NEW YORK--(BUSINESS WIRE)-- Fitch Ratings affirms the following Minneapolis-St. Paul Metropolitan Airports Commission, MN's (the commission) unlimited tax general obligation revenue bonds (GORBs) at 'AAA':
--$9.06 million GORBs, series 16.
The Rating Outlook is Stable.
The bonds are general obligations of the commission, payable primarily from a pledge of net revenues. The bonds are further secured by the pledge of the commission's full faith and credit and its statutory obligation to levy a tax upon all taxable property in the metropolitan area, without limitation, if required, to provide funds sufficient to pay debt service.
KEY RATING DRIVERS
DIVERSE, WEALTHY ECONOMY: The metropolitan area has a strong economy, as evidenced by low unemployment, above-average wealth levels and a diverse tax base.
STRONG STRUCTURE: The rating reflects the unlimited general obligation tax pledge of the commission and a strong legal structure.
SELF-SUPPORTING OBLIGATION: Strong airport operations and financial performance support payment of GO bonds from operations. The commission has not tapped the GO funding mechanism since 1969.
MANAGEABLE DEBT LEVELS: The commission has a very low level of GO bonds outstanding and no plans to use the remainder of its authorization. The underlying counties have moderate debt levels and capacity to absorb the commission's GO taxing authority if necessary. Overall commission debt levels are moderate.
WEALTHY, DIVERSE REGIONAL ECONOMY
The commission operates the Minneapolis-St. Paul International Airport (the airport) along with several smaller reliever airports in the region. The commission's tax base, from which the general obligation pledge is derived, consists of seven counties (Hennepin, Ramsey, Dakota, Scott, Anoka, Washington and Carver). The combined area's total assessed value was approximately $3.2 billion for 2011. Hennepin County (ULTGO bonds rated 'AAA', Stable Outlook by Fitch) represents about 45% of the commission's total taxable base. Reflective of broader recessionary trends, taxable assessed values for the counties have decreased for the past three years after strong growth earlier in the decade.
The seven county region benefits from below-average unemployment and high wealth levels, mitigating some of Fitch's concerns about tax base pressures. County unemployment rates are all well below the national average. Likewise, per capita income levels are strong ranging from 106% to 133% of the 2010 national average. Median household income ranged from 100% to 158% of the 2010 national average. The area's economy benefits from a diverse employer base, including government, education, health care, and a number of large corporate headquarters.
STRONG LEGALS AND HISTORY OF SELF-SUPPORT FROM OPERATIONS
The indenture requires the commission to deposit in a reserve fund the debt service for the following two years. Usage of funds in the reserve is fully restricted for debt service. If the reserve fund falls below the two-year requirement, the commission must levy a tax, without limit as to rate or amount, on its seven-county jurisdiction. Funds are currently on deposit with the trustee for 2013 and 2014 debt service. Final maturity on the GO bonds is Jan. 1, 2015.
Due to the strong operations and financial performance of the airport, the bonds have been self-supporting with pledged revenues. The commission has not exercised its taxing authority since 1969. The commission recently redeemed all $202 million of outstanding series 15 GORBs, leaving the series 16 GORBs as the only GORBs outstanding.
The commission is authorized to issue an additional $55 million of GORBs, but does not intend to do so. The commission is planning to issue non-GO-backed bonds shortly as part of its manageable capital plan. Debt profiles of the underlying counties are moderate.
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, Zillow.com, 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 Criteria
U.S. Local Government Tax-Supported Rating Criteria
Eric Friedman, +1 212-908-9181
One State Street Plaza
New York, NY 10004
Scott Zuchorski, +1 212-908-0659
Jessalynn Moro, +1 212-908-0608
Elizabeth Fogerty, +1 212-908-0526
Source: Fitch Ratings