OREANDA-NEWS. Fitch Ratings affirms the following ratings for Las Vegas, Nevada (the city):

--$205.9 million various limited tax general obligation (LTGO) bonds at 'AA';
--$1.3 million Special Improvement District Nos. 1463, 1470, 1471, 1473, and 1477 local improvement LTGO bonds series 2002 at 'AA';
--$0.4 million Special Improvement District No. 1481 local improvement LTGO bonds series 2004A at 'AA';
--$13.2 million series 2009A and 2009B certificates of participation (COPs) at 'AA-'.

The Rating Outlook is Stable.

SECURITY

The LTGO bonds are general obligations of the city and payable from all funds legally available for the purpose of making such payment. The city has pledged its full faith and credit for the payment of the bonds, subject to statutory and constitutional limits on the amount of ad valorem taxes it may levy.

The COPs are secured by lease payments made by the city for the City Hall site, and City Hall building (as well as the Main Street Parking Garage site and building, which was financed with LTGO bonds). The city has covenanted to annually appropriate for the lease payments regardless of use and occupancy of the facilities.

KEY RATING DRIVERS

HEALTHY FINANCES: The city's financial position continues to strengthen due to rising revenues and moderate expenditure growth. Fund balances remain healthy and conservative multi-year projections indicate ongoing structural balance.

ONGOING REVENUE CHALLENGES: The city relies on economically sensitive taxes for much of its general fund support and has limited ability to raise revenues.

ECONOMIC RECOVERY CONTINUES: The city's tourism and gaming sectors continue to experience steady growth after sharp declines during the last recession. Assessed value (AV) also recorded substantial gains in fiscal 2015 following several years of decreases.

MIXED LONG-TERM OBLIGATIONS: Overall debt levels are moderate and amortization is somewhat below average. Carrying costs for debt service and retirement benefits account for a substantial share of governmental expenditures, in part due to lower overall spending levels in recent years.

RATING SENSITIVITIES
SUSTAINED STRUCTURAL BALANCE: A return to structural imbalance would place downward pressure on the rating. Upward rating movement is constrained by the city's limited revenue flexibility, which could be mitigated by increased levels of reserves.

CREDIT PROFILE
Las Vegas is Nevada's largest city and its economic center. The city has more than 600,000 residents and together with surrounding communities in the Las Vegas Valley includes a population of more than two million. While Nevada's gaming and tourism industries are closely associated with the city, many of the largest casinos and hotels in the region are located outside of the city's borders in unincorporated Clark County.

HEALTHY FINANCIAL POSITION
The city's finances remain healthy and have benefited from increased revenues arising from continued economic growth. General fund revenues increased by 7% in fiscal 2015 due to increases in consolidated tax revenues (which consist principally of sales and excise taxes), property taxes, and fees. Expenditures rose by just 3.7% during this same period, resulting in breakeven results despite one-time spending of $19.3 million for capital and other needs.

The fiscal 2016 budget is balanced and management projects continued operating balance through 2020, which Fitch considers reasonable based on the city's conservative revenue and expenditure assumptions. Unrestricted fund balances remained adequate at 17.9% of general fund spending ($91.1 million) at the end of fiscal 2015 and are projected to remain stable.

The city had previously raised reserves to a high of 29.4% of general fund spending in fiscal 2011, but reduced this balance over several years to support a variety of one-time uses. Fitch considers the city's general fund balances as an important offset to its reliance on economically sensitive revenues, and would view further material drawdowns as a credit negative. This perspective is somewhat mitigated by the city's substantial non-general-fund resources, including approximately $34 million in uncommitted capital improvement funds and internal service fund balances in excess of policy targets, that could be made available for general fund uses if needed.

ONGOING REVENUE CHALLENGES
The city will continue to be challenged by its reliance on economically sensitive revenues, as well as its limited revenue-raising abilities. Consolidated taxes accounted for 51 % of general fund revenues in fiscal 2015 and have proven historically volatile. Property taxes provide an additional 18% of general fund revenues, but the city has limited ability to increase these or other revenues. Fee increases generated an additional $7 million for the city in fiscal 2015 but represent a small portion of total general fund revenues.

ECONOMIC RECOVERY CONTINUES
Las Vegas continues to experience economic growth after a sharp downturn in the last recession. Population growth has returned to above-average levels and employment has increased steadily since 2010, recently surpassing pre-recession levels. The city's 6.3% unemployment rate remains above the 4.8% U.S. average but is much improved from double-digit levels in prior years.

Economic growth has been supported by the ongoing recovery of the city's tourism and gaming sectors. Visitor volumes increased by 3.7% in 2014 and 2.9% in 2015, contributing to a new peak of 42 million visitors. Hotel and motel occupancy rates for Clark County have increased in each of the last six years, reaching 87.7% in 2015. While tourism and gaming remain vulnerable to reductions in consumer spending, this continued positive trend in the region's dominant industry is encouraging for the city's economy and finances.

The city's housing market has also seen recent gains. January 2016 home values reported by Zillow.com were 9% above prior year levels, while foreclosures continue to decline to a level close to the national average. AV for fiscal 2015 increased by 15.5%, the first gain for the city since 2008. Both home values and AV remain well below pre-recession levels but appear to be on a positive trajectory.

MIXED LONG-TERM OBLIGATIONS
Overall debt levels are moderate at 5.7% of market value and $3,650 per capita. Amortization of direct debt is somewhat below average with 41% of outstanding principal scheduled for payment within 10 years.

The city participates in a state-sponsored pension plan funded at an estimated 72% of liabilities under Fitch's assumption of 7% investment returns and has regularly made its annual required contributions. Retiree health insurance costs are funded on a pay-as-you-go basis, but recent reductions in benefit levels and contributions towards an irrevocable reserve have helped the city control the growth of related liabilities.

Carrying costs for debt service and retirement benefits accounted for a sizable 20% of governmental expenditures in fiscal 2015. Although such expenses have remained fairly steady in absolute terms, they comprise a larger share of the city's cost structure than several years ago due to declines in governmental spending.