Standard & Poor's Ratings Services said it has raised its issuer credit rating on Tamarac, Fla. to AA from AA-minus.
"The upgrade reflects steady increases in general fund reserves despite significant revenue declines," said Standard & Poor's credit analyst Hilary Sutton.
Standard & Poor's has also raised its underlying rating (SPUR) to AA-minus from A-plus on the city's debt secured by its covenant to budget and appropriate. The outlook is stable.
The AA-minus rating is based on the city's covenant and reflects the city's: general obligation general creditworthiness (AA/stable); participation in the Broward County economy, which, although experiencing economic weakness, is broad and diverse; very strong available general fund reserves likely to remain so despite a small drawdown projected for fiscal 2012 year-end due to one-time capital expenditures; conservative management, in our view, with formal financial policies and a multiyear capital improvement program; and low debt levels, coupled with above-average principal amortization.
Offsetting these strengths are the city's underfunded pension plans.
There is a 2x historical additional bonds test and other restrictions on debt secured by non-ad valorem revenue sources. Although debt service competes with all other operating costs of the city government, especially given the increased pressure that Amendment 1 (a constitutional amendment that, among other things, increases tax exemptions and limits tax revenue growth) and the economic downturn have placed on ad valorem revenues, the city has a strong financial position and a diverse non-ad valorem revenue base, which are credit strengths.
Tamarac is in northwestern Broward County, about 12 miles west of Fort Lauderdale, and covers 12 square miles. The population of approximately 60,000 reflects a 9% increase from the 2000 Census.