OREANDA-NEWS. Fitch Ratings has assigned an 'AA+' to the following Alamo Regional Mobility Authority (RMA), TX obligations:

--$65.7 million senior lien vehicle registration revenue bonds, series 2016;
--$50.2 million junior lien vehicle registration revenue bonds, series 2016.

The bonds are scheduled to sell via negotiation during the week of May 16. Bond proceeds will be used to fund various mobility projects.

The Rating Outlook is Stable.

SECURITY

The bonds are special limited obligations of the RMA and payable solely from trust estate revenues comprised of a $10 county vehicle registration fee (VRF) imposed on all motor vehicles in Bexar County.

KEY RATING DRIVERS

AMPLE DEBT SERVICE COVERAGE: Pledged revenues provide ample all-in maximum annual debt service (MADS) coverage for all debt planned through 2019. A sound additional bonds test, based on historical revenues, provides solid bondholder protection against the over dilution of coverage. Fitch makes no rating distinction between the senior and junior liens due to ample all-in coverage.

POSITIVE GROWTH PROSPECTS: Surrogate revenue history of a similar fee has proven resilient to past economic downturns, annual vehicle registrations are robust, and continued growth prospects are favorable.

RATING SENSITIVITIES

PLEDGED REVENUE DECLINES: Large and sustained declines in collections and diminished coverage would put negative pressure on the rating.

CREDIT PROFILE

Alamo RMA is coterminous with Bexar County (GO bonds rated 'AAA'), the fourth most populous county in Texas. The county is part of the rapidly growing San Antonio MSA. Major employment sectors include military, government, domestic and international trade, convention and tourism, medical and healthcare, financial services and telecommunications. Wealth levels lag state and U.S. averages but are growing at a faster pace than both.

SOLID BONDHOLDER PROTECTIONS AGAINST DILUTION
The flow of funds for the senior and junior liens is standard. The indenture requires a standard debt service reserve fund based on the lesser of 100% MADS, 10% par, or 125% AADS. The additional bonds test requires MADS coverage of 1.4x and 1.3x for senior and junior lien bonds, respectively, and is based on historical revenues from any 12 months from the previous 18-month period. The senior lien rating is on par with the junior lien as Fitch does not believe the higher ABT provides significant additional protection to bondholders.

AMPLE MADS COVERAGE
Pledged revenues for fiscal 2015 totaled $15.6 million or 1.56x the projected all-in MADS (2020) for debt planned through 2019. Because collection of the VRF commenced in 2014, Fitch's revenue estimate is based on a similar fee ($10 road and bridge fee) that has been collected as part of the county's annual vehicle registration since 1995.

These revenues did not post a single decline from 1999-2015 and grew by a compound annual average of 3%, leading the Fitch Analytical Scenario Tool (FAST) to default to a modest 1% decline in VRFs under a 1% national GDP decline scenario. Based on this projected decline in pledged revenues, the 1.3x ABT of the junior lien exceeds the 'AAA' margin of 1.12x. All-in MADS coverage also compares favorably to the 'AAA' threshold. However, the short history of pledged revenue collections, fixed dollar cost of the VRF, and reliance on annual transactions leads Fitch to assign an 'AA+'.

VRF COLLECTION SAFEGUARDS
The county commissioners' court approved the $10 county VRF in August 2013 to commence in January 2014. Vehicle owners must pay the entire county VRF (comprised of various fees currently totaling $74), including the pledged county VRF, in order to receive their vehicle registration; partial payments are not allowed.

VRFs are collected by the county assessor-collector who covenants, per the funding agreement with the county, to remit the VRFs to the authority within 40 days of receipt. VRFs received by the trustee are deposited in the pledged revenue fund no later than the fifth business day preceding the first day of each calendar month per the indenture. The trustee shall deposit amounts equal to one-sixth of the interest coming due and one-twelfth of the principal coming due. Collection of the VRF will remain in effect so long as there are outstanding bonds.

POSITIVE GROWTH PROSPECTS FOR PLEDGED REVENUES
The ongoing rapid expansion of the county's population and economy, limited mass transit options and continued residential development in suburban areas will require continued dependence on private vehicles, leading to favorable prospects for pledged revenue growth. However, a lack of any inflationary adjustment in the VRF may dampen growth trends somewhat. The county's population has grown by a compound annual average of over 2% since 2000, more than twice the U.S. average (0.9%). The breadth and depth of the local economy has enabled it to readily absorb the contraction of the energy sector that services the nearby Eagle Ford Shale. The county's unemployment rate fell to a low 3.5% in February 2016, down from 3.8% the year prior.

PARTNERSHIPS KEY TO CAPITAL PROJECTS
The RMA issues debt solely for mobility projects. Per a funding agreement with Bexar County, over the next 10 years the RMA will fund two-thirds ($179 million) of various projects totaling $270 million in partnership with the county, San Antonio, VIA Metropolitan Transit, and the Texas Department of Transportation. The RMA plans to issue another $42 million of senior lien VRF bonds in 2019. The amortization rate for the current offerings is slow with 21% of principal retired within 10 years.

SPECIAL REVENUE STATUS
Fitch views the pledged VRFs as special revenues under section 902(2)(B) of the bankruptcy code, which defines "special excise taxes imposed on particular activities or transactions" as special revenues. Therefore, the rating would not be capped by an Issuer Default Rating (IDR) of the RMA. There is no bankruptcy opinion that addresses the special revenue status of the pledged funds, and Fitch is not aware of a bankruptcy in which excise taxes were involved.