OREANDA-NEWS. Fitch Ratings has affirmed the following Green Oak Charter Township, Michigan (the township) limited tax general obligation (LTGO) bonds:

--\$805,000 LTGO building authority bonds series 2000 at 'AA-';
--\$550,000 LTGO sanitary sewer special assessment bonds series 2001 at 'AA-';
--\$7.8 million LTGO sanitary sewer special assessment bonds series 2003 at 'AA-';
--\$3.8 million LTGO water special assessment bonds series 2003 at 'AA-';
--\$1.6 million LTGO sanitary sewer special assessment bonds series 2004A at 'AA-'.

Additionally, Fitch affirms the township's implied unlimited tax general obligation (ULTGO) rating at 'AA-'.

The Rating Outlook is Stable.

SECURITY

The bonds are general obligations of the township to which it has pledged its full faith and credit and ad valorem pledge subject to applicable charter, statutory, and constitutional limitations). The building authority bonds have an irrevocable pledge of cash rental payments paid by the township to the building authority.

The special assessment bonds are additionally payable from special assessments levied on properties affected by the capital improvements.

KEY RATING DRIVERS

SUBSTANTIAL RESERVE LEVELS: The township maintains extremely high fund balance levels relative to spending after over a decade of operating surpluses. The dollar amount of reserves is small given the limited size of the township's budget.

LIMITED REVENUE FLEXIBILITY: General fund revenues primarily come from property taxes and state revenue sharing, both of which have been on a recent positive trend. However, tax rates are at their cap and the township lacks any significant ability to independently increase the level of revenues.

WEALTHY, PRIMARILY RESIDENTIAL ECONOMY: The township's tax base is primarily residential and many residents take advantage of the township's proximity to employment opportunities in and around Ann Arbor. Wealth levels are above average.

MIXED DEBT PROFILE: Debt levels are somewhat above average, but the township's unfunded liability related to retirement benefits is low. Carrying costs for debt service and retirement benefits are an elevated portion of the township's overall budget, in part due to rapid principal amortization.

LTGO ON PAR WITH IMPLIED ULTGO: The LTGO bond are rated on par with the township's implied ULTGO rating on the basis of the financial flexibility provided by the township's elevated fund balance levels and the recent willingness of voters to both approve and renew millages.

RATING SENSITIVITIES

STABLE CREDIT PROFILE: The rating is sensitive to shifts in fundamental credit characteristics including the township's substantial reserve levels. The Stable Outlook reflects Fitch's expectation that such shifts are unlikely.

CREDIT PROFILE

The township is located 14 miles north of Ann Arbor, just off of the US-23 and I-96 corridor. The township's 2013 population of 18,015 represents a cumulative increase of over 15% from 2000 population levels.

STRONG FINANCIAL POSITION; LIMITED REVENUE FLEXIBILITY
The township's \$577,000 net operating surplus (after transfers) in fiscal 2014 marks at least a decade of balanced general fund operations contributing towards an exceptionally strong reserve position. Unrestricted general fund balance at fiscal year-end 2014 was \$5 million, a very high 220% of general fund spending that is well above the township's strong policy for general fund balance to exceed 150% of spending. The township's projections for fiscal 2015 (year ending March 31st) show a surplus slightly greater than the \$113,000 surplus budgeted. Management has indicated preliminary plans for draws related to capital improvements; although the timing is uncertain, management expects that the draw will not exceed \$1.5 million and Fitch believes reserves will continue to remain very high and within policy levels.

The township's high reserves help offset risks related to both the small size of the township's budget and the township's lack of any significant way to independently raise revenues. The township is currently operating at its maximum charter millage under the Headlee cap, although Fitch views two recent successful levy elections (one a renewal and one for a new levy) as positive indicators of the township's political climate.

The township is heavily dependent on property tax and state shared revenues, at 26% and 45% of total general fund revenues, respectively. State shared revenues have grown a cumulative 22% since fiscal 2009, largely attributable to the improving state economy and the township's population growth. Property tax revenue resumed growth in fiscal 2014 following a recent positive trend in the tax base. The township continues to budget conservatively and has been slowly restoring some expenditures in recent years given the more favorable revenue environment.

SMALL, GROWING TOWNSHIP WITH ABOVE AVERAGE WEALTH LEVELS

The township's tax base is primarily residential and residents benefit from proximity to the US-23 and I-96 corridor and access to the diverse employment opportunities of Ann Arbor and neighboring Oakland County. Township wealth levels are above average with per capita and median household income at 133% and 157%, respectively, of the state average, and 121% and 144%, respectively, of the national average. Livingston County's unemployment rate of 6.3% in September 2014 is well below past highs but the reduction largely reflects a slow long-term contraction of the labor force in addition to improving employment. The township's tax base has posted solid growth over the past couple years although still remains below pre-recession peaks.

MIXED DEBT PROFILE

Overall debt levels are somewhat elevated at \$5,370 per capita and 4.8% of township market value. Amortization is rapid, with 86% of principal retired within 10 years. Capital needs appear to be limited and the township does not anticipate further borrowing over the near term.

Non-union employees participate in the Green Oak Charter Township Group Pension Plan (a defined contribution plan) while the township's full-time public safety employees participate in the Michigan Municipal Employees Retirement System (MERS). The township funds 100% of the required payment for each plan, with annual payments consisting of contributions from both employees and the township. Using Fitch's adjusted 7% rate of return, the township's portion of MERS funding is weak at 59%. Other post-employment benefits (OPEB) are funded on a pay-go basis and a limited number of employees are eligible to receive these benefits. Fitch considers the township's unfunded liability related to retirement benefits to be a low percentage of township market value. The township's total carrying costs related to debt service and retirement benefits is an elevated 23.6% of total governmental spending.