July 2, 2012 / 8:51 PM / 5 years ago

TEXT-Fitch rates Fairfield, Conn. GOs 'AAA'

July 2 - Fitch Ratings has assigned a 'AAA' rating to the following Town of
Fairfield, Connecticut's (the town) general obligation (GO) bonds:

--$37,600,000 GO Bonds, Issue of 2012.

In addition, Fitch assigns a rating of 'F1+' to the town's $12,135,000 GO bond
anticipation notes (BANs).

The bonds and notes are scheduled to sell competitively on July 11.

In addition, Fitch affirms the following ratings:

--Approximately $143 million outstanding GO bonds at 'AAA'.

The Rating Outlook is Stable.

SECURITY
Bonds and BANs are backed by the town's full faith and credit and unlimited
taxing power.

KEY RATING DRIVERS

STRONG FINANCIAL MANAGEMENT: The town of Fairfield's sound operating results and
solid reserve levels are the result of its strong financial management, prudent
fiscal policies and conservative budgeting practices.

GROWING RESERVE LEVELS: Historically stable fund balance levels have improved
the last two years and management is projecting surplus results for this fiscal
year which should increase balances further.

ABOVE-AVERAGE SOCIOECONOMIC INDICATORS: The local economy is diverse and
positive economic indicators include very high income levels and below-average
unemployment rates. The town benefits from its proximity to New York City, New
Haven, Hartford and Stamford employment centers.

MODERATE DEBT LEVELS: Overall debt levels are low to moderate with above-average
par amortization.

FUTURE RETIREE COSTS WELL FUNDED: The town's pension funded levels are
above-average and other post employee benefit (OPEB) liabilities are manageable.

MARKET ACCESS: The 'F1+' short-term rating reflects the strong credit
characteristics of the town and Fitch's expectation for strong market access.

CREDIT PROFILE

ABOVE-AVERAGE SOCIOECONOMIC INDICATORS
The town of Fairfield is an affluent residential community located on the Long
Island Sound in the southwestern part of the state about 50 miles north of New
York City and 51 miles southwest of Hartford. The town is home to Fairfield
University and Sacred Heart University and the headquarters of the General
Electric Company. Many of the town's residents are professionals or executives
that work in New York City or in neighboring cities and towns.

Fairfield's estimated market value of $15.5 billion for fiscal 2013 is
equivalent to a very high $261,000 per capita. The taxable assessed value (grand
list) is down 10% from the fiscal 2011 level due to a five year revaluation of
property effective October 1, 2010. Management has adjusted the tax millage rate
appropriately to maintain its property tax revenues.

Income and wealth levels are very high with median family income at 166% and
224% of state and national levels respectively. Fairfield's unemployment rate of
6.4% (Apr. 2012) is lower than the state's 7.5% rate and an improvement from
6.9% a year ago.

STRONG FINANCIAL MANAGEMENT
The bulk of the town's revenues are derived from property taxes (87%) and these
revenues have increased steadily the last three years as a result of tax
increases. The tax base is very diverse, and tax collection rates are excellent.

Management has historically used conservative budgeting practices and manages
its expenditures during the year to offset any unanticipated revenue shortfalls.
For fiscal 2011 the town had a $1.6 million general fund operating surplus after
transfers due primarily to positive expenditure variances and new grant income.

The surplus increased the town's unrestricted general fund balance (the sum of
the committed, assigned and unassigned fund balance as per GASB 54) to $15
million or 5.7% of spending, at the lower end of the town's 5 - 8% general fund
balance policy.
Management anticipates positive operations again in fiscal 2012 due to better
than anticipated revenue from property tax collections, conveyance fees and
investments. The revenue growth helped offset higher than anticipated legal
fees, unemployment compensation and costs incurred due to Hurricane Irene.

Management projects an approximate $1.5 million in fund balance growth from
operations, which would bring the unrestricted fund balance up to an estimated
6.3% of fiscal 2012 expenditures.

FISCAL 2013 BUDGET CONTINUES TO GROW RESERVE LEVELS
The town's fiscal 2013 budget furthers recent efforts to increase reserve
levels, appropriating $500,000 to unassigned fund balance. Additionally the 2013
budget includes a $2 million contribution to the internal service fund, in
excess of consultant's recommendations, to offset future accrued workers'
compensation liabilities.

Impressively, the budget also includes an additional $820,000 in pension funding
above and beyond the actuarially required contribution (ARC) and 100% funding of
its OPEB ARC for town and public safety employees. To support operations and
these contributions management approved a 4% property tax increase.

MANAGEABLE DEBT LEVELS
The town's debt levels remain low to moderate with overall debt to market value
at 1.5% and dept per capita at $3,938 after the 2012 issuance. Amortization
rates are above average with 69% of par maturing in 10 years.

The town has made a concerted effort to update and improve its school
facilities. It has recently completed the construction of two new elementary
schools and a new middle school as well as substantial renovations to existing
facilities. Enrollment in its public schools has been growing and management
projects continued growth through 2017. The state of Connecticut provides
assistance for school building projects and the town estimates receiving 20-25%
in reimbursement for eligible project costs.

Some additional debt issuances are expected in the next few years to complete
school improvements as well as additional costs for the town's new Metro North
train station. A total of $22 million remains in authorized but unissued debt
for projects, but management indicates this amount is conservative and borrowing
should amount to less.

VERY STRONG PENSION AND OPEB POSITION
Pension funded levels are above-average with both the town administered police
and fire plan and town employee plan funded at 102% and 99%, respectively, as of
July 1, 2011. Contributions made in fiscal 2011, totaling 100% of the combined
ARC, were $2.9 million, a manageable 1.1% of general fund spending.

The town's unfunded OPEB liabilities were $109 million for police, fire and town
employees and $22 million for the town's board of education as of July 1, 2010.
The town has established two trusts for town police and fire OPEB, with total
assets of $9.2 million as of June 30, 2011. For fiscal 2013 the town has
budgeted $8.6 million towards the police, fire and town employee OPEB plans,
which represents an estimated 100% of the ARC.

The town makes pay-as-you-go payments representing the implicit rate subsidy for
the board of education employees and paid $689,000 in fiscal 2011.

Additional information is available at 'www.fitchratings.com'. The ratings above
were solicited by, or on behalf of, the issuer, and therefore, Fitch has been
compensated for the provision of the ratings.

In addition to the sources of information identified in Fitch's Tax-Supported
Rating Criteria, this action was additionally informed by information from
Creditscope, University Financial Associates, S&P/Case-Shiller Home Price Index,
IHS Global Insight, Zillow.com, National Association of Realtors.

Applicable Criteria and Related Research:
--'Tax-Supported Rating Criteria' (Aug. 15, 2011);
--'U.S. Local Government Tax-Supported Rating Criteria' (Aug. 15, 2011).

Applicable Criteria and Related Research:
Tax-Supported Rating Criteria
U.S. Local Government Tax-Supported Rating Criteria

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