OREANDA-NEWS. Fitch Ratings has affirmed the following Broward County, Florida (the county) bonds:

--Approximately $256.4 million general obligation (GO) bonds at 'AAA';
--Approximately $201.4 million half-cent sales tax revenue bonds at 'AA+'.

The Rating Outlook is Stable.

SECURITY
The GO bonds are supported by the county's full faith and credit and unlimited taxing power.

The sales tax revenue bonds are payable from the county's share of the local government half-cent sales tax.

KEY RATING DRIVERS

STRONG FINANCIAL OPERATIONS: Reserves are maintained at robust levels while liquidity is excellent. Operations are structurally balanced.

DEBT REMAINS LOW: Fitch expects the county's key debt ratios will remain low as most capital needs are slated to be funded from dedicated sources and capital reserves, limiting future tax-supported borrowing plans.

ECONOMY PERFORMING COMPARATIVELY WELL: Employment levels continue to grow, although at a slower pace than in previous years, and unemployment remains lower than the state and nation. The economy exhibits good diversity, and benefits from extensive transportation and trade infrastructure and a reputation as a leading tourist destination. Income metrics are slightly above the state averages.

STRONG SALES TAX COVERAGE: Fiscal 2015 pledged revenue coverage of maximum annual debt service (MADS) excluding federal interest subsidies for the half-cent sales tax revenue bonds is 4.7 times (x). Sales tax revenues have increased for five consecutive years and now exceed pre-recession peak collections.

RATING SENSITIVITIES

SUPERIOR FINANCIAL POSITION: The rating is sensitive to shifts in fundamental credit characteristics including the county's strong financial management practices. The Stable Outlook reflects Fitch's expectation that such shifts are highly unlikely.

DECLINING SALES TAX REVENUES: A sharp drop-off in sales tax revenues could lead to negative rating action on the sales tax bonds.

CREDIT PROFILE
Broward County is situated on Florida's Atlantic coast between Miami-Dade and Palm Beach counties. The county is home to 31 incorporated municipalities including Fort Lauderdale, Coral Springs, and Hollywood, and ranks as Florida's second largest county with a 2014 population of 1.87 million.

STRONG RESERVES, EXCEPTIONAL LIQUIDITY

County finances are characterized by elevated reserves and robust liquidity. At the end of fiscal 2014, combined unrestricted general fund and sheriff contractual services fund (sheriff fund) balance, the county's two main operating funds, totaled $340.5 million or 24.7% of spending. Liquidity is also plentiful with unrestricted cash and investments in the operating funds of $419.1 million; sufficient to cover nearly four months of operations. Across all governmental funds, the county maintains about $1.1 billion of cash and investments which equates to nearly eight months of general government spending.

Unaudited results for fiscal 2015 show a general fund surplus of $15.6 million (1.4% of spending) and a $536,000 surplus in the sheriff fund. The combined unrestricted balance of the general fund and sheriff fund totaling $364.1 million equates to about 29% of spending.

Fiscal 2016 certified assessed value growth fuels a $52 million increase in budgeted property tax revenues. Operating tax rates are unchanged from fiscal 2015 although the capital outlay millage was marginally reduced. Overall spending increases were tied to wage hikes, which were part of a 5% employee salary raise spread over fiscals 2015 and 2016. Management expects year-end operations to be balanced.

TAXABLE VALUE GROWTH ACCELERATES

Taxable assessed values (TAV) have demonstrated an accelerating growth trend in recent years after a 28% decline in TAV from fiscal 2008-2012. A less than 1% rise in fiscal 2013 TAV was followed by gains of 4% and 5.7% in fiscals 2014 and 2015, respectively.

Certified values for fiscal 2016 of $150.7 billion represent a 6.7% increase over fiscal 2015 certified TAV. According to the Zillow Group, the housing market continues to prosper with home values up 10% over the past 12 months, outpacing both statewide and national home value gains. During the period of tax base erosion the county reduced operating spending and impressively increased fund balances in the operating funds.

STRONG DEBT METRICS

The county's key debt metrics remain very modest and affordable. Net overall debt is equivalent to 1.3% of market value or $1,269 per capita, each measure considered low by Fitch. The overall debt burden is heavily influenced by obligations of the overlapping Broward County School Board.
The cost of servicing the county's direct debt is affordable. The fiscal 2014 debt service is a modest 4.1% of the total general government expenditures of $1.7 billion.

The county's tax supported borrowing plans are manageable. Officials plan on issuing about $43 million payable from non-ad valorem revenues during the latter half of fiscal 2016. Most capital is funded through pay-go as the county maintains significant balances within the transportation capital projects fund and capital outlay fund (totaling $461 million as of fiscal 2014). The county's major borrowing plans are largely for self-supporting enterprise debt.

Pension benefits are provided through the state-administered Florida Retirement System (FRS). FRS is well funded and the county's actuarial required contribution (ARC) to the plan consumes a reasonable 4% of total spending. The county maintains two other post-employment benefit (OPEB) plans: a county plan and a sheriff's office plan. Management has not established an OPEB Trust although an informal reserve has been set up in the general fund totaling almost $46 million as of fiscal 2014 for future OPEB costs. Total carrying costs, debt service, pensions and other post-employment benefits, account for a moderate 9.2% of total fiscal 2014 governmental spending.

SALES TAX BOND COVERAGE

Pledged half-cent sales tax revenues have increased in each of the past five fiscal years after dropping 20% between fiscals 2006 and 2010. Fiscal 2015 revenues grew 5.3% from the prior year and collections now exceed fiscal 2006 peak sales tax revenues. Coverage of MADS excluding federal subsidies from fiscal 2015 revenue is a strong 4.7x. Collections could drop by 59% before MADS coverage reaches 1.0x.

The additional bonds test of 1.5x MADS is somewhat weak, but the county's use of half-cent sales tax revenues in excess of debt service for general operations most likely precludes significant additional leverage. No additional sales tax debt is anticipated.

DEEP AND DIVERSE SOUTHEAST FL ECONOMY

Broward County is part of the Miami-Fort Lauderdale-Pompano Beach metropolitan statistical area (MSA) which accounts for nearly 30% of Florida's population. Broward County income levels are slightly higher than the state average.

Overall employment growth within the Broward County has performed well since 2011 with an annual average growth rate of 2.7% through 2014, almost double the job growth rate nationwide. The most recent unemployment rate from October 2015 is 4.7%, is slightly below the state and national rates of 5.2% and 5%, respectively.