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TEXT-Fitch affirms Colleyville, Texas
July 13, 2012 / 4:41 PM / 5 years ago

TEXT-Fitch affirms Colleyville, Texas

July 13 - Fitch Ratings has affirmed the 'AAA' rating on the following
Colleyville, Texas (the city) limited tax general obligation (GO) 
debt: 

--$4.4 million outstanding GO bonds, series 2007;
--$4.8 million outstanding combination tax and tax increment refunding bonds 
(TIF bonds), series 2011;
--$2.1 million outstanding GO refunding bonds, series 2011.

The Rating Outlook is Stable.

SECURITY

The GOs and TIF bonds are secured and payable from ad valorem taxes levied 
against all taxable property located within the city, subject to a $2.50 per 
$100 assessed valuation limitation imposed by the state constitution and city 
charter. The TIF bonds are additionally secured by a lien and pledge of certain 
tax increment revenues of the city. 

KEY RATING DRIVERS

HEALTHY FINANCIAL PROFILE: The city's financial profile remains very healthy as 
evidenced by strong reserve levels, ample liquidity, conservative budgeting 
practices, and strong financial policies.

SOLID TAX BASE: The city has an affluent tax base that is primarily residential 
in nature. Taxable assessed values (TAV) have held relatively steady during the 
downturn with only a modest decline in fiscal 2012. The expansion of State 
Highway 26, which traverses the city, provides positive indication for future 
commercial growth.

MANAGEABLE DEBT BURDEN: Direct debt levels are expected to remain modest given 
manageable capital plans and rapid amortization of existing debt, although 
overall debt levels are moderately high due to overlapping school district debt.

BROAD AND DIVERSE ECONOMY: The city is part of the broad and diverse Dallas-Fort
Worth-Arlington metropolitan statistical area (MSA) economy and employment base.
Local wealth levels as measured by median household income are nearly 300% the 
national average.

CREDIT PROFILE

Colleyville is an upper income community located in the Dallas-Fort Worth MSA, 
approximately 11 miles northeast of Fort Worth. The city has an estimated 
population of nearly 23,000 and anticipates reaching a full build-out population
of 26,000 in the next 10 to 15 years. The city limits cover approximately 13 
square miles and its tax base of nearly $3.9 billion is primarily residential. 
The city's efforts to attract more retail and commercial development have been 
met with success, helping to diversify the city's revenue stream and tax base. 
With additional shopping and entertainment venues as well as office space, the 
city's retail activity has generated healthy sales tax revenue growth. The city 
continues to focus on promoting economic development in the community to further
diversify its tax base.

SOUND FINANCIAL POSITION

The city's financial position remains healthy despite the recent challenges of 
the economic recession and the city's life cycle shift from rapid growth to 
nearing full build-out. Sales tax revenue growth has offset declines in building
permits and licenses, while property tax receipts, which account for 
approximately 60% of general fund sources, continue to perform well benefiting 
from TAV growth and collection rates of 99% on a total basis. The city's tax 
rate has held steady at $0.356 per $100 TAV, which is comparable to surrounding 
communities. 

The unreserved general fund balance has historically been maintained well above 
the city's 25% of spending policy. At the close of fiscal 2011, the unrestricted
general fund balance (committed, assigned, and unassigned per GASB 54) was $10.9
million, representing a very strong 61.9% of spending. The budget is balanced 
for fiscal 2012 and management reports performance is tracking well within 
budget. The city plans to spend down some of its fund balance periodically for 
one time capital outlays. 

HIGH OVERALL DEBT BURDEN; LIMITED CAPITAL NEEDS

The direct debt burden is manageable, although the sizeable debt of overlapping 
school districts raises the overall per capita debt to the high category. Debt 
retirement is rapid at 85% in 10 years. Fitch considers future capital needs 
manageable, and the city does not anticipate any additional tax-supported 
borrowings in the near term. 

Pension benefits are provided through the Texas Municipal Retirement System 
(TMRS), a statewide agent multiple employer plan. The city's funding position is
a robust 105% as of December 2011. Other post-employment benefits offered to 
retirees is limited to group life insurance of up to $7,500. This benefit is 
also offered through TMRS and the city has historically funded 100% of its 
annual required contribution, thus this plan is also fully funded.

STABLE ECONONMY

Despite being nearly built-out and a marked contraction of new construction over
the last two fiscal years, the city's tax base has held up well. TAV declined 
modestly (0.3%) in fiscal 2012, but overall has held its valuation from fiscal 
2010 levels. Certified estimates for fiscal 2013 reflect about 2% growth, but 
this does not reflect the impact of pending appeals. Wealth levels as measured 
by median household income are nearly three times that of the national level.

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