Fitch Ratings assigns an 'AAA' rating to the following Bloomington, MN (the city) general obligation (GO) bonds:
--$5.895 million GO permanent improvement revolving fund bonds of 2012, series 46;
--$6.32 million GO permanent improvement revolving fund refunding bonds, series 2012A.
The bonds are expected to sell via competitive sale on June 4, 2012. Proceeds are being used for various capital improvement projects and to refund outstanding bonds.
In addition, Fitch affirms the following ratings:
--$52.4 million GO bonds at 'AAA'.
The Rating Outlook is Stable.
The bonds are unlimited tax general obligations of the city for which the city pledges its full faith and credit and power to levy direct general ad valorem taxes. The permanent improvement revolving fund bonds will also be supported by special assessments, and the tax increment bonds are additionally secured by tax increment funds.
KEY RATING DRIVERS
Financial Stability: The city benefits from strong financial practices reflected by its sophisticated, proactive financial planning, above-average reserves, and consistent financial operations.
Thriving Mall Anchors Economy: The local economy, anchored by the large and healthy Mall of America (MOA), is prosperous with below average unemployment levels and high wealth levels.
Moderate Debt Levels: Debt levels are affordable and future capital needs are manageable.
Located in Hennepin County (GO bonds rated 'AAA', Stable Outlook by Fitch), approximately 11 miles from Minneapolis, Bloomington had a 2010 population of 82,893 residents. In addition to participating in the expansive Minneapolis metropolitan economy, the city's own economic base is broad and includes a mix of industry, including large technology, healthcare, and manufacturing concerns. Unemployment for February 2012 was 5.6%, below the state average of 6.6% and well below the nation's of 8.7%. Wealth indicators and taxable market values per capita are well above average, though the overall tax base has contracted some in recent years.
The city is home to the MOA, the largest shopping center and entertainment complex in the United States. The mall comprises almost 10% of the city's total assessed value. The city continues to experience growth centered around the mall, with a new hotel project and other expansion projects complementing MOA's 10% growth in sales in 2011. The city does not receive sales tax revenue from MOA, but the mall is the largest employer in the city, supplying 13,000 jobs.
The combination of historically strong economic growth and manageable budgetary increases has contributed to a strong financial position. The city posted a $462,000 general fund deficit (0.8% of expenditures) for fiscal 2010 after transferring out $4.4 million of operating surplus to pre-fund future pension obligations. The city's unreserved general fund balance was a substantial $19.1 million, representing 33.9% of expenditures and transfers out. City officials project another operating surplus for fiscal 2011 of about $555,000, primarily through cost-savings measures, diligent budget monitoring and increases in lodging and admissions taxes.
Property taxes accounted for approximately two-thirds of general fund operating support in fiscal 2010. The city passed a slight decrease in the property tax levy for fiscal year (FY) 2011, and has a similar decrease in FY 2012. The city's 2012 budget was balanced, but management's current early projections are for a $2.4 million surplus. Overall, the measured pace of budgetary expansion combined with the discretionary nature of significant portions of the budget and maintenance of ample reserves provides the city with considerable financial flexibility.
Low direct debt ratios are a product of high internal funding for capital projects. The direct debt burden is just 0.7% of market value or $961 on a per capita basis. Overall debt levels are more moderate at 2.3% of market value or $3,147 on a per capita basis, reflecting the relatively sizable issuances by Hennepin County and Bloomington School District. Payout is well above average with approximately 90% of debt retired within 10 years. The city's capital improvement plan totals $458 million, with the largest component for road and street improvements.
The city participates in two state pension plans for all employees except volunteer firefighters, for whom the city has a single-employer plan. The city makes all statutorily required payments to the state plans, and the city's fire plan is currently 105% funded with additional funds set aside for future contributions. The city provides only an implicit subsidy for other post-employment benefits for retirees.
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', dated Aug. 15, 2011;
--'U.S. Local Government Tax-Supported Rating Criteria', dated Aug. 15, 2011.
Applicable Criteria and Related Research:
Tax-Supported Rating Criteria
U.S. Local Government Tax-Supported Rating Criteria