TEXT-Fitch affirms Cameron Park Cmty Service District, Calif. GOs

Tue Feb 19, 2013 2:01pm EST

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Feb 19 - Fitch Ratings has affirmed Cameron Park Community Service District,
California's (the district) general obligation bonds (GOs) as follows:

--$7.8 million Election of 2005, series A at 'AA-'.

The Rating Outlook is Stable.

SECURITY

The bonds are secured by an unlimited ad valorem tax levied on all taxable
property within the district.

KEY RATING DRIVERS

ADEQUATE RESERVES: The district has maintained an unrestricted general fund
balance of more than $2.5 million, which while relatively small represents more
than 50% of annual spending.

MODEST TAX BASE DECLINES: The district's assessed values declined for a fourth
consecutive year in fiscal 2013 and are now 10% below the peak level recorded in
fiscal 2009. Local wealth indicators are above the state averages.

CONCENTRATED REVENUE SOURCES; EXPENDITURE FLEXIBILITY: Property taxes are the
single largest revenue source for the district, accounting for around 70% of
total general fund revenues. This concentration risk is somewhat mitigated by
the district's ability to quickly modify contracted fire protection service
levels, the district's largest expenditure item.

LOW DEBT: Total debt ratios are low, as the Election of 2005 bonds are the only
outstanding debt; the district reports no plans for additional issuance. The
outstanding bonds feature slow amortization and limited use of capital
appreciation bonds.

RATING SENSITIVITIES

Due to the district's limited operations, concentrated revenue sources, and a
retiree service-oriented economy, the rating is capped at its current level. An
unexpected large outlay that significantly reduces operating reserves could
apply negative rating pressure, as could continued AV declines.

CREDIT PROFILE

The district is located approximately 30 miles east of Sacramento and serves
most of the Cameron Park community. Approximately 18,000 residents live within
the district's 6.7 square miles. The district provides fire protection,
emergency, parks and recreation, street lighting, and landscaping services.

STABLE FINANCIAL RESULTS

The district has consistently generated operating surpluses and built up
reserves over the past five fiscal years. The fiscal 2011 (latest audit
available) ending unrestricted general fund balance was $2.5 million, equivalent
to 50% of spending. Management reports that fiscal 2012 is projected to end with
a modest surplus and corresponding increase in reserves.

The district has a history of conservative budgeting, with actual results
typically outperforming budget. According to the latest budget projection,
fiscal 2013 operations will likely be break-even, and the reserves will stay
above 50%. Fitch considers this expectation reasonable given recent results.

DECLINING REVENUES; FLEXIBLE COSTS

Due to the district's limited operations, it has both concentrated revenues and
expenditures. Property tax receipts (70% of total) are by far its largest
revenue source, while contracted fire service (65% of total) is the major
expense.

The housing market downturn during the last recession led to declines in
property tax receipts. In fiscal 2010 the district responded to the revenue drop
by successfully adjusting downward its contracted fire service level, saving
$0.5 million or 10% of total expenditures. The district retains the flexibility
to further adjust service levels with 30 days' notice to the provider, which is
seen as a credit strength. In addition, the district could discontinue
discretionary capital spending in the event of financial pressure.

Labor costs are well contained. The district only employs 10 full-time staff
with paid benefits, and hires many part-time seasonal workers without benefits.
Additionally, part of the labor cost is fully reimbursed through an
intergovernmental joint power authority agreement for providing ambulance
services.

The district is also considering several measures to enhance its financial
position, including reducing other post-employment benefits (OPEB) for future
employees and seeking additional revenues from renting out a newly built
community center.

SOUND ECONOMY; LOW DEBT

Since the recession, assessed value (AV) has contracted by a cumulative 10%,
from $2.14 billion in fiscal 2009 to $1.93 billion in fiscal 2013. In response,
the district increased the tax rate for the GO debt service from $21.3/$100,000
AV in fiscal 2010 to $26.7 in fiscal 2013, which is still an affordable level.

Local economic activity is focused on providing services to retirees, which has
provided a measure of stability. The county's December 2012 unemployment rate of
9.4% was slightly lower than the state's 9.7% rate. The district's median
household income was 18% higher than the California average in 2011, indicating
an above average wealth profile.

The outstanding 2005 GO bonds are the district's only outstanding debt. Adding
overlapping debt, the district's total debt burden is low at 1.9% of AV and
$2,200 per capita. The district reports no identified capital needs, and
maintenance costs are sufficiently covered by surplus revenues. The district
also sets aside funds for capital replacement. Budgeted fiscal 2013 total
carrying costs (debt service, pension, and OPEB) are an affordable 14% of total
governmental expenditures.

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 Fitch's Tax-Supported
Rating Criteria, this action was additionally informed by information from
Creditscope, University Financial Associates, S&P/Case-Shiller Home Price Index,
IHS Global Insight, National Association of Realtors.

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

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