Fitch Rates Tampa, Florida's Sales Tax Bonds 'AA'; Outlook Stable

NEW YORK--(Business Wire)--
Fitch Ratings assigns a rating of 'AA' to the following Tampa, Florida sales tax
revenue bonds:

--$39,850,000 refunding revenue bonds, series 2010.

The bonds are expected to sell via negotiation the week of Sept. 27.

In addition, Fitch affirms the following ratings:

--Approximately $61.9 million sales tax revenue bonds, series 2001A and 2006 at
'AA'.

The Rating Outlook is Stable.

RATING RATIONALE:

--The rating reflects the strength of debt service coverage from Tampa's share
of proceeds from the levy and collection of a one-half cent discretionary
infrastructure sales surtax, solid bondholder protection including a 1.5 times
(x) additional bonds test (ABT), and lack of additional leveraging plans.

--The rating also incorporates the general creditworthiness of the city, most
notably a history of conservative financial management and healthy fund balance
levels; Tampa's position as the hub of economic activity for Florida's Gulf
Coast; and a low to moderate debt burden with manageable capital needs.

--Offsetting these strengths are the city's high unemployment rate and
significant housing stress contributing to declining taxable values, revenue
weakness and budgetary pressure.

--Fitch also notes a history of significant balances reported in the sales tax
funds which are earmarked or designated for various capital projects but are
available to pay debt service until spent, if necessary.

KEY RATING DRIVERS:

--Tampa's financial profile is expected to weaken with deficits anticipated in
fiscal 2010 and fiscal 2011. Reserves are expected to remain healthy
nonetheless, but Fitch cautions that the city's inability to produce break-even
or surplus results through revenue enhancements, including but not limited to
the adoption of tax rate increases, or additional cost cutting measures could
place the city's financial profile and rating stability at risk.

--Additional leveraging, though presently not anticipated, and/or prolonged
economic instability may soften sales tax collections and dilute coverage to a
point that is inconsistent with the present rating.

SECURITY:

Pledged revenues consist of the city's share of a voter-approved local option
community investment tax (CIT) levied at the rate of one-half cent on all retail
transactions within the incorporated and unincorporated areas of Hillsborough
County. The CIT is effective for a 30-year period terminating on November 30,
2026 which is two months subsequent to the scheduled final maturity of the
bonds. The ABT requires 1.5x coverage of proposed MADS from pledged revenues for
any 12 consecutive months out of the 24 consecutive months immediately preceding
issuance. The refunding revenue bonds, series 2010 are not secured by a debt
service reserve fund.

CREDIT SUMMARY:

Through the first 10 months of fiscal 2010 pledged revenues are down only 1.6%
from the year prior which, if annualized, would produce a coverage ratio of
2.48x MADS prior to the refinancing. Monthly sales tax collections have
exhibited positive growth each month from April to July this year, generating
revenue growth of 3.3% from the year prior. The city is forecasting flat growth
in fiscal 2011 and 2012, whereas the most recent forecast from the Florida
Office of Economic and Demographic Research predicts statewide sales tax growth
of 5.1% in fiscal 2011.

Fitch is cautiously optimistic about the recent sales tax trends, noting that
the July unemployment rate remains high in both Hillsborough County (12.2%) and
Tampa (12.6%) and the persistence of low consumer confidence levels statewide,
according to a recent release from the University of Florida Bureau of Economic
and Business Research. Fitch also notes the uncertain impact on collections from
a number of federal rebate programs. In any event, current coverage levels are
strong and the city has no plans to leverage the CIT further. Should collections
fall by approximately 20%, which would mirror the cumulative decline experienced
since fiscal 2008, coverage of MADS would remain healthy at 2.0x. Lastly, the
city maintains a significant balance in the CIT capital projects fund earmarked
or designated for specific projects but available to pay debt service until
spent, if necessary. The balance held at the close of fiscal 2009 totaled $32.7
million and has equaled no less than $26 million dating back to fiscal 2005. In
Fitch's view, the absence of a reserve fund securing the series 2010 bonds has
little impact on the credit quality given the strong coverage levels and ABT
requirement.

Fiscal 2009 marked the fifth consecutive year the city achieved a net surplus
within its operating funds (general fund and utility tax special revenue fund),
during which period the unreserved and undesignated fund balance increased by
more than $84 million to $132.3 million or 39% of spending. The city targets an
unreserved and undesignated fund balance equal to 20% of spending. In addition,
at the close of fiscal 2009 the city included designations in its unreserved
fund balance of $7.6 million for emergencies and $19.4 million for its
self-insurance program.

Management expects to end fiscal 2010 with an unreserved and undesignated fund
balance equal to $119.2 million or 36% based on expenditures of approximately
$334 million. The proposed fiscal 2011 budget appropriates $31.8 million in fund
balance to close a shortfall driven by lower property tax revenues, rising
pension costs, and an increase in pay-go capital spending. Should the entire
fund balance appropriation be spent reserves would fall to approximately 24% of
total spending. In no event does management foresee the targeted fund balance
drawn lower than the 20% policy, which Fitch considers an adequate reserve given
the city's other credit characteristics. Fitch also notes that actual operating
results historically have exceeded original budget projections.

However, concern lies with the recent trend of deficit operations, and the
inability to adopt tax rate increases to offset declining taxable values. The
city plans to collect $121.9 million in property tax revenue in fiscal 2011,
which is $44.3 million less than the sum received in fiscal 2007. The city
expects taxable values to continue to fall over the next several years, though
not at the 11% to 12% annual decline experienced the prior two fiscal periods.
Management indicated the current budget leaves some room for additional cost
savings but stressed that budgetary actions taken to date have narrowed the
degree of flexibility remaining. Management also reports that a property tax
rate increase may be considered for the fiscal 2012 budget year.

The city's debt burden remains low to moderate on an overall basis. Additional
issuance plans are very limited. Debt service will total nearly $37 million in
fiscal 2011, consuming 10% of the combined operating fund budget. The debt
service figure includes utility tax debt issued on behalf of the city's parking
enterprise system which is not fully self-supporting. All long-term debt bears
interest at a fixed-rate and the city does not have any exposure to derivative
products. Approximately 70% of the city's outstanding debt is repaid within 10
years, which is considered above average and provides management options to fund
future capital needs. The city's pension plans remain well funded, but costs
have risen sharply - more than doubling in the past two years to $40.6 million
in fiscal 2011 or a high 11% of operating fund spending as a result of recent
market losses.

The Tampa metropolitan statistical area (MSA) housing market was among the
earliest and hardest hit, and the crisis remains severe. According to PPR, home
construction has slowed to levels not seen since before 1985. The federal
homebuyer credit stimulated sales activity, alleviating the supply and demand
imbalance existing the last several years and apparently slowing the steep
decline in home prices noted through the first three quarters of 2009. A large
number of non-traditional mortgage products and loans in delinquency combined
with a weak job market are likely to pressure the housing market for the
foreseeable future. Longer-term growth prospects are supported by an excellent
regional transportation network featuring interstate highway access and domestic
and international air service via Tampa International Airport (airport revenue
bonds rated 'AA-' by Fitch with a Stable Outlook). Florida's proposed high-speed
rail system, which received federal funding approval in 2010, is expected to
provide a big job boost. Tampa further benefits from year-round tourism,
cultural, and recreation attractions, and a sizeable education and healthcare
presence which has demonstrated good resiliency throughout the recession.

Additional information is available at 'www.fitchratings.com'.

In addition to the sources of information identified in the report
'Tax-Supported Rating Criteria', this action was additionally informed by
information from Creditscope, University Financial Associates, LoanPerformance,
Inc., University of Florida Bureau of Economic and Business Research, IHS Global
Insight, and PPR.

Applicable Criteria and Related Research:

'Tax-Supported Rating Criteria', dated Aug. 16, 2010

'U.S. Local Government Tax-Supported Rating Criteria', dated Dec. 21, 2009

For information on Build America Bonds, visit 'www.fitchratings.com/BABs'.

Applicable Criteria and Related Research:

U.S. Local Government Tax-Supported Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=492470

Tax-Supported Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=548605

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS.
PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK:
HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING
DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S
PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND
METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF
CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE
AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF
CONDUCT' SECTION OF THIS SITE.

Fitch, Inc.
Michael Rinaldi, +1-212-908-0833
Director
One State Street Plaza
New York, NY 10004
or
Kelly McGary, +1-813-224-0492
Senior Director
or
Committee Chairperson
Steve Murray, +1-512-215-3729
Senior Director
or
Media Relations
Cindy Stoller, +1-212-908-0526
cindy.stoller@fitchratings.com

Copyright Business Wire 2010