OREANDA-NEWS. Fitch Ratings assigns the following ratings to the Town of Greenwich, CT's general obligation (GO) bonds and notes:

--$50 million GO bonds, issue of 2016, 'AAA';
--$60 million GO bond anticipation notes (BANs), issue of 2016, 'F1+'.

The bonds and BANs are being issued to permanently refinance a portion of outstanding BANs and to finance capital improvements. The bonds and BANs are scheduled to sell competitively on January 14.

In addition, Fitch affirms its rating on the following:

--$101 million GO bonds at 'AAA';
--$80 million GO BANs, issue of 2015 at 'F1+'.

The Rating Outlook is Stable.

SECURITY
The bonds and notes are general obligations of the town and are secured by the town's full faith and credit and unlimited taxing power.

KEY RATING DRIVERS
SUPERIOR ECONOMIC PROFILE: Superior wealth levels and a breadth of regional employment opportunities underscore Greenwich's economy, its below-average unemployment rate, and exceptionally high market value per capita.

SOPHISTICATED FINANCIAL MANAGEMENT: The town's historical and current use of prudent and conservative management practices supports its strong financial profile.

SOUND RESERVE LEVELS: A history of surplus operations has increased the town's general fund reserves to ample levels and, combined with ancillary funds, provide for a strong level of financial flexibility.

MANAGEABLE LONG-TERM LIABILITIES: Debt ratios when compared to market value are very low and amortization is rapid, as general fund-supported debt is retired in five years as per town policy. Carrying costs for debt, pension and other post- employment benefits (OPEB) are low as a percent of overall spending.

STRONG MARKET ACCESS: The 'F1+' short-term rating reflects Fitch's expectation for strong market access given Greenwich's superior long-term credit fundamentals.

RATING SENSITIVITIES

SOUND FINANCES DRIVE STABLE OUTLOOK: The rating is sensitive to shifts in fundamental credit characteristics including the town's strong financial management practices and maintenance of sound reserves.

CREDIT PROFILE

Greenwich is located in southwestern Connecticut approximately 28 miles from New York City and had an estimated population of 62,610 in 2014.

ABOVE-AVERAGE DEMOGRAPHIC PROFILE

Greenwich's wealth levels are among the highest in the nation. Many of the town's residents are executives and professionals who have easy access to the New York City and southern Fairfield county employment markets. The unemployment rate of 3.6% for October 2015 is down from 4.6% the prior year and remains below the state (4.8%) and national (5.0%) averages.

The town's estimated market value of $44.4 billion, based on the fiscal 2016 grand list value of $31.1 billion, is the largest of any Connecticut municipality. The town is predominantly residential (80% of value), with a small commercial real estate presence representing office space and high-end retail. According to management, preliminary results for the most recent five-year property revaluation effective for fiscal 2017 show a 5% increase in values. The average home price in Greenwich was $2 million in 2015 and home values were up 3.9% through November 2015 according to Zillow.com. Market value per capita is an impressive $712,337.

FINANCIAL MANAGEMENT IS STRONG

The town's financial strength is derived from its stable revenues as well as strong financial management policies. Modest increases in the annual property tax levy and conservative budgeting practices have led to positive operating results for the past eight fiscal years, leading to ample general fund and ancillary reserves. Prudent budgeting policies provide for full funding of pension annual required contributions (ARC) and, beginning in fiscal 2016, full funding of the OPEB ARC.

In fiscal 2015, the town's general fund experienced an operating surplus of $6.6 million after transfers, increasing unrestricted fund balance slightly to $48.5 million or a sound 12% of spending. Contributing to the surplus results were positive expenditure variances from conservative budget projections and employee cost savings due to maintenance of vacated positions for both general town and school departments. On the revenue side, property tax revenues, building permits and other revenues were stronger than expected. Property tax collections are strong and have averaged 99.2% the past five years.

Greenwich also maintains a working fund balance in its risk reserve fund for unanticipated legal costs and a separate fund for pay-as-you-go capital costs. The balances in these funds combined were $8.9 million at fiscal-end 2015, equating to 2.2% of general fund spending.

The town's total fiscal 2016 budget of $411 million increased spending by 3.9%, compared to 4.1% in fiscal 2015. The primary drivers were continued increases in town and school employee benefit costs. The increase in OPEB contributions to meet the full ARC, per a newly implemented board policy, was $1.9 million compared to the prior year contribution. The budget also includes a $15 million contribution to the capital projects fund and $500,000 to its risk reserve fund. The only employee contract currently open is for firefighters, and this contract, which expired June 30, 2015, is currently in arbitration. Management has indicated that the issues are focused on health and safety. Management reports that year-to-date operations are trending well when compared to the budget.

LOW-TO-MODERATE DEBT LEVELS

The town's credit profile benefits from a history of pay-as-you-go capital financing, which has helped to maintain a manageable debt burden. Town debt, net of sewer assessments used to support sewer-related GO debt, is moderate on a per capita basis at $3,176, but very low at 0.45% of the very large market value. Fitch expects that debt ratios will increase moderately as a result of the town's expected borrowing over the next couple of years to meet its capital improvement plans. Debt amortizes rapidly, with all general fund-supported debt retired in five years, as per town policy. Total town debt retires at an above-average 90% rate in 10 years.

MANAGEABLE LONG-TERM EMPLOYEE RETIREMENT COSTS

The town's single-employer pension plan had been fully funded but funding levels have declined as a result of significant market losses in 2008 and 2009 and management's decision to gradually reduce the expected investment rate of return from 8.5% to 7%, which Fitch views positively. The unfunded actuarially accrued liability totaled $142 million at July 1, 2014, equivalent to an estimated 72% funding level based on the assumed 7% rate of return.

The town has a history of paying 100% of its pension ARC as is required by the town's charter, and the town-administered plan was closed to all newly hired non-public safety employees in 2008. Based on the July 1, 2014 valuation report, the town's actuary projects that future pension ARCs will decline slightly in fiscal 2017 and then remain stable. The town's pension ARC totaled $22.7 million in fiscal 2015, up from $19.8 million in fiscal 2014, and a manageable 4.5% of governmental spending. The pension ARC for fiscal 2016 is $21.6 million.

The town's credit profile further benefits from forward-funding of its OPEB liability and the establishment of an irrevocable trust in 2008. The trust had assets of $17.1 million and was 23% funded as of July 1, 2014.

The town's carrying costs inclusive of debt service, pension and OPEB contributions were a low 12% of total governmental spending in fiscal 2015.