OREANDA-NEWS. November 18, 2015. Fitch Ratings has assigned a 'BBB' rating to the following bonds of Park Creek Metropolitan District, Colorado (the district):

--about \\$253 million senior limited property tax supported revenue refunding bonds, series 2015A.

The bonds are scheduled to sell Dec. 2 via negotiation.

Proceeds of the bonds will be used to refund the outstanding senior limited tax bonds of the district and a portion of the outstanding developer advances of the district for savings.

In addition, Fitch affirms its 'BBB' rating on \\$186 million of outstanding senior limited property tax supported revenue bonds, which will be refunded as part of this transaction.

The Rating Outlook is Stable.

SECURITY

The bonds are payable from a senior lien on certain payments received pursuant to an interlocal agreement and derived from the levy of a limited ad valorem tax within the Westerly Creek Metropolitan District (WCMD).

KEY RATING DRIVERS

ADEQUATE DEBT SERVICE COVERAGE: Senior debt service coverage using dedicated property tax revenue is forecast to be thin albeit sufficient at 1.3 times (x) in 2015. Fitch expects coverage to improve over time with the development of the tax base.

WEAK DEBT PROFILE: Debt ratios are very high including subordinate obligations not rated by Fitch, and amortization is slow. This profile is characteristic of the district's single development purpose.

STRATEGIC LOCATION: The Stapleton service area is located between downtown Denver and the Denver International Airport. The district's diverse development includes sizeable retail and industrial sectors as well as growing residential investments.

ADVANCED URBAN DEVELOPMENT: The service area has attained an advanced level of development and only a moderate amount of infrastructure costs remain for the near to medium term.

AUSPICIOUS GROWTH TRENDS: Stapleton represents Denver's only remaining large tract of developable land that includes a residential component. The number of residential units under construction has accelerated in recent years.

RATING SENSITIVITIES

IMPROVING TAX BASE TRENDS: The district's property tax is at the maximum rate. Assessed valuation (AV) growth forecast by the district for 2017 and 2018 tax collection, based largely on development and construction underway, is important to rating stability given already diminished coverage levels. Material deviation from this growth forecast could pressure financial operations and debt service coverage.

CREDIT PROFILE
The district was created for the purpose of assisting in the financing and construction of infrastructure improvements serving the former Stapleton International Airport in Denver. WCMD was created simultaneously to provide property tax and other revenue to the district (pursuant to an interlocal agreement) in exchange for completion of infrastructure improvements by the district. The district, WCMD, and Stapleton Business Center district comprise the Stapleton service area, located seven miles east of downtown Denver.

LARGE AND DIVERSE DENVER AREA DEVELOPMENT

The service area of the district and WCMD is ideally located in close proximity to downtown Denver, major transportation corridors, and the Denver International Airport. The development plan creates a mixed-use community that at full build-out is projected to include 12,000 housing units, 13 million square feet of commercial and retail space, and 1,100 acres of open space and parks on about 4,000 total acres.

Development on the first 2,172 of 2,935 projected developable acres is now in its fifth phase, with 74% of the planned 9,041 single-family residential units completed. A regional shopping center and other retail are also in place, with industrial space built and occupied as well. Office construction in the district has lagged other sectors. Housing offerings in Stapleton are varied, and the 2015 average new home price of \\$516,000 reflects the generally affluent nature of residents.

The district's AV is concentrated, but the level of concentration is trending down favorably. The top 10 taxpayers represent 22% of total values for 2015 collection, down from 27% in 2013. These taxpayers represent a mix of commercial and industrial properties.

ADVANCED STAGE OF URBAN DEVELOPMENT

Nearly \\$700 million in infrastructure has been put in place to date, comprising the bulk of such needs for full development. Funding sources include district borrowing, tax increment financing (TIF) bonds issued by the Denver Urban Renewal Authority (rated 'A-' by Fitch with a Stable Outlook), and excess TIF revenues.

Management anticipates annual district debt issuance of approximately \\$25 million to fund infrastructure and refinance subordinate debt. The district's practice of refunding outstanding subordinate lien debt with senior lien bonds may limit prospects for coverage growth on the senior lien over the long term. The district's additional bonds test for senior bonds is revised with this refunding to require that 1.35x average annual debt service (AADS) coverage be met using forecast coverage for the next three years. Although Fitch believes that this is weaker than the historical coverage test currently in place (1.25x two-year historical AADS coverage), Fitch considers the district's AV forecasting assumptions, which account for current valuation of construction in progress, to be reasonable.

ASSESSED VALUE GAINS IMPROVE COVERAGE

The AV of WCMD, the taxing district, increased at a compound annual growth rate (CAGR) of 6.8% from 2009 to 2016, with only one decline (8.2%) due to reappraisal loss in 2012. AV grew by a modest 1.5% for 2015, a non-reassessment year, as several large commercial projects were completed after certification of the tax roll. This growth is reflected in the 2016 certified values, which increased by a large 22% from both reappraisal and new development.

The decline in AV for 2012 decreased senior bond coverage to 1.20x from 1.46x the prior year. However, the rebound in AV increased coverage to 1.31x for 2015, and projected 2016 dedicated property tax revenues based on certified AV provide coverage of 1.74x. Maximum annual debt service (MADS) coverage using 2016 pledged revenue is adequate at 1.33x following this sale.

TAX BASE GROWTH PROJECTIONS SUPPORTED BY DEVELOPMENT ACTIVITY

The district projects strong tax base growth of 10.5% for 2017, a reappraisal year. This forecast captures the ongoing construction of apartments, flexible office space, a hotel, and various retail slated for 2016 completion. This projection increases senior bond coverage to 1.7x.

Management's forecast of 8% reappraisal growth in 2018 is consistent with regional trends. Residential and commercial construction in the district's service area has accelerated significantly in recent years. Construction reached a low of 190 homes built in 2009, improving to 851 in 2014. Additionally, the developer reports that commercial and multi-family construction in 2015 has reached an unprecedented pace for the district.

FITCH STRESS ANALYSIS

Fitch's stress tests show senior lien coverage remaining thin but above 1.2x assuming sharply reduced AV and development activity. Under such stress scenarios, the district's subordinate lien debt would rely on developer advances for repayment.

In the event of default on any subordinate bonds, there is no acceleration of senior debt or other adverse effects to senior bondholders.