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Municipal Credit
Research New Issue Published 1 March 2006 |
MOODY’S ASSIGNS A1 RATING TO THE TOWN OF MATTAPOISETT’S (MA) $7,629,000 GENERAL OBLIGATION BONDS
A1 Rating Applies to $2.275 Million in Outstanding Debt
Moody’s Investors Service has assigned an A1 rating to the Town of Mattapoisett’s $7,629,000 General Obligation Bonds. Concurrently, Moody’s has affirmed the town’s A1 underlying rating, affecting $2.275 million of the town’s outstanding general obligation debt. The A1 rating is based on the town’s wealthy and growing tax base, solid reserve position, and manageable debt burden. Proceeds from these bonds will be used to retire outstanding notes for school construction and water and sewer projects. $7.1 million of school construction bonds are secured by the town’s general obligation unlimited tax pledge, as this project has been voted exempt from the limits of Proposition 2 . The remainder, to be used for water and sewer projects, is secured by the
town’s limited tax pledge. TAX BASE GROWTH EXPECTED TO CONTINUE DUE TO ONGOING RESIDENTIAL DEVELOPMENT
Moody's believes that the ongoing development of a 180-home gated community and golf course (The Bay Club) will continue to increase assessed valuations over several years and provide the moderate $1.28 billion tax base with stable new growth revenues within the limits of Proposition 2 . Located about six miles east of the City of New Bedford (rated Baa1/positive outlook) and 56 miles south of Boston (rated Aa1/stable outlook) the town is situated on Buzzard’s Bay, making it an attractive location for vacationers, as reflected by a reported 40% seasonal population increase from its modest 6,268 year-round population (based on 2000 census). Between fiscal 2001 and fiscal 2006, the town’s primarily residential tax base (94.9% of assessed values) experienced healthy annual growth, averaging
13.2%. This growth includes the development of the Bay Club, a large golfing community, which will continue to bolster the town’s growth in the medium-term. Moody’s believes that the continued development of the Bay Club will provide the town with healthy and predictable new growth revenues over the next few years, as there are plans to add 20 to 30 new $1 to 2 million homes in each of the next five years. The town has land available for further development, but future expansion may be contained by limits on sewer treatment capacity, which is provided by the neighboring community of Fairhaven (rated A2). Although the town is currently operating below its capacity limit, contracted capacity may constrain the town’s development prior to the contract’s expiration in 2012. The town’s wealth levels exceed commonwealth medians, with equalized value per capita of $197,500 or 163% of the commonwealth median.SOUND FINANCIAL POSITION
SUPPORTED BY CAREFUL FINANCIAL MANAGEMENT
Moody’s expects the town’s financial position to remain sound, given conservative financial management and budgeting that has led to steadily increasing reserves over the past four fiscal years. In fiscal 2004, the town held $2.64 million in total general fund balance, or an ample 15.9% of revenues, with an undesignated/unreserved portion of $1.6 million or 9.6% of revenues. Unaudited fiscal 2005 results show an increase in both measures of reserves to $3.1 million, and $1.7 million, respectively. The town’s financial position is further strengthened by the maintenance of a Stabilization Fund, which increased to $729,698 at the close of fiscal 2005, and the town has recently established a Capital Stabilization Fund to fund approved capital projects and minimize the need for borrowing.
Management expects to end fiscal 2006 with an operating surplus and add an additional $300,000 to the Stabilization Fund, bringing total available reserves to over $1 million. Although the 2007 budget has not been finalized, the town currently forecasts a moderate 4% increase over 2006 appropriations, which it plans to fund through new growth revenues, additional anticipated state aid receipts and increased fees.
DEBT BURDEN TO REMAIN MANAGEABLE GIVEN COMMONWEALTH SCHOOL CONSTRUCTION ASSISTANCE
Moody’s expects the town’s overall debt burden will remain affordable given offsetting school construction aid. The town’s overall debt burden of 2.8% of equalized value falls to a more manageable 2.1% when accounting for school construction assistance on both the town’s local school debt and its 38% portion of the Old Rochester Regional School District debt. Amortization of principal is a below average 58.2% in 10 years and, as the town has assumed interest payments for previously-issued notes, debt service has grown to an above average 9.4% of the town’s expenditure budget. The town’s authorized but unissued debt of $16.4 million is primarily comprised of sewer projects to be funded through betterment assessments, which the town plans to capitalize within the next two
years.
KEY STATISTICS:
2000 Population: 6,268
2006 Equalized Valuation: $1.28 billion
Average Annual Increase in Equalized Value (2001-2006): 13.2%
Equalized Valuation Per Capita: $197,500
2000 Per Capita Income: $28,050 (108.1% of commonwealth)
2000 Median Family Income: $68,246 (110.7% of commonwealth)
2004 General Fund Balance: $2.6 million (15.9% of revenues)
2004 Undesignated/Unreserved General Fund Balance: $1.6 million (9.6% of revenues)
2004 Stabilization Fund: $208,478
2005 General Fund Balance (unaudited): $3.1 million
2005 Undesignated/Unreserved General Fund Balance (unaudited): $1.7 million
2005 Stabilization Fund (unaudited): $729,698
Overall Debt Burden: 2.8% of equalized value
Adjusted Debt Burden: 2.1% of equalized value
Rate of Amortization: 58.2% in 10 years
Post-Sale Long-Term Debt Outstanding: $9.9 million
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