OREANDA-NEWS. Fitch Ratings has affirmed the 'A' rating on the following unlimited tax (ULT) bonds for Meridian Metropolitan District, CO:

--$59.7 million general obligation (GO) refunding bonds series 2011A;
--$10.4 million GO refunding bonds series 2011B.

The Rating Outlook is Stable.

SECURITY

The bonds are payable from an unlimited ad valorem tax levied against all taxable property within the district.

KEY RATING DRIVERS

HIGH TAXPAYER CONCENTRATION: The geographically small district is comprised primarily of corporate campuses, resulting in high taxpayer concentration.

LIMITED OPERATIONS, SOLID RESULTS: The district's scope of operations is limited and therefore is unlikely to experience unforeseen or volatile expenditure pressures. The district maintains a healthy financial position.

HIGH DEBT, MINIMAL NEEDS: The debt profile is characterized by high debt to market value and slow principal amortization, balanced against limited future debt needs.

TAX BASE GROWTH RESUMES: Recent tax base growth reversed recessionary declines, and was driven by renewed construction and improved reassessment trends. Favorable market absorption trends, stable occupancy rates, and ongoing development of the district are expected to mitigate any further material erosion of taxable values.

RATING SENSITIVITIES

COMPETITIVE MARKET PRESSURES: Prolonged weakness in the commercial real estate sector could put upward pressure on the district's tax rate and lead to negative rating action.

CREDIT PROFILE

Meridian Metropolitan District is a 1,300-acre limited purpose government located in northern Douglas County, approximately 15 miles southeast of downtown Denver.

MASTER-PLANNED OFFICE PARK

The district, which was organized in 1976 to provide infrastructure improvements, consists of a master-planned office park (the Meridian International Business Center) that has been in development since the 1980s. The development currently includes a number of corporate headquarters facilities, other office facilities, some retail establishments, and the Meridian Golf Club. Corporate headquarters located within the district include Liberty Media, Starz Encore, TeleTech, EchoStar, Western Union, Evolving Systems, CH2M, and regional headquarters of American Family.

As is typical of many metropolitan districts in Colorado, the governing board includes employees or associates of the current developer. The district currently has significant developable land available, as only 30% of the 15 million square feet in the district's master plan has been constructed.

LIMITED FINANCIAL OPERATIONS

The district's limited financial operations are sound, marked by consistently positive budget variances and operating surpluses. The general fund unreserved balance for 2014 was 11.4% of total expenditures and transfers out, and management expects to add to reserves again in 2015. Revenues are generated primarily from property tax collections and expenditures consist primarily of debt service, capital costs, and a management fee to the developer. The district's tax rate increased moderately over the past several years due to higher operating costs and a period of sluggish assessed values. The tax rate remains comparable to other Denver area metro districts.

HIGH TAX BASE CONCENTRATION

The tax base consists predominately of large owner-occupied commercial properties, although there is a nominal percentage of multi-family residential property. The district has high taxpayer concentration, with the largest taxpayer comprising 7% of the base, and the top 10 payers totaling 42% of 2015 assessed valuation (AV). While this concentration has declined from 77% in 2001, it is still a negative credit consideration.

AV in the district declined by a cumulative 14% from 2008 through 2012 due to recessionary pressures. Subsequently, AV increased 26% from 2012 through 2016, with average annual gains averaging 6%, due primarily to a new office building plus some reappraisal gains. Prospects for future growth appear positive given the district's desirable location near the Denver metropolitan area, but the timing of such growth will likely be related to the pace of recovery in the regional economy.

HIGH DEBT AND SLOW PAYOUT

The district's elevated debt is a credit concern given the prolonged high debt service resulting from the 2011 refinancing. Overall debt is 12% of total market value, but management reports no plans for additional borrowings as all internal infrastructure projects have been completed. Debt service totaled a high 40% of governmental spending in 2014, although this is common for Colorado metro districts. Principal amortization is very slow with only 24% retiring within 10 years. The district does not have any employees and therefore does not have any pension obligations.