OREANDA-NEWS. Fitch Ratings has assigned an 'AA+' rating to the following city of Mansfield, Texas general obligation bonds (GOs) and certificates of obligation (COs):

--$16.52 million GO refunding and improvement bonds, series 2016;
--$4.43 million GO refunding bonds, taxable series 2016;
--$15.835 million combination tax and revenue COs, series 2016.

The GOs and COs are scheduled for a negotiated sale no later than the week of Dec. 14. Proceeds will be used to refund certain outstanding obligations for savings and to finance municipal improvements.

In addition, Fitch has affirmed its 'AA+' rating on the city's $108.83 million GOs and COs (pre-refunded basis).

The Rating Outlook is Stable.

SECURITY
The GO bonds and COs are payable from a limited ad valorem tax levied against all taxable property in the city; the COs are also payable from a pledge of net revenues of the city's water and wastewater system, not to exceed $1,000.

KEY RATING DRIVERS

GROWING, DIVERSIFIED ECONOMY: Mansfield benefits from growth of the Dallas-Fort Worth regional economy. Fitch expects the area's well-developed transportation infrastructure to foster additional growth in the city.

CONSISTENT OPERATING PERFORMANCE: The city's solid reserve position reflects strong post-recessionary revenue growth and structurally balanced operations. Maintenance of a sound financial cushion is key to the current rating given the risks associated with rapid growth.

MANAGEABLE LONG-TERM LIABILITIES: High overall debt and associated carrying costs (debt service, pension and other post-employment benefits) result from regional growth but have not materially impacted operations. Pension and retiree obligations are soundly funded.

ABOVE-AVERAGE DEMOGRAPHICS: Income and educational assessment levels trend well above average. Participation in the strong regional economy and the city's expanding job base contribute to a low unemployment rate.

RATING SENSITIVITIES

[SOUND FINANCES; MANAGEABLE DEBT: The rating is sensitive to a deviation from Fitch's expectation that Mansfield will maintain sound finances and affordable debt despite ongoing growth pressures.]

CREDIT PROFILE
Mansfield is located within the ninth largest metropolitan area in the nation, with 1.1 million residents located within a 15-mile radius. The city's estimated population of 69,448 has more than doubled since the 2000 census. A significant amount of developable land remains within Mansfield's 38.6 square mile boundary.

STRONG AND EXPANDING LOCAL ECONOMY
Mansfield is located in the southeastern portion of Tarrant County and is directly connected to nearby Dallas and Fort Worth, the DFW International Airport and surrounding communities by a robust and expanding transportation network.

Fiscal 2016 taxable assessed valuation (TAV) is well-diversified and has grown a solid 4.7% on average over the past five years reflecting appreciation and new development. The city's industrial parks are home to a reported 115 industries. Fitch anticipates near-term growth to continue based on extensive commercial and industrial expansion plans underway including those announced by Klein Tools (manufacturer of high-quality hand tools), Mouser Electronics (a Berkshire-Hathaway company and distributor of electronic parts), and BCB Transport (transportation services and warehousing).

A notable medical and health services presence is evidenced by Methodist Hospital's $300 million capital investment. The hospital system reportedly has plans for future expansion on a 22-acre site. Hospital Corporation of America and Texas Health Resources also are reportedly slated for future hospital development totaling $227 million.

Median household income is high at 77% above the national average. The city's levels of educational attainment trend well above average and contribute to a low unemployment rate of 3.4% as of September 2015.

SOUND FINANCIAL PERFORMANCE
The city typically outperforms its conservative budget and maintains ample reserves in compliance with its 25% policy target. The city completed fiscal 2014 with unrestricted reserves of $12 million, equal to 25.5% of spending and anticipates comparable results for fiscal 2015.

The fiscal 2016 budget is balanced. The long-term plan anticipates moderate growth, consistent with regional trends, a constant tax rate and maintenance of healthy reserves. Fitch considers these projections reasonable based on regional growth trends in the near term and the city's history of sound fiscal management.

HIGH DEBT; WELL-FUNDED RETIREE LIABILITIES
Fitch expects the city's high debt burden, at 9.9% of fiscal 2016 market value, to remain a credit concern as a result of substantial overlapping school district debt. Elevated carrying costs equal to 22.1% of fiscal 2015 governmental spending (unaudited) partly reflect a rapid tax-supported amortization rate of 67% in 10 years.

The city's general government capital plan is focused on street improvements. Over a 10-year period, the city conservatively projects issuing up to $90 million of new GO debt, which compares to about $70 million in principal amortization over the same period. Fitch will continue to monitor the city's debt profile; a decline in economic growth and taxable values could pressure the city's debt burden.

The city participates in the Texas Municipal Retirement System, an agent multiple-employer defined benefit plan. Under GASB Statement Nos. 67 and 68, the city reports a fiscal 2015 net pension liability (NPL) of $14.8 million, with fiduciary assets covering 87.9% of total pension liabilities at the plan's 7% investment return assumption. The NPL of the plan represents a very small 0.3% of the city's fiscal 2015 market value.

The city provides OPEB to retirees for health insurance and fully funds its annual required contribution each year; the city also established an OPEB trust in 2008. Its unfunded actuarial accrued liability is a minimal $7 million.