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.