NEW YORK - Standard & Poor's Ratings Services said it raised its rating on Hilton Head Island Public Service District No. 1, S.C.'s general obligation (GO) debt two notches to AA-plus from AA-minus based on the district's history of strong financial operations and stable economy. The outlook is stable.
Standard & Poor's also assigned its AA-plus rating, and stable outlook, to the district's $4 million series 2010 GO bonds.
The rating further reflects the district's: affluent community in northern Hilton Head Island ('AA+' GO debt rating); well-established, tourism-centered local economy with below-average unemployment; large and growing property tax base; and strong financial position, supported by healthy fund balance reserves.
"We believe the district should continue to maintain strong financial operations, supported by the service area's ongoing growth and development," said Standard & Poor's credit analyst Linda Yip. "Furthermore, with limited additional capital and debt needs, we believe the district should maintain a stable debt burden."
The district continues to maintain a strong financial position. Unrestricted net assets have averaged more than 58% of expenditures over the past three fiscal years. The district ended fiscal 2009 with a $6.4 million balance that, while lower than previous years, still accounted for a strong 44.8% of expenditures; management attributes this decline primarily to the funding of a reverse osmosis plant, completed in fiscal 2009. Estimated fiscal 2010 results show an increase in unrestricted net assets to about $6.6 million, or 45% of operating expenditures.
A property revaluation that went into effect for fiscal 2009 increased the district's property tax base by 12.4% to $360.8 million. Market value totals $8.4 billion, or an extremely strong $248,050 per capita. Wealth and income levels are, in Standard & Poor's opinion, strong.
Overall net debt accounted for a low 1.6% of market value, or a moderate $3,846 per capita. Amortization on the district's total GO debt, including the new bonds, is average with officials planning to retire 57.4% over 10 years and 100.0% by 2030.
