Standard & Poor’s on Monday revised the outlook to stable from negative on Osceola County, Fla.’s A-plus rating on 2006 and 2010 limited-tax general obligation bonds.
The stable outlook reflects Standard & Poor’s assessment of the stabilization of the county’s property tax base, which allowed it to maintain adequate maximum annual debt service coverage on the bonds, according to S&P analyst Linda Yip.
The agency also affirmed its A-plus rating on the county’s GO debt.
Osceola County, about 18 miles south of Orlando, had $857.8 million of GO and revenue bonds outstanding though 2041, according to the county’s 2012 audit. The county has a population of about 269,000.
“We believe the county’s property tax base stabilization will likely allow management to maintain adequate maximum annual debt-service coverage,” Yip wrote.
If a severe decrease in the county’s assessed property value led to weak or insufficient coverage S&P said it could lower the rating.
If coverage increased to stronger levels over the next two years then the rating could be raised. Standard & Poor’s said the latter is unlikely based on current trends.
The county’s A-plus GO rating reflects the county’s liquidity and lack of current plans to issue additional GO bonds.
“Since the onset of the housing market downturn, Osceola County, like other parts of the state, has experienced a significant property tax base deterioration,” said Yip.
The $16.5 billion taxable assessed value for fiscal 2013 is a 37.4% decrease from the $26.3 billion in fiscal 2008.
The pace of annual decline in assessed value continues to slow with a decrease of 1% in fiscal 2013 compared with 7.8% in 2012, 16.1% in 2011 and 17.2% in 2010, S&P said.
The property tax is the largest source of budget funding for most cities and counties in Florida. Many local governments are beginning to see property values rise.
