OREANDA-NEWS. Fitch Ratings affirms the following Charter Township of Chesterfield, Michigan (the township) ratings:

--\\$1.2 million capital improvement limited tax general obligation (LTGO) bonds, series 2007, at 'AA-';
--Implied unlimited tax general obligation (ULTGO) rating at 'AA-'.

The Rating Outlook is Stable.

SECURITY

The LTGO bonds are backed by the full faith and credit of the township and its ad valorem property tax pledge, subject to applicable constitutional, statutory and charter limitations.

KEY RATING DRIVERS

HIGH RESERVES; STABLE FINANCES: The township continues to maintain considerable unrestricted reserves across its four primary operating funds: general, police department, fire department operating, and fire department equipment funds (together, the operating funds). Net of a one-time use of funds for capital in fiscal 2014, the township has experienced no less than nine consecutive fiscal periods of balanced operations.

LIMITED REVENUE FLEXIBILITY: Independent revenue-raising capacity is constrained by state-imposed property tax limitations. Positively, voters recently demonstrated strong support for the increase and extension of their fire operating and fire equipment tax rates, respectively.

MIXED ECONOMIC METRICS: Wealth levels are slightly above average and market value per capita is average. Unemployment has improved and is now comparable to the state average, although year-over-year improvements have been driven by somewhat sizable labor force contractions. The township's tax base continues to gradually improve.

MIXED DEBT PROFILE: The township's total debt burden is considered high, largely driven by overlapping school district debt. The township's pension and other post-employment benefits (OPEB) liabilities are very low. Carrying costs and amortization are both considered moderate.

ULTGO AND LTGO ON PAR: The LTGO rating is on parity with the ULTGO rating due to the financial flexibility generated by the township's high reserve levels.

RATING SENSITIVITIES

STABLE CREDIT PROFILE: The rating is sensitive to shifts in fundamental credit characteristics, including the township's considerable reserve levels and already elevated debt profile. The Stable Outlook reflects Fitch's expectation that such shifts are unlikely.

CREDIT PROFILE

The Charter Township of Chesterfield is located approximately 20 miles north of downtown Detroit on Interstate 94. The township's 2014 population of 44,048 marks a cumulative 17.8% increase over 2000 figures.

HIGH RESERVES; STABLE FINANCES

The township's operating profile is characterized by robust reserve levels and consistent structural balance. At fiscal year-end 2014, combined unrestricted reserves across the township's four operating funds totaled \\$10.9 million, or a very high 62.1% of operating fund spending (142% of general fund spending). Unrestricted reserves grew in fiscal 2014 despite a \\$786,000 operating deficit, driven by a \\$1.5 million one-time use for the construction of a parking lot. The township had budgeted for a \\$2.1 million deficit across the operating funds. The township has budgeted for a \\$1 million deficit across the operating funds in fiscal 2015, although management has demonstrated a strong history of conservative budgeting and audited results routinely beat the budget.

Property tax revenue comprised 61% of fiscal 2014 operating revenue and the township is currently operating at the maximum allowable millage rates under the Headlee Amendment, resulting in limited ability to raise the millage rate. However, voters demonstrated strong support in 2012 for the increase of the fire operating tax rate from 1.3858 mills to 2.75 mills and the extension of the fire equipment tax rate to 2033. The fire equipment millage is the township's only renewable tax rate.

An operating deficit in the police department fund has been eroding the fund's restricted reserves for several years, and without resolution may require the township to either utilize unrestricted reserves or go to the voters for an increase in the police department tax rate over the medium term. However, given the township's robust reserve levels, historically very strong performance within the other operating funds, and the hiring of a new police chief to restructure the department's cost structure, Fitch believes that the township is well-positioned to either absorb or resolve the fund's deficit spending over the near- to medium-term.

SUBURBAN COMMUNITY; MIXED ECONOMIC METRICS

The township is largely residential in nature and about 50% built out. The township's assessed value has posted steady, albeit modest, gains over the past several years following four years of steep declines. Market value per capita is average at \\$78,000.

Wealth levels for township residents are slightly above state and national averages. The township's unemployment rate, which has historically been elevated, fell to 5.7% in March 2015 from 9.0% in March 2014. However, this year-over-year improvement was related to a sizable 2.8% year-over-year labor force contraction rather than organic employment growth.

HIGH DEBT LEVELS

The township's overall debt burden is high at \\$6,145 per capita and 7.9% of market value, largely driven by overlapping school district debt. The two largest school districts both recently completed large facility projects. Management does not expect additional borrowing from the schools over the near- to medium-term. The township has no debt issuance plans and expects to finance its limited capital improvement plans on a pay-go basis.

WELL-MANAGED LEGACY COSTS

The township participates in state-administered agent defined benefit pension plans for general and uniformed employees. The township contributes well over 100% of the required payment for each of the three plans to improve funding levels, and annual costs have been manageable. In aggregate, the plans are slightly underfunded at an estimated 71% in 2013, assuming a 7% rate of return, although the unfunded liabilities associated with the plans are a very low percent of township market value.

The township prudently fully funds its annual required contribution (ARC) associated with OPEB and has over-funded this obligation recently. The unfunded OPEB liability is a low portion of township market value and, given the township's practice of overfunding the ARC and recent labor agreements precluding new hires from purchasing OPEB, Fitch expects this liability to continue to decline.

The township's carrying costs of debt service, pension, and OPEB were a moderate 20.2% of governmental spending in fiscal 2014. Carrying costs would have been 17.7% if the township had contributed only its actuarial pension and OPEB requirements, which Fitch still views as moderate.