Fitch Ratings has affirmed the 'AAA' rating on the following
general obligation (GO) bonds for Jupiter, FL (the town):
--$5.2 million GO bonds, series 2001;
--$10.7 million GO bonds, series 2005.
The Rating Outlook is Stable.
SECURITY
The bonds are backed by the full faith, credit, and taxing power
of the town.
KEY RATING DRIVERS
STRONG FINANCIAL MANAGEMENT: The town benefits from an
experienced and prudent management team evidenced by consistently
positive operating results.
HIGH FINANCIAL RESILIENCE: Robust general fund reserves combined
with ample revenue raising capabilities provide robust financial
flexibility.
EXPANDING LOCAL ECONOMY: Economic indicators are favorable and
the traditionally limited local economy has shown signs of
diversification.
POSITIVE DEBT PROFILE: Rapid amortization and expected
population and tax base growth will quickly reduce the town's
already moderately low debt burden, given the lack of plans for
additional debt. Carrying costs including pension and other
post-employment benefits (OPEB) are manageable.
RATING SENSITIVITIES
CONTINUED AMPLE FINANCIAL FLEXIBILITY: The rating is sensitive
to shifts in fundamental credit characteristics including the
town's strong financial management practices. The Stable Outlook
reflects Fitch's expectation that such shifts are unlikely.
CREDIT PROFILE
Jupiter is located on the eastern coast in Palm Beach County
(GOs rated 'AAA'; Stable Outlook by Fitch) and has an estimated
year-round population of 55,000.
STRONG, GROWING LOCAL ECONOMY
Recent notable growth in both the biotech and aerospace
industries has diversified the somewhat narrow economy, which
traditionally was based in tourism, healthcare and retail. The town
has added approximately 1,000 jobs in biotech and aerospace
industries since the recession began. The relatively recent Max
Planck Institute for Neuroscience continues to meet its job
creation goals.
The town's assessed valuation has grown somewhat over the past
two years after notable declines during the recession. The newly
opened Harbourside development, a $150 million mixed use
development, will augment the tax base. Fitch views management's
projections of measured tax base growth going forward as
conservative.
Wealth indices for the town are markedly above average, as
exhibited by per capita money income at 168% of the state and 156%
of the national levels. Employment metrics are similarly favorable,
with unemployment rates historically below those of the state and
the nation. Healthy employment growth of 3.5% over the past year
allowed for a simultaneous absorption of the solid 2.2% labor force
growth and a reduction in unemployment to 3.8% in November,
2014.
ROBUST FINANCIAL PROFILE
The town has consistently demonstrated positive operating
results, building robust reserves during the course of the
recession. The low tax rate provides ample revenue-raising capacity
under the millage cap. Healthy liquidity and the flexibility to
reduce expenditures round out the exemplary financial profile.
Fiscal 2013 concluded with a $3 million net operating surplus in
the general fund, equal to 8% of spending. Reserves increased to a
very high 54.6% of expenditures and transfers out. The strong
financial performance was in line with historical positive
operating trends since at least fiscal 2007, with fund balance
drawdown in one of those years attributable to capital spending.
Liquidity has been ample throughout the period, with cash and
investments exceeding liabilities by a wide margin.
The county achieved these financial results while maintaining a
very low 2.5 operating millage. Fitch notes positively that there
is ample revenue-raising capacity under the 10-mill cap. Total
taxes, of which property taxes are more than half, represent about
two-thirds of total revenues, and they have shown the first uptick
since the recession began. Fitch believes the town also has solid
expenditure flexibility.
Expected fiscal 2014 results indicate an addition to fund
balance, despite a modest appropriation of fund balance during the
budgeting process. Fitch expects the town will realize an
operational surplus given that revenues have tracked above budget
and expenditures below budget. Preliminary projections for fiscal
2015 indicate that the town will not utilize the full appropriation
and may in fact add to fund balance.
NO PRESSURES FROM LONG-TERM OBLIGATIONS
Overall debt levels are moderately low at $3,617 on a per capita
basis and 2.4% of market value. Rapid amortization, at 89.2% of
principal retired within ten years, no future debt plans, and
anticipated population and tax base growth will quickly reduce the
existing debt burden.
The fiscal 2015-2019 Community Investment Program (CIP) totals a
modest $64.8 million. The largest expenditure is $30 million for
the water system. No debt is planned over the course of the CIP.
Pay-as-you go capital financing, which Fitch views as a source of
financial flexibility, is noteworthy at $19.6 million, averaging
less than $4 million per year. This is by far the largest funding
source for general government needs, with various fees, revenues,
and grants comprising the remainder.
Pensions are provided for general employees through the
state-run Florida Retirement System (FRS) and for police officers
through the town administered Municipal Police Officers Retirement
Trust (MPORT). Total annual pension contributions are manageable at
7.3% of general fund expenditures and are not expected to increase
materially in the immediate future. The FRS funded ratio is a
reported 85.4%, or approximately 79%, after adjusting for Fitch's
assumed 7% rate of return. MPORT funding has improved over the past
few years to a reported 79.7% or estimated Fitch adjusted 76%.
Fitch considers both funding ratios to be satisfactory.
OPEB is currently funded on a pay-go basis and both the ARC and
actual costs are nominal as a percentage of government fund
spending. Carrying costs including debt service, pension and OPEB
pay-go were a very manageable 15.2% of total fiscal 2013
governmental expenditures.
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, S&P/Case-Shiller Home Price Index, IHS Global
Insight, and the National Association of Realtors.
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=978693
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Fitch RatingsPrimary AnalystBarbara Ruth RosenbergDirector+1
212-908-0731Fitch Ratings, Inc.33 Whitehall StreetNew York, NY
10004orSecondary AnalystParker MontgomeryAnalyst+1
212-908-0356orCommittee ChairpersonArlene BohnerSenior Director+1
212-908-0554orMedia Relations, New YorkElizabeth Fogerty+1
212-908-0526elizabeth.fogerty@fitchratings.com