Dallas-- Ohio is issuing $80 million of capital facilities lease-appropriation bonds to fund parks and recreation improvement projects.
The series 2016A bonds, being issued by through the state treasurer's office, expected to price during the week of March 21nd.
Hilltop Securities Inc. is the senior manager and PNC Capital Markets LLC, Estrada, Hinojosa & Co., and US Bancorp are co-managers. Acacia Financial Group, Inc. is the financial advisor. Bond Counsel is Ice Miller LLP and Issuer and Disclosure Counsel is Peck, Shaffer & Williams, a division of Dinsmore & Shohl LLP. Shumaker, Loop & Kendrick, LLP is Underwriter's Counsel.
The bonds, which mature between 2017 to 2031, are secured by the state's pledge of legislative appropriation, with the lease renewable biennially until the bonds are retired. The rental payments securing the bonds are collected under lease agreements between the Ohio Public Facilities Commission and the Department of Natural Resources. The lease agreement is subject to biennial appropriation from the state's general revenue fund .
Ohio's DNR operates and maintains the state's system of parks and promotes their use by the public. Through its division of parks and recreation, DNR plans, constructs, equips and furnishes public service facilities in state parks. Those facilities include inns, lodges hotels cabins camping sites restaurants, golf courses and boating and swimming facilities.
Fitch Ratings assigned an AA rating to the bonds, one notch below Ohio's AA-plus general obligation rating.
Fitch rates $8.5 billion of outstanding state GO bonds including highway capital improvement bonds and $1.6 billion outstanding appropriation-backed bonds including those issued by the Treasurer of State and the Ohio Building Authority.
Though the Buckeye state has steadily gained jobs since July 2010, according to Fitch it has yet to fully recover the jobs lost prior to and during the last recession. "Job growth has lagged the U.S., most recently recording 1.5% year-over-year growth in December 2015 versus the U.S. rate of 1.9%," according to a Feb. 12 Fitch report.
Ohio Gov. John Kasich signed the state's $71.2 billion 2016-2017 budget last June. The budget absorbs an estimated net income tax cut of $1.9 billion over two years for individuals and small businesses. It cuts taxes across all brackets by 6.3 %.
Fitch said that the tax changes are expected to reduce biennial revenues by $869 million in fiscal 2016 and $952 million in fiscal 2017 "moderating what would otherwise have been strong revenue growth."
The tax reductions are partially offset by an increase in cigarette taxes, according to Fitch. Smokers pay 35 cents more for a pack of cigarettes, bringing the total tax to $1.60.
Ohio has more than $2 billion in its rainy-day fund, the highest in the state's history. On July 9, 2015, the state deposited $526 million into the fund as part of its new two-year budget. The move pushed the fund's balance to its record peak.