DALLAS — A rapidly expanding tax base and improved finances led Standard & Poor’s to upgrade the underlying credit of Potter County to AA from AA-minus as the county priced a refunding issue, while the agency also raised Tom Green County two notches to AA-minus from A. Analysts said a lower debt burden and stable financial position led to the upgrade of Tom Green, which applies to about $14.8 million of outstanding debt. Officials don’t plan to sell any new-money debt for a few years but may come to market with refunding bonds within the next year, according to analysts. “I’m certainly glad they did that, as we’ve taken a lot of steps over the past decade to improve our fiscal health,” said county judge Mike Brown. “Our commissioner’s court mandated we keep our fund balance at a minimum of 20% of expenditures and we’ve been able to do that despite a few drawdowns for some one-time capital projects.” Analysts said the county expects a general fund balance of about $5.7 million for fiscal 2008 after drawdowns the past two years to fund the one-time projects. “It is our belief that Tom Green County’s financial position will remain stable at its current level while additional capital needs stay manageable,” said Standard & Poor’s credit analyst Jennifer Garza. “Furthermore, we also believe the county’s economic environment will remain stable and also continue to be an economic center for that part of Texas.” The county, which includes the city of San Angelo, is home to about 105,000 residents in West Texas. The county’s taxable-assessed value has increased the past five years to $3.7 billion this year from $2.7 billion in 2003, according to analysts. Judge Brown said the county hasn’t been impacted by the national slowdown in the housing market and has seen increases in all its financial benchmarks. “The county is a central shopping and medical center for a large swath of rural Texas,” Brown said. “Our hotel and motel industry continues to see high occupancy rates and all types of construction remains strong in the area.” Tom Green County carries an underlying rating of A from Fitch Ratings, while Moody’s Investors Service doesn’t rate the credit. Moody’s assigned a Aa3 rating to Potter County’s refunding, which priced yesterday. The Texas Panhandle county, which includes Amarillo, sold about $9.1 million of general obligation refunding bonds through a negotiated sale led by First Southwest Co. Complete results weren’t available by press time. County auditor Kerry Hood said it was hard to quantify exactly what the upgrade meant for the refunding, but it did preclude the county from having to secure bond insurance. Mary Jane Dietz of Southwest Securities, the financial adviser to the county, said the refunding resulted in savings of about 4.66%, or nearly $467,500, for the county. “We were so excited to get this sale done [yesterday] as the market just looked so dismal earlier in the week,” Dietz said. “The upgrade certainly helped, but with the current bond-insurance market some people may want uninsured debt with a double-A underlying rating rather than triple-A insured paper anyway.” Standard & Poor’s said the upgrade reflects the county’s “significant local property-tax base expansion and a considerably improved financial position,” and applies to $18 million of debt outstanding. The county’s property tax base averaged 5.3% annual growth the past five years to $5.8 billion. The unreserved general fund balance was $15 million for fiscal 2007, and officials expect a $3 million drawdown this year for expenditures related to the restoration of the county courthouse, according to analysts. Potter County’s population of more than 122,000 is up nearly 8% from the 2000 Census.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.