2015-03 Fitch Investors Rating
Credit Rating Reports
2015-03 Fitch Investors Rating
3/12/2015 12:54:38 PM
3/12/2015 12:54:32 PM
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3/52015 Fitch Ratings I Press Release <br /> As is typical in Indiana, due to stringent restrictions on the issuance of general obligation debt,the city relies <br /> upon the use of lease rental revenue bonds payable from ad valorem taxes. The obligation to pay is not subject <br /> to appropriation, but is subjectto abatement in case of damage or destruction of the leased premises. The <br /> requirementto maintain property and casualty insurance, along with rental interruption insurance sufficient to <br /> cover two years of abated rental payments, mitigates the abatement risk. <br /> The College Football Hall of Fame,for which the series 2011A bonds were issued,vacated its building in South <br /> Bend at the end of 2012 and moved to Atlanta. The city is currently in conversations with private entities <br /> interested in redeveloping the space for commercial use. It is also being vetted for a potential civic use. Fitch <br /> believes there is minimal risk of lease payments not continuing as there is no appropriation risk,a special <br /> property tax levy is used to pay debt service without tapping into general fund revenue or local option income <br /> tax revenue. The last lease rental payment is Feb. 1, 2018, at which time the city owns the facility outright. <br /> The majority of city employees participate in the Public Employees Retirement Fund (PERF), an agent multiple- <br /> employer defined benefit plan, administered by the state. The city continues to fund its statutory annual required <br /> contribution as mandated by the state. Based on a 7% rate of return, Fitch-estimated city's local portion has a <br /> weak funded ratio of 55%. <br /> In addition to PERF, the city has two single employer defined benefit plans for police and fire fighters hired prior <br /> to 1977. Indiana statute requires funding only the next year's budgeted expenditure,these plans have been <br /> funded on a pay-as-you-go-basis and therefore have very low funding ratio of approximately 3%. As a result of <br /> property tax reform, in 2009 the state assumed the funding of the two plans. The combined UAAL for these <br /> plans is$141.2 million. Fitch does not expectthe city to be responsible for this liability but recognizes as a risk <br /> the possibility thatthe state could change the law again. In that case,this sizable liability-2.9% of full value, <br /> could revert to the city. <br /> The city addresses its other post-employment benefits(OPEB)costs on a pay-as-you-go basis and has no <br /> plans to pre-fund the liability. The unfunded liability was$21.5 million, or a modest 0.4% of taxable market <br /> value as of Jan. 1, 2013. Overall debt service, pension, and OPEB costs are manageable at 17.8% of total 2013 <br /> governmental fund expenditures. <br /> Contact: <br /> Primary Analyst <br /> Karen Wagner <br /> Director <br /> +1-212-908-0230 <br /> Fitch Ratings, Inc. <br /> 33 Whitehall Street <br /> New York, NY 10004 <br /> Secondary Analyst <br /> Christina Lin <br /> Analyst <br /> +1-212-908-0548 <br /> Committee Chairperson <br /> Amy Laskey <br /> Managing Director <br /> +1-212-908-0568 <br /> Media Relations: Elizabeth Fogerty, New York, Tel: +1 (212) 908 0526, Email: <br /> firstname.lastname@example.org. <br /> In addition to the sources of information identified in Fitch's Tax-Supported Rating Criteria,this action was <br /> additionally informed by information from Creditscope, S&P/Case-Shiller Home Price Index, IHS Global Insight <br /> and, National Association of Realtors. <br /> Applicable Criteria and Related Research. <br /> —'Tax-Supported Rating Criteria' (Aug. 14, 2012), <br /> —'U.S. Local Government Tax-Supported Rating Criteria' (Aug. 14, 2012). <br /> hH ps://www.fitchratings.com/creditdesk/press_releases/detail.cfm?print=1&pr_id=980802 3/4 <br />
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