OREANDA-NEWS. Fitch Ratings has assigned an 'AA' rating to the following Ogden City Redevelopment Agency (RDA), Utah bonds:

--Approximately $23.5 million revenue refunding bonds, series 2016 A and B.

The Rating Outlook is Stable.

SECURITY
The bonds are payable from a pledge of the franchise tax revenues received by the agency from the city, which include receipts from energy sales and use taxes and telecommunication taxes.

KEY RATING DRIVERS

SATISFACTORY FINANCIAL PROFILE: The city's operations have been mostly positive in recent years, supported by recovering sales tax revenues and steady property tax revenues. Reserve levels are satisfactory for the rating level. The city maintains significant revenue flexibility and intends to increase its property tax rate to strengthen its financial position.

MODERATE DEBT: Long-term liabilities burden is characterized by low to moderate overall debt ratios, rapid direct debt amortization, well-funded pension plans, and no near-term debt needs. Carrying costs are moderate and the RDA has some limited exposure to VRDO.

BELOW AVERAGE SOCIO-ECONOMIC CONDITIONS: Income levels are below average while tax base and population growth have been relatively slow, despite recent employment gains. Top property taxpayers present notable concentration risk.

STRONG COVERAGE: The franchise tax revenue bonds debt service coverage is strong and benefits from a sound additional bonds test (ABT). This revenue stream remained relatively stable during the recession although future volatility is expected due to declining landline connections and energy use uncertainties.

RATING SENSITIVITIES

STRUCTURAL BALANCE: Deviations from structurally balanced budgets and conservative financial management could prompt a negative rating action.

CREDIT PROFILE

Ogden is located 40 miles north of Salt Lake City, connected by Interstate 15, FrontRunner (commuter rail train) and Ogden-Hinckley Airport. The presence of Weber State University and nearby Hill Air Force Base support the city's manufacturing and aerospace sectors, while recreational winter sports and hospitality industries are built around nearby ski resorts. The city's main employers include the IRS and various public sector entities, and manufacturers such as Autoliv and Fresenius.

STRONG DEBT SERVICE COVERAGE

Based on fiscal 2015 franchise tax revenue and estimated debt service, maximum annual debt service (MADS)coverage is high at 3.2 times (x), and is able to withstand a one-time decline of 68%, assuming no further issuance. The revenue stream remained relatively stable during the recession, with a cumulative 3.1% decline between 2009 and 2012. Under a stress scenario of a 3.1% decline annually, MADS coverage would still remain a strong 2.2x throughout the life of the bonds.

Fiscal 2015 franchise revenue saw a modest decrease of 2.1%, due to a warm winter and suppressed demand for energy, as well as lower telecom taxes with reduced demand for landline phones.

SOUND FINANCIAL PROFILE, EXCELLENT REVENUE FLEXIBILITY

Ogden produced three operating surpluses (after transfers) in the past five years, and ended fiscal 2015 with $5.7 million (9.4% of spending) in unrestricted general fund balance. This is helped by a recovering economy with sales tax receipts growing at an average annual pace of 4.7% over the last five years.

The general fund enjoys diverse sources of operating revenues, led by sales tax revenue (26%), property tax revenue (18%, including receipts for GO bonds debt service), inter-governmental (17%), and franchise tax revenue (15%).

Property tax revenues have remained relatively stable due to the automatic rate adjustment mechanism when assessed value changes. Management intends to further enhance this revenue stream and plans to go through the truth-in-taxation process to increase the property tax levy gradually. Although the city's property tax rate is high relative to its neighbors, it sits well below the 7 millage cap, and rate increases below the cap are not subject to voter authorization.
MODERATE LONG-TERM LIABILITIES BURDEN

Overall debt ratios of the city are low to moderate at $2,007 per capita and 3% of market value. The city's direct debt amortizes rapidly, with almost all debt paid off within 10 years. The city, through the RDA, has around $4 million (less than 10% of total debt) of variable rate debt outstanding with no hedging. Fitch does not view this as a material risk.

Management does not plan to issue additional debt in the near term. Capital needs are mostly funded from the city's capital improvement projects fund. Beginning in calendar year 2016, the city will benefit from additional revenues as the state imposed an increase in the gas tax rate and the county voted for an additional sale taxes. The city estimates that it will receive an extra $1.6 million (2.6% of general fund spending) annually from these two sources, which will be used on infrastructure capital expenditures.

The city participates in the well-funded Utah Retirement System, with a combined funded ratio of approximately 90%, using Fitch-adjusted conservative 7% discount rate (compared with 7.5% used by URS). No other post-employment benefits are offered. Total carrying costs (debt service plus actuarially required contribution to pension plans) are moderate at 19% of total governmental spending in fiscal 2015, reflecting in part the rapid debt amortization, and are expected to remain stable.

BELOW AVERAGE ECONOMIC PROFILE

Despite recent advances in employment and tax base, the economic profile remains mixed. The city's unemployment rate dropped to a low 3.8% in November 2015, a significant improvement from over 11% at the height of the recession, and lags the state average of 3.1% although it is well below the nation's 4.8%. Ogden's median household income is 34% below state average, and its poverty rate is elevated at 23% in 2014. 20% of the citizens have a bachelor's degree or above, compared with 31% statewide.

The tax base is heavily concentrated in the top 10 payers (21.4%), including Boyer Business Depot Ogden, a 1,118-acre business park which comprises 5.9% of the city's AV, Fresenius (5%), and IHC health service (2.2%), both medical supplies manufacturers.

The city's assessed value grew a cumulative 6% over the last two years, and fiscal 2015 saw the addition of 1,500 jobs in the city. This positive trend is likely to continue in the near term as the city projects significant job growth and Zillow home price index forecasts further stabilization of house prices in the city.