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For Immediate Release: Fitch Ratings has affirmed the $10.4 million General Obligation (GO) Bonds and Issuer Default Rating (IDR) of Rowan County, NC at ’AA+’. The Rating Outlook is Stable.
The bonds constitute a general obligation of the county, payable by a pledge of its full faith and credit and unlimited taxing power.
The county’s ’AA+’ IDR and GO ratings reflect its solid operating performance and low long-term liability burden, tempered slightly by slowly growing revenues. The Stable Outlook reflects Fitch’s expectation that the county will continue to practice conservative budgeting and manage expenditures while maintaining ample reserves.
Rowan County lies approximately 50 miles southwest of Greensboro and 42 miles northeast of Charlotte, in the southern piedmont section of North Carolina. Population growth remains below state and national averages at approximately 2% since 2010, with an estimated 2018 census population of 140,262. The county’s economy retains a manufacturing presence, although the employment base is diverse with notable healthcare and distribution employment opportunities.
Fitch expects revenue growth to remain in line with the level of inflation based on anticipated modest tax base and population growth. The county has high revenue raising ability, as its current property tax rate is well within the statutory cap.
Expenditures are expected to remain in line with to marginally above revenue growth. The county’s solid expenditure flexibility reflects low expenditure pressures, moderate carrying costs, and the absence of collective bargaining in North Carolina.
The county’s combined debt and Fitch-adjusted net pension liability is low relative to resident personal income at 1.8%. Fitch expects this trend to continue considering manageable intermediate term debt plans, rapid amortization, and well-funded pension plans.
The county’s ample general fund reserve position, solid historical operating performance, and superior inherent budget flexibility supports its ability to maintain the highest gap-closing capacity. The county is expected to manage well through an economic downturn.
REVENUE GROWTH PROSPECTS: Evidence of stronger economic and revenue growth prospects above Fitch’s current assessment could bolster the county’s revenue framework and potentially affect the overall rating. Conversely, the rating is sensitive to the county’s ability to maintain revenue growth in line with the level of inflation, a low long-term liability, and ample reserves.
Fitch expects future revenue growth to trend in line with the level of inflation when considering property revaluations, conducted every four years, year over year increases in TAV of about 1%, and continued sales tax growth. The last reassessment effective fiscal 2020 resulted in an increase of 9.7% in taxable assessed valuation to $13.7 billion. Additionally, the county experienced an increase in sales tax revenues totaling $26.6 million at the end of fiscal 2019, an 8.6% increase from fiscal 2018. The county also maintains an available fund balance of 33% at approximately $48.4 million, well above the informal fund balance of 21%.
In addition to the sources of information identified in Fitch’s applicable criteria specified below, this action was informed by information from Lumesis.
Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of 3 - ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity.
For more information on Fitch’s ESG Relevance Scores, visit www.fitchratings.com/esg.