OREANDA-NEWS. Fitch Ratings has assigned a rating of 'A+' to the following bonds to be issued by the city of Atlanta, Georgia:

--$38,000,000 tax allocation refunding bonds (Eastside project), series 2016.

The bonds will be sold via negotiation on or about May 10. Proceeds from the sale of the bonds will refund in full the outstanding tax allocation bonds (Eastside project), series 2005B resulting in level annual debt service savings without extending final maturity.

The Rating Outlook is Stable.

SECURITY

The bonds are a limited obligation of the city payable solely from the pledged tax increment revenue (TIR) generated within the Eastside tax allocation district (TAD) and related investment earnings. Pledged tax increment revenues are generated from taxes levied by the city of Atlanta, Fulton County, and the Atlanta Public Schools (APS). The city anticipates cash funding a debt service reserve fund (DSRF) equal to maximum annual debt service (MADS) on the bonds.

KEY RATING FACTORS

SOLID COVERAGE CUSHION: Audited fiscal 2015 pledged revenues totaling $11.7 million are equal to 3.7x estimated MADS following issuance. Preliminary revenue estimates for fiscal 2016 are near $13 million following an 11% increase in the Eastside TAD's taxable assessed value (TAV) for the year. Fitch estimates that fiscal 2015 pledged revenues could decline by as much as 73% before coverage of MADS would decline to 1.0x - equal to 1.9x the largest historical annual revenue decline, or 12.2x the revenue loss estimated by the Fitch Analytical Sensitivity Tool (FAST) under a 1% national GDP decline scenario.

CENTRAL ATLANTA LOCATION: The Eastside TAD is relatively small in size encompassing a land area of 890 acres but favorably located within Atlanta's central business district and midtown area which should promote long-term stability in property values and pledged TIR.

MODERATE CONCENTRATION RISK: The largest taxpayers account for a high proportion of the Eastside TAD tax digest and increment value. However, they are largely comprised of multi-family residential properties from which TIRs are generated by individual owners or renters, which lessens concentration risk.

LOW LEVERAGE RISK: The additional bonds test (ABT) requires a minimum 1.5x MADS coverage from prior year revenue as a condition precedent to the issuance of additional parity debt. There are no plans for additional parity issuance, and the Eastside TAD has accumulated considerable reserves that may only be used to fund development projects that might arise in the future or to pay down debt. Fitch does not expect the city to issue a level of additional parity debt that would alter our assessment of the sufficiency of their coverage cushion.

SEPARATION FROM OPERATING RISK: The bonds are backed by a lien on tax increment revenues which are defined as 'special revenue' within Section 902(2)(C) of Chapter 9 of the Bankruptcy Code. A lien on special revenues would be preserved in the event of a municipal bankruptcy filing and be exempt from the automatic stay provisions of the Code.

RATING SENSITIVITIES

SHIFTS IN COVERAGE CUSHION: The rating is sensitive to unexpected shifts in the coverage cushion of MADS driven by non-cyclical changes in the value of the Eastside TAD tax digest, changes in tax rates, and/or the issuance of a significant amount of additional bonds.

CREDIT PROFILE

The Eastside TAD encompasses 890 acres of land within the city's central business district and midtown. It was established in 2003 to promote the development of commercial and residential projects and certain governmental infrastructure and amenities in the downtown area of the city, among other functions. Projects undertaken since its inception include the Centennial Olympic Park and Capitol Gateway.

SOLID REVENUE RESILIANCE TO HISTORICAL LOSSES
Pledged revenues for fiscal 2015 totaled $11.7 million or 3.7x the estimate of MADS following issuance ($3.16 million). Preliminary fiscal 2016 pledged revenue totals $12.99 million or 4.1x estimated MADS. Fitch's revenue estimate reflects 10-year historical tax collection rates and a 1% collection fee to the county tax commissioner. FAST generates a 6% decline in Eastside TIR under a 1% national GDP decline scenario, or 12.2x the revenue loss that could be experienced before MADS coverage would decline to 1.0x. Alternatively, Fitch estimates fiscal 2015 pledged revenues could experience a decline equal to 1.9x, the largest actual revenue decline before MADS coverage would decline to 1.0x.

Pledged TIR is derived from the levy of taxes by the city of Atlanta, Fulton County, and APS on the estimated taxable value of the Eastside TAD (the certified tax digest less resolved appeals, credits, and exemptions). The total tax levy is then multiplied by the increment ratio (the incremental value over the certified base value) against the total tax levy. Taxes become due between August and October each year. Eastside TAD TIRs received by the city are deposited in the Eastside TAD debt service fund until transferred to the bond trustee no later than the fifth business day preceding each Jan. 1 to pay debt service on the bonds due Jan. 1 and July 1 of the following year.

HEALTHY TAX DIGEST GROWTH EXPECTED TO MODERATE
The current trend of urbanization bodes well for property values over the intermediate to long term given the Eastside TAD's location within Atlanta's business corridor and midtown. New construction opportunities are limited by the Eastside TAD's developed status and limited geographic expanse, but some development opportunities are reported to exist within the Eastside TAD's southern border. The Eastside TAD's certified tax digest for tax year 2015 (fiscal 2016) is $692.6 million or 2.3x the certified base value of $299.7 million. The tax digest has increased at a CAGR of 6% since fiscal year 2006. This includes gains of 6.9% and 13.9% the last two fiscal years largely driven by improvement in the economy and housing market and property appreciation.

MULTI-FAMILY RESIDENTIAL PROPERTIES DRIVE TAXPAYER CONCENTRATION
The top 10 taxpayers account for a high 30% of the updated tax digest or 50.4% of the incremental value for fiscal year 2016. However, concentration risk is lessened considerably by the fact that the majority of large taxpayers are multi-family residential properties, from which taxes are ultimately derived from individual condominium owners or renters. The largest non-residential taxpayers account for a more moderate 12.6% of the updated tax digest or 27.7% of the incremental value and include a Courtland hotel, several office buildings, and a parking garage.

LOW RISK TO ADDITIONAL LEVERAGE
The series 2016 bonds will be the only bonds outstanding backed by a pledge of the Eastside TAD TIR following issuance. The city does not anticipate undertaking any major projects within the Eastside TAD nor does it plan to issue additional bonds on parity with the series 2016 bonds to be issued. The Eastside TAD has accumulated significant reserves from which it could fund future development projects, if any materialize. The total fund balance of the Eastside TAD was $71.8 million in fiscal year 2015 having steadily increased from $46.5 million in fiscal year 2011. A moderate to low level of risk to additional leverage results from the combination of strong reserves, the well-developed nature of the Eastside TAD, and adequate legal provisions limiting the issuance of additional parity debt based on a 1.5x MADS coverage test.

LOW RISK TO MILLAGE RATE CHANGES AND DELINQUENT COLLECTIONS
The total millage rate levied within the Eastside TAD (41.53 mills) is comprised of 9.39 mills levied by the city, 21.64 mills by the APS, and 10.5 mills by the county. It has been flat dating back to 2006 but is subject to change over time. Fitch does not consider risk to tax rate changes to be material as property taxes fund a considerable share of the respective governmental entities' general fund budgets: 31% for the city, 69% for APS, and 81% for the county for fiscal year 2016. Current tax collections over the last decade have averaged 96.9% for the city and APS and 94.8% for the county but are much higher on a total basis at 99.5% and 98.8%, respectively.