OREANDA-NEWS. September 16, 2015. Fitch Ratings has assigned an 'AAA' rating to the following Overland Park, KS (the city) unlimited tax general obligation (ULTGO) bonds:

--\\$15.935 million internal improvement bonds series 2015A;
--\\$2.33 million internal improvement refunding bonds series 2015B;
--\\$18.495 million internal improvement refunding bonds series 2015C.

The bonds are scheduled for a competitive sale the week of Sept. 21. Proceeds will be used to finance various capital projects and refund outstanding bonds.

In addition, Fitch has affirmed the 'AAA' rating on the city's outstanding ULTGO bonds.

The Rating Outlook is Stable.

SECURITY

The bonds are general obligations of the city backed by the city's full faith and credit and its ad valorem tax, without limitation as to rate or amount.

KEY RATING DRIVERS

STRONG ECONOMIC BASE: Overland Park enjoys a deep and diverse local economic base, reflected in its low unemployment rate and strong assessed value (AV) growth.

ABOVE AVERAGE SOCIOECONOMIC PROFILE: Wealth levels are above average and education levels are high.

SOLID FINANCIAL OPERATIONS: Results for 2014 show a third straight year of positive operations, augmenting already sizable reserves, with another surplus expected for 2015.

MODERATE LONG-TERM LIABILITIES: Overall debt levels are moderate and direct debt is rapidly amortized. Pension and other post-employment benefit (OPEB) liabilities are manageable.

RATING SENSITIVITIES

FUNDAMENTAL CHANGES: The rating is sensitive to the shifts in the city's fundamental credit characteristics such as a material weakening in its financial flexibility. The Stable Outlook reflects Fitch's expectation that such shifts are unlikely.

CREDIT PROFILE

Overland Park, the second largest city in Kansas, is an affluent community located within the Kansas City metropolitan area.

STRONG ECONOMIC BASE

The city benefits from its location, extensive transportation network, and well-educated workforce, which drive continued growth of the diverse local economy. The city is home to several Fortune 500 companies, with Sprint as its leading employer. Both the financial services and professional and business service sectors account for a greater percentage of total countywide employment than the national average. The city's workforce is highly educated, with 58% attaining higher education versus 29% nationally.

Continued economic growth is evidenced by the below average unemployment rate, steady sales tax growth, and increases in AV. The city's June 2015 unemployment was low at 3.9%, bettering the state's rate of 4.7% and the 5.5% national average. After three years of small gains in taxable AV, the city has experienced two years of extensive growth, increasing 7.1% in 2014 and 6.2% in 2015. Further growth is expected as management reports ongoing substantial permitting activity.

SOLID FINANCIAL OPERATIONS

The city finished 2014 with a \\$7.9 million general fund surplus, its third consecutive surplus after four consecutive years of operating deficits. The surplus increased unrestricted fund balance to \\$57.4 million or a healthy 41.3% of expenditures. The surplus was driven by a 4.3% increase in sales tax revenues and development fees finishing \\$2.9 million ahead of budget. Employees received 3% increases in salary, which they will again receive in 2015. The 2015 budget assumes a 3.7% increase in expenditures and some headcount growth, although the number of employees remains well below past highs. Another surplus is projected for 2015.

The city retains revenue raising flexibility as it has not raised its millage since 2012 and tax rates are well below neighboring communities. Multi-year forecasts show essentially balanced operations going forward.

MODERATE LONG-TERM LIABILITIES

Aggregate debt levels are manageable at \\$3,236 per capita and 3.1% of market value. Debt levels are likely to decrease as minimal additional debt is planned and principal amortization is rapid with 80% repaid within 10 years.

The city participates in the Kansas Public Employees' Retirement System (KPERS), a cost-sharing multi-employer plan, for which the city has made all required payments. KPERS was weakly funded at 60% as of Dec. 31, 2013, or an estimated 54% when adjusted by Fitch to reflect a 7% discount rate, suggesting likely increases in future required payments.

The city also maintains two smaller single-employer defined benefit plans for police and fire, and a defined contribution plan. Reflecting a 7% discount rate, the police and fire plans are 85% and 65% funded, respectively. The city has pre-funded a portion of its OPEB liabilities. The plan was 19.5% funded as of Dec. 31, 2013. Carrying costs for debt service, pension and OPEB were moderate at 16% of 2014 governmental funds spending.