NEW YORK - Standard & Poor's Ratings Services said it raised its underlying rating (SPUR) on Louisiana Local Government, Environmental Facilities, & Community Development Authority's revenue debt, secured by Bossier City, La.'s lawfully available funds pledge, one notch to A-plus from A based on the city's strong financial position, evidenced by its willingness to implement cost-saving measures in fiscal 2010 to preserve strong reserves. The outlook is stable.
At the same time, the rating service assigned its A-plus long-term rating, and stable outlook, to the authority's $60 million series 2010 revenue bonds, supported by Bossier City's lawfully available funds pledge.
In Standard & Poor's view, the rating reflects the city's: role as an economic, employment, health care, educational, and entertainment center for a four-parish area; and strong financial position, evidenced by very strong reserves, as well as the presence of a $30 million gaming fund reserve for capital needs and unexpected events.
In Standard & Poor's opinion, these credit strengths are offset, in part, by the city's: moderately high overall net debt per market value, and slow debt amortization schedule.
"A history of strong financial performance somewhat mitigates our concerns regarding the city's reliance on sales tax collections for general fund revenues," said Standard & Poor's credit analyst Scott Sagen. "We, however, believe management should maintain reserves while running balanced operations and making debt service payments. In addition, we think the city's limited capital needs will help moderate high debt levels."
The city's lawfully available funds are defined in the loan agreement as the funds, income, revenues, fees, receipts, or charges of any nature from any source whatsoever on deposit with the city, provided city officials do not legally dedicate and require such funds for other purposes. Lawfully available funds include all of the hotel-motel occupancy taxes received by the city from the state and the Shreveport-Bossier Convention & Tourist Commission.
Despite annual general fund reserve declines since fiscal 2007, the city's financial position remains strong, evidenced by its willingness to implement cost-saving measures in fiscal 2010 to maintain still-strong reserves.
The city's unreserved general fund balance declined to $6.5 million, or a strong 11% of expenditures, in fiscal 2009 to meet operating needs. Because of rising pension costs related to a larger workforce, management implemented several cost-saving measures in fiscal 2010, including reducing staffing levels by roughly 13% and instituting a hiring freeze.
Following the city's cost-control measures, officials expect to increase the unreserved fund balance to $7.7 million, or an estimated 17% of budgeted expenditures, in fiscal 2010. In addition, management's ability to use revenues in excess of $30 million from the riverboat gaming special revenue fund for operations and debt service payments provides additional revenue flexibility.
The city's diverse property tax base continues to expand. The tax base grew by an average of almost 7% annually since fiscal 2006 to $503 million for fiscal 2009.
