TEXT - Fitch affirms Green Oak Charter Township, Michigan

Thu Jan 24, 2013 3:30pm EST

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Jan 24 - Fitch Ratings has affirmed the following Green Oak Charter
Township, MI (the township) limited tax general obligation (LTGO) bonds:

--$0.9 million LTGO building authority bonds series 2000 at 'AA-';

--$0.615 million LTGO sanitary sewer special assessment bonds series 2001 at 
'AA-';

--$8.415 million LTGO sanitary sewer special assessment bonds series 2003 at 
'AA-';

--$4.1 million LTGO water special assessment bonds series 2003 at 'AA-';

--$1.75 million LTGO sanitary sewer special assessment bonds series 2004A at 
'AA-'.

Additionally, Fitch has assigned an implied unlimited tax general obligation 
(ULTGO) rating of 'AA-'.

The Rating Outlook is Stable.

SECURITY

Both the building authority bonds and the sanitary sewer special assessment 
bonds are secured by the township's limited tax general obligation pledge. The 
latter are additionally secured by the collection of special assessments levied 
on properties affected by the capital improvements.

SENSITIVITY/RATING DRIVERS

HIGH FUND BALANCE: The township maintains extremely high fund balance levels 
after repeated years of operating surpluses.

LITTLE REVENUE FLEXIBILITY: Revenues primarily come from property taxes, which 
have been declining and are at their rate limit, and state aid. State aid 
recently increased due to growth in population.

MANAGEABLE LONG TERM OBLIGATIONS: Debt, pension and other post-employment 
benefits (OPEB) costs are moderate, with little additional debt planned.

SMALL, LIMITED ECONOMIC BASE: The township is primarily residential with a small
population.

LTGO ON PAR WITH IMPLIED ULTGO: The LTGO bond are rated on par with the 
township's implied ULTGO rating on the basis of the financial flexibility 
provided by the township's elevated fund balance levels and the recent 
willingness of voters to approve a road millage.

CREDIT PROFILE

SMALL, GROWING TOWNSHIP WITH ABOVE AVERAGE WEALTH LEVELS

Green Oak Charter Township is located in Livingston County, approximately 50 
miles northwest of Detroit and 40 miles north of Ann Arbor. Per capita money 
income as of the 2010 census in the township was above average at 131% of the 
state and 120% of the nation. Unemployment in Livingston County was 8.1% as of 
October 2012, well below recent highs of close to 12%. The township's population
rose 12% to 17, 548 between the 2000 and 2010 censuses. The tax base is largely 
residential and has little concentration. The largest taxpayer and employer is 
Green Oak Village Place, a shopping center which according to management has 
remained stable despite the economic downturn.

LIMITED REVENUE RAISING CAPABILITIES

The township is currently operating at its maximum charter millage under the 
Headlee cap. TV declined a cumulative 15% over the past four years, though 
declines have slowed. Management is expecting TV to stabilize, which Fitch 
believes is reasonable based on planned development activity. Voters recently 
approved a 15 year levy for road improvements that is expected to generate about
$1.4 million per year.

The township is heavily dependent on property tax and state shared revenues, at 
27% and 49% of total general fund revenues, respectively. State shared revenues 
increased 32% in fiscal 2012, largely from the increase in population. Property 
tax revenue has been consistently declining with reductions in TV. Expenditure 
growth has been controlled through the elimination of open positions and 
increase employee contributions for health care. After several years of no 
salary increases, the township recently agreed to raises for both union and 
non-union employees.

HIGH FUND BALANCE LEVEL PROVIDES CUSHION

Despite revenue constraints, the township has had at least six consecutive years
of operating surpluses, and is projecting another surplus for fiscal 2013. The 
current unrestricted general fund balance is $4.1 million, or a very high 170% 
of expenditures, which is in line with the township's informal fund balance goal
of 150% of expenditures. The township recognizes that the reductions in TV and 
potential volatility in state aid could continue to stress revenue and views the
large fund balance as an ample cushion to protect against these revenue 
declines.

MANAGEABLE CARRYING COSTS

Overall debt is somewhat elevated at 4.3% of market value and $4,336 per capita.
The majority of the township's overall debt is overlapping debt from local 
school districts; direct debt is very low and largely self-supporting. 
Amortization is very rapid with 97% retired within 10 years and the township has
limited future capital needs.

Non-union employees participate in the Green Oak Charter Township Group Pension 
Plan (a defined contribution plan) while the township's police department 
participates in the Michigan Municipal Employees Retirement System (MERS). The 
township funds 100% of the required payment for each plan. Using Fitch's 
adjusted 7% rate of return, MERS funding is weak at 57%. OPEB is funded on a 
pay-go basis and a limited number of employees are eligible to receive these 
benefits. The township's total carrying cost for general fund supported debt 
service, pensions and OPEB is a moderate 17.5% of expenditures.
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