Bangkok--4 Jan--Standard & Poor's
Standard & Poor's Ratings Services raised its rating and underlying rating (SPUR) two notches to 'AA-' from 'A' on Prescott Valley, Ariz.'s outstanding series 2007 certificates of participation (COPs). The outlook is stable.
"The raised ratings reflect the town's continued strong financial performance including consistent maintenance of very strong reserves for several years," said Standard & Poor's credit analyst Paul Dyson. "In our opinion, this level of reserves provides a substantial credit cushion to the general fund revenue declines that the town is currently experiencing."
The town's revenue growth has been strong in all categories, and this -- combined with prudent expenditure management -- has allowed the town to maintain very strong and consistent unreserved general fund balances over several years. The town also increased its reserve policy to 25% (of combined general fund and highway user fund) from 15% in March 2008. The town's audited results for fiscal 2009 indicate a $9.4 million general fund deficit, although this followed a very strong fiscal 2008 surplus of $13.4 million. Management attributes the large increase in fund balances (or reason for the large surplus) for fiscal 2008 and the deficit in fiscal 2009 to the impact of bond proceeds designated for capital (library project) in fiscal 2008, which were spent down in fiscal 2009. Management states a portion will also be spent in fiscal 2010. The unreserved, undesignated fund balance in fiscal 2009 was $22.7 million, or 65% of expenditures (versus $21.7 million, or 68% of expenditures in fiscal 2008). This level is, in our view, extremely strong and exceeds the town's 25% policy. An additional policy requires that debt service payments for each fund not exceed 25% of operating revenues. The town's budget for fiscal 2010 indicates a $1.3 million use of reserves so that the fiscal 2010 unreserved, undesignated fund balance is estimated to decline to $21.4 million, or 63% of expenditures.
Prescott Valley (population 36,569) is located nine miles from Prescott and 80 miles northwest of Phoenix.
RELATED RESEARCH
USPF Criteria: "Appropriation-Backed Obligations," June 13, 2007
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Media Contact:
Ana Sandoval, New York (1) 212-438-5095,
[email protected]
Analyst Contacts:
Paul Dyson, San Francisco (1) 415-371-5079
Matthew Reining, San Francisco (1) 415-371-5044
Key Contacts:
Americas Media Relations: (1) 212-438-6667
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[email protected]
Americas Customer Service: (1) 212-438-7280
[email protected]