DALLAS - Harris County, which includes Houston, will competitively price $395 million of tax anticipation notes next week to cover cash-flow needs in the upcoming fiscal year.
Texas' most populous county is enjoying a relatively robust economy compared to most urban centers and last April won a general obligation debt upgrade to AAA from Standard & Poor's.
The upcoming notes carry ratings of SP-1-plus from Standard & Poor's and F1-plus from Fitch Ratings. Moody's Investors Service, which rated last year's issue MIG-1, has not issued a report on next week's deal.
First Southwest Co. is financial adviser.
In providing the GO upgrade on April 16, Standard & Poor's analyst James Breeding cited the county's diversifying tax base, strong reserve levels, low-direct debt levels, and additional financial resources through toll road revenues.
Harris County, unlike Dallas County, operates its own toll roads throughout the greater Houston area. In the Dallas area, a separate subdivision of the state, the North Texas Tollway Authority, builds and operates the toll system.
In its credit report on the upcoming notes, Fitch pointed out that Harris County's 2009 anticipated cash ending balance of $272 million represents a strong 20.6% of total general fund receipts.
"Although this projection anticipates a modest $14 million drawdown from unaudited fiscal 2008 levels, it is conservatively based on modest assessed valuation growth of 4.5%, well below the actual average of almost 8% per year on average over the past five fiscal years," wrote Fitch analyst Jose Acosta, who rates the county's GO debt at AA-plus.
Moody's rates Harris County's GO debt Aa1.
Last year, the county issued the same amount of Tans, and in 2006 issued $295 million.
With a population of 3.9 million, Harris County is the third most populous in the nation behind Los Angeles County and Cook County, Ill. Population continued to grow in the past year as the oil and petrochemical industries boomed. But the county has diversified to a large extent in the past decade, with strong growth in medical research, transportation and high-tech.
"The Houston area's low cost of living enabled the county to maintain positive in-migration, which benefits its retail base and residential real estate sector," Fitch's Acosta noted. "Additionally, the county's trade and export sectors remain significant, given the Port of Houston's dominance of the Gulf region. As in many parts of the country, residential building permit activity is down, with values posting a 20% decline in fiscal 2008."
