Bangkok--3 Dec--Standard & Poor's
Standard & Poor's Ratings Services raised its rating on Aspen, Colo.'s parks and open-space sales and use-tax revenue bonds one notch to 'AA-' from 'A+' based on strong debt service coverage of existing sales-tax debt in addition to good growth of pledged revenues between fiscal years 2004 through 2008.
At the same time, Standard & Poor's assigned its 'AA-' rating to Aspen's series 2009 parks and open-space sales and use-tax revenue refunding bonds.
The rating reflects our view of taxes derived from a very desirable year-round mountain community with very high per capita retail sales; strong coverage of proposed maximum annual debt service (MADS), at 2.73x using audited 2008 pledged revenues; and good legal provisions, including a 1.5x MADS additional bonds test (ABT) and debt service reserve.
Tempering these strengths, in our view, is a local economy that is concentrated in tourism and activities related to the ski industry, though the community increasingly supports a very affluent nonseasonal population as well as summertime activities that attract visitors during the nonwinter months; and significant projected declines in sales-tax revenues by management for 2009 given a national slowdown in retail spending.
"The stable outlook reflects our expectation that the city's desirability as both a winter and summer destination, its very wealthy and increasingly nonseasonal resident base, and its continued use of tax revenues after debt service for maintenance of parks and open-space facilities will continue to drive strong coverage of debt service on the bonds," said Standard & Poor's credit analyst Timothy Barrett. "Additionally, the rating reflects the possibility of some minor volatility of fluctuations in sales-tax revenues due to the tourism-based nature of the local economy, although the city is protected by an adequate ABT," said Mr. Barrett.
Securing the bonds is the city's 1.5% parks and open-space sales tax (POSST) net of collection expenses. City officials will use bond proceeds to refund a portion of the city's outstanding series 2001 bonds, which were issued for the purpose of buying, improving, and maintaining trail, recreation, and open-space properties, and will be on parity with the outstanding 2005 and 2005B POSST bonds. Effective Jan. 1, 2001, the city approved an increase of the sales tax to 1.5% from 1%. The 1.5% POSST is applied to all sales transactions, including food. The POSST receipts are directly deposited into the Parks and Open Space Fund and are restricted to those uses after payment of debt service. The city's dedication to parks and open space, with a portion of maintenance and general operations supported by tax revenues after debt service, provides additional security for the bonds.
Aspen, with a permanent population of 6,403 that increases to 30,000 during the ski season, is located about 160 miles west of Denver and is the primary city and county seat of Pitkin County.
RELATED RESEARCH
USPF Criteria: "Special Tax Bonds," June 13, 2007
USPF Criteria: "Location, Location, Location: What Does It Mean For My Community's Rating?," April 22, 2008
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Media Contact:
David Wargin, New York (1) 212-438-1579,
[email protected]
Analyst Contacts:
Timothy Barrett, New York (1) 212-438-6327
Matthew Reining, San Francisco (1) 415-371-5044