Standard & Poor's Ratings Services said it raised its long-term rating on Thornton, Colo.'s series 2010 open space and parks sales and use tax revenue refunding bonds to AA-plus from AA.
The outlook is stable.
"The upgrade is based on the district's continued pledged revenue growth," said Standard & Poor's credit analyst Daniel Zuccarello, "that has contributed to a significant increase in annual and maximum annual debt service (MADS) coverage levels."
The rating further reflects the city's: extremely strong 36.2x MADS coverage; reliance on sales tax for operational purposes, thereby reducing the likelihood of additional bonding; steady expansion of the sales tax base stimulated by the city's strong population growth over the past decade; and primarily residential community with good access to Denver's economic and employment base.
The preceding credit strengths are offset, in part, by the city's: concentration in the leading sales tax vendors, but they are mostly staple retailers and utilities; and below-average per-capita retail sales.
The bonds are secured by the city's 0.25% open space and parks sales and use tax as well as its 3.5% general sales and use tax.
"The stable outlook reflects our anticipation that Thornton's sales and use tax will continue to grow at a healthy rate supported by recovering economic activity and a growing population," added Zuccarello. It also that coverage will remain very strong and that management will likely not bond down to the additional bonds test, partially due to the city's reliance on sales tax for operational purposes.
