Fitch rates Rockwall County’s $35.3mm GO bonds ‘AA-’; outlook stable



Fitch Ratings announced June 4 that it had assigned an initial ‘AA-’ rating to Rockwall County, Texas’ $10.7 million unlimited tax road bonds, series 2009, and $24.6 million limited tax refunding bonds, series 2009.


The bonds are scheduled to be sold via negotiated offering the week of June 8, 2009.

Fitch Ratings is a global rating agency committed to providing the world’s credit markets with independent and prospective credit opinions, research, and data.  It is widely recognized by investors, issuers, and bankers for its credible, transparent, and timely coverage.


Fitch also assigned an ‘AA-’ rating to the county’s $48 million in outstanding limited tax notes, and $2.8 million in certificates of obligation.


The Rating Outlook is “Stable,” Fitch proclaimed.

According to the ratings company, the unlimited tax road bonds are payable from ad valorem taxes levied, without legal limit as to rate or amount, on all taxable property within the county. The limited tax refunding bonds are payable from ad valorem taxes levied against all taxable property located within the county, subject to a $0.80 per $100 assessed valuation limitation.


No rating distinction is made between the unlimited tax road bonds and limited tax bonds due to the availability of substantial taxing margin. The refunding bond proceeds will be used to refund the series 2008 tax notes issued for the construction of the justice center, and the road bonds will be used for various road improvement projects.


The ‘AA-’ rating reflects the county’s strong financial position, including healthy reserve levels and strong growth in taxable assessed valuation (TAV). While county direct debt ratios are modest, overall debt levels are high due to school district debt.


Fitch noted as a positive credit factor strong commercial development occurring along Interstate 30 in the county, with favorable prospects for further development from future road improvements. The county has also experienced strong single-family residential growth due to its location along Lake Ray Hubbard.

Highlights from the Fitch report follow:


Rockwall County is 25 miles northeast of Dallas along Lake Ray Hubbard.With a population of approximately 84,000, the county has grown 81% since 2000. The county includes the towns/cities of Rockwall, Fate, Heath, Royse City, and McLendon-Chisholm.


Recreational facilities and accessibility to the Dallas metropolitan area have resulted in increased tourist trade and residential development in the county. Taxable value growth has been strong with a five-year average annual rate of 11.3%.

The economy continues to experience substantial commercial and residential growth, as evidenced by various retail commercial construction projects along Interstate 30, and continued residential real estate growth.


The Harbor development is noteworthy; this development includes a mixed-use lakefront entertainment area, with a variety of retail, hotel, movie theatre, and restaurant offerings. The county’s tax base is composed of 64% residential and approximately 17% commercial.

Fitch says it considers the county’s financial profile as strong. Financial performance has been consistently positive, with general fund surpluses and increasing reserves in recent years. The general fund reported net income of $2.4 million in fiscal 2008, which followed surpluses of $4.1 million in fiscal 2007 and $2.7 million in fiscal 2006. The general fund balance for fiscal 2008 totaled $20.9 million, representing more than 100% of spending and transfers out. Preliminary fiscal 2009 results include another operating surplus and an increase in reserves.

The county’s direct debt levels are low at about $733 per capita and 0.9% of fiscal 2009 assessed valuation; however, overall debt levels are high at $8,581 per capita and 10.7% of fiscal 2009 assessed valuation.

Debt levels are expected to remain elevated as the county issues bonds authorized in 2008 for $100 million in road bonds for improvements to four major arteries that move traffic through the county, including several highways. In addition, the county has $17.2 million in remaining road bond authorization from a prior authorization.


These road bonds are expected to be sold through 2017, as state funding becomes available.

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