TEXT-Fitch affirms Westlake, Ohio's LT GOs at 'AAA'

Wed Nov 28, 2012 4:22pm EST

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Nov 28 - Fitch Ratings has taken the following rating actions on Westlake,
OH's bonds:

--Approximately $13.5 million limited tax general obligation (LTGO) bonds
affirmed at 'AAA';
--Implied unlimited tax general obligation (ULTGO) rating affirmed at 'AAA'

The Rating Outlook is Stable.

SECURITY
The bonds are secured by the levy of ad valorem taxes limited by rate within the
8.7 mills granted by the city's charter.

KEY RATING DRIVERS

AFFLUENT WELL-LOCATED COMMUNITY: The city benefits from its close proximity to
Cleveland and exhibits strong socioeconomic indicators including above-average
resident wealth levels, strong full value per capita, and below-average
unemployment.

HEALTHY PROPERTY TAX BASE: The wealthy tax base is diverse with healthy
collections and the property tax rate is comprised primarily of continuous
levies which mitigate renewal risk.

WELL-MANAGED FINANCIAL OPERATIONS: The city has a history of strong solid
management which has produced strong reserve and liquidity levels and ample
financial flexibility.

MANAGEABLE LONG-TERM LIABILITIES: Above-average debt amortization combined with
a well-maintained infrastructure with dedicated income tax revenues for capital
improvements moderates the need for future borrowing, allowing the city to keep
a manageable debt profile.

IMPLIED ULTGO RATED ON PAR: Fitch makes no distinction between the LTGO rating
and the implied ULTGO rating due to the financial flexibility offered by the
city's high reserve levels.

CREDIT PROFILE

The city is located in Cuyahoga County in northeastern Ohio, approximately 13
miles west of Cleveland, 15 minutes from the airport, and in close proximity to
three interstates.

AFFLUENT POPULATION BENEFITS FROM CLOSE PROXIMITY TO CLEVELAND

With a modest 2010 population of 32,729, an increase of 3.2% from 2000, Westlake
is home to an affluent population, featuring per capita income and median
household income equal to 166% and 144%, respectively, of the state average. The
city is home to world and national headquarters including Nordstrom, Travel
Centers of America, Koyo Corporation and Bonnie Bell. Crocker Park, a mixed-use
planned development, is located on 75 acres in western Westlake. The development
features high-end retailers, restaurants, office space and residential
dwellings. In 2011, American Greetings announced plans to move its corporate
headquarters in 2014 to Westlake from Brooklyn, Ohio. The company plans to move
about 1,500 full-time workers with a payroll of $155 million to an undeveloped
site at the south end of Crocker Park. The city is currently in discussions with
American Greetings and the developer regarding tax increment financing for the
project.

The local economy supports a stable labor force with historical unemployment
rates below state and national levels. In September 2012, the city reported an
unemployment rate of 5.7%, compared to state and U.S. rates of 6.5% and 7.6%,
respectively. Major employers include St. John-West Shore Hospital (1,392
employees), Hyland Software (1,038) and Westlake City Schools (556).

HEALTHY PROPERTY TAX BASE

Despite a slight contraction from the recession, the city's tax base remains
solid, generating an above-average full value per capita of $120,000. Property
tax revenues account for approximately 29% of general fund revenues. The tax
base is diverse with the top 10 property taxpayers comprising 9.3% of assessed
value, and total property tax collections are healthy, averaging 98%. The city's
tax rate is relatively low - in 2012 Westlake had the 15th lowest residential
and 8th lowest commercial property tax rate out of 80 districts within Cuyahoga
County. The property tax rate consists primarily of continuous levies, which
Fitch views positively as there is no renewal risk. The one levy that requires
renewal, the 0.90 mill supplement for police and fire, was renewed for five
years in November 2011. The city has a strong history of voter support for
millage renewals.

WELL-MANAGED FINANCIAL OPERATIONS PRODUCE STRONG RESERVES

Income tax revenues are the primary source of general fund revenues, comprising
41%. The city levies a 1.5% income tax. Of the 1.5%, one percent is unvoted;
3/8th of one percent is voted through 2023 and dedicated to the infrastructure
capital projects fund; and 1/8th of one percent is voted and dedicated to
operations and maintenance of the recreation program and center. This levy will
expire in 2020, the last year for debt service on recreation bonds issued in
2008. If residents work in a locality that has a municipal income tax, the city
provides a 100% tax credit.

Financial operations are well maintained, preserving ample reserves which
provide comfortable margins for liquidity. The city has traditionally maintained
large balances in its general fund, well in excess of the policy minimum of
three months operating expenses. The city implemented GASB 54 in fiscal 2009.
After recording a $5.2 million operating surplus in 2009, the unrestricted (sum
of committed, assigned, and unassigned) fund balance held the equivalent of 94%
of general fund spending. The city ended 2010 and 2011 with net surpluses after
transfers of $2.5 million and $7.1 million, respectively. Unrestricted general
fund balances continued to be strong at 97% and 132% of spending for 2010 and
2011, respectively. Preliminary results through the 10 months ending Oct. 31,
2012, are positive with income tax revenues 7% ahead of last year. Officials are
estimating a $31 million general fund cash balance at the end of 2012, on par
with 2011 cash results. Fitch believes the proactive and long-standing
management team, which follows prudent budgeting practices, will continue to
provide the city with ample financial flexibility and reserves.

MANAGEABLE LONG-TERM LIABILITIES

The city's debt burden at $4,481 per capita or 3.8% of full value is moderate
and is made up of primarily overlapping school district debt. Amortization is
well above-average with 93% of debt retired in 10 years. The five-year
(2012-2016) capital improvement plan totals approximately $56 million with the
majority of the projects funded from dedicated income tax levies in the
infrastructure capital improvements and recreation funds. The city provides
pension benefits through the state-administered plan and funds 100% of its
required contribution. Carrying costs for debt and pensions (including other
post-employment benefits) is manageable at 10.3% of spending.

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 the Tax-Supported Rating
Criteria, this action was additionally informed by information from Creditscope,
S&P/Case-Shiller Home Price Index, IHS Global Insight, Zillow.com, and National
Association of Realtors.

Applicable Criteria and Related Research:
'Tax-Supported Rating Criteria', 14 Aug 2012.
'U.S. Local Government Tax-Supported Rating Criteria', 14 Aug 2012.

Applicable Criteria and Related Research:
Tax-Supported Rating Criteria
U.S. Local Government Tax-Supported Rating Criteria
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