Fitch Ratings has affirmed the rating on the following Town of Ridgefield, CT's (the town) outstanding bonds:
--$49 million general obligation (GO) bonds affirmed at 'AAA'.
The Rating Outlook is Stable.
SECURITY
The bonds are a general obligation of the town and are backed by its full faith, credit, and unlimited taxing authority.
KEY RATING DRIVERS
SOUND FINANCIAL MANAGEMENT: Ridgefield's stable operating results and solid reserve levels are a result of its willingness to raise revenues, conservative budgeting practices and ongoing expenditure monitoring.
STRONG SOCIOECONOMIC INDICATORS: Wealth levels are above average and unemployment levels are low relative to the state and nation. The affluent tax base is primarily residential and boasts a very high market value (MV) per capita.
MANAGEABLE DEBT BURDEN: The debt burden is average and is expected to remain so given the town's limited issuance plans. Amortization is very rapid and debt service costs are manageable.
AFFORDABLE RETIREE COSTS: The town's pensions are well-funded and other post-employment benefit (OPEB) liabilities are affordable, due largely to prudent plan management and a commitment to actuarial funding.
RATING SENSITIVITIES
The rating is sensitive to shifts in fundamental credit characteristics including the town's strong financial management practices and resultant financial flexibility. The Stable Outlook reflects Fitch's expectation that such shifts are unlikely.
CREDIT PROFILE
Ridgefield is an affluent suburban community, located in northwestern Fairfield County on the New York border. Its 2013 population of approximately 25,000 is up 6.4% since 2000.
SOLID SOCIOECONOMIC INDICATORS
Town residents are predominantly professionals employed in Fairfield County, Westchester County, and New York City. The local economy is anchored by the corporate headquarters of Boehringer-Ingelheim, Ltd. (BI), a privately owned German pharmaceuticals research, development and manufacturing firm, which covers 250 acres in Ridgefield. BI is the town's largest employer and taxpayer. BI has approximately 1,400 employees and totals 4.8% of taxable assessed value (TAV). BI is currently undergoing a multi-phase expansion which management expects to add to the town's tax base in future years.
Wealth levels are high. Per capita money income is over twice the national and state averages and market value per capita is a high $271,000. The September 2014 unemployment rate was a relatively low 3.9%, well-below the current state and national averages at 5.9% and 5.7%, respectively.
The town's TAV of $4.8 billion is up 1.76% following a 17.55% decline after the most recent five-year revaluation effective Oct. 1, 2012. The decline reflected the downturn in housing prices and was in line with management's expectations. Management successfully adjusted tax rates to maintain revenue neutral levels.
SOUND FINANCIAL PROFILE
The town's financial position remains strong as evidenced by its ample liquidity and sound fund balance levels. The town generated a modest net operating deficit (after transfers) of $972,000 (.7% of general fund spending) in fiscal 2013 and a stronger surplus of $1.4 million in fiscal 2014. The positive results were primarily due to the outperformance of property tax revenues and conservative departmental expenditure budgeting.
Unrestricted general fund balance totaled $16 million at fiscal end 2014, equal to a sound 11.5% of spending. The town has consistently met or exceeded its fund balance policy requiring an unassigned general fund balance equal to 8%-9% of spending.
The town's total fiscal 2015 budget of $133 million is up by a moderate 3.9% from fiscal 2014. The increase reflects higher town operating and school funding costs, as well as new general fund appropriations of $1.9 million for capital spending previously budgeted in the capital projects fund. Despite robust capital spending from operations, the budgeted fund balance draw is only $900,000. Management reports that expenditures have been tracking modestly below budget thus far in fiscal 2015 and expects to close the year in line with budgeted expectations.
MANAGEABLE DEBT BURDEN
Total debt per capita is moderate at $3,466 but debt as a percentage of MV is much lower at 1.3%, underscoring the town's substantial $271,000 MV per capita. Given minimal bonding plans over the next several years, debt ratios should remain at favorable levels. Fiscal 2014 debt service represented a moderate 8.6% of governmental fund spending, but is somewhat mitigated by a very rapid amortization rate of 86% of principal retired within 10 years.
AFFORDABLE RETIREE COSTS
The town manages three employee pension plans. Contributions in fiscal 2014 for all three plans on a combined basis totaled $2.7 million, equal to 109% of the annual pension cost (APC). As of July 1, 2013, the plans reported a funded ratio of 91.5% on a combined basis, based on the plans' 7% investment rate of return assumption. The total unfunded actuarial accrued liability (UAAL) is a modest $7.1 million, which has declined consistently in recent years due to the town's prudent funding practices.
The town continues to fund its OPEB obligation on a pay-as-you-go basis and contributed $1.8 million, or 82% of the annual required contribution (ARC) in fiscal 2014; the contribution amount equaled a modest 1.4% of fiscal 2013 spending. The OPEB unfunded liability totals a manageable $21.3 million as of July 1, 2013 and the town's OPEB trust fund had a net position of $2.3 million at fiscal end 2014. Carrying costs for debt service, pension ARC and OPEB contributions totaled a low 11.3% of governmental fund spending in fiscal 2014.
Additional information is available at 'www.fitchratings.com'.
In addition to the sources of information identified in Fitch's Tax-Supported Rating Criteria, this action was additionally informed by information from Creditscope, University Financial Associates.
Applicable Criteria and Related Research:
--'Tax-Supported Rating Criteria' (Aug. 14, 2012);
--'U.S. Local Government Tax-Supported Rating Criteria' (Aug. 14, 2012).
Applicable Criteria and Related Research:
Tax-Supported Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=686015
U.S. Local Government Tax-Supported Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=685314
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=966915
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