium term, per Zillow Group forecasts."
The county's current property tax rate of 2.7652 per $100 of assessed value has remained unchanged since fiscal 2010, although the county did not roll back the rate last year after the reappraisal boosted most home values and property tax bills.
The county ended fiscal 2017 with a modest general fund surplus of approximately $2 million, Fitch said. The county's $223 million fiscal 2018 general fund budget was 1.8 percent above the previous year's adopted budget and was balanced without the use of reserves.
The budget was amended mid-year to $247 million reflecting the growth in the county's tax base following the reassessment. Based on year-to-date estimates, the county expects to end the year with roughly break-even general fund results, Fitch said.