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Marco Island Sales Projections - PDF

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					    CITY OF MARCO ISLAND
                 Office of the City Manager
                        50 Bald Eagle Drive
                     Marco Island, Florida 34145
                           239-389-5000
To:         City Council
From:       Steven T. Thompson, City Manager
Date:       December 17, 2009
                                                                      WEEKLY UPDATE

This Weekly Update is intended to provide timely and regular information for the City
Council, and often includes substantive and critical information. City staff works to
avoid surprises and to ensure that the City Council is informed on issues and able to
respond to citizens. Copies are also provided through the City’s website for the
community. Items that are marked with an asterisk (*) are updates from a previous
City Council Meeting.

CITY MANAGER
City Bond Rating. The staff has received and attached copies of press releases from
Fitch Ratings concerning the agency’s surveillance, or review, of the City’s General
Obligation and revenue bonds. Fitch is a national debt/bond rating company and
performs an independent analysis and surveillance of debt actions and trends. The
better the bond rating, the more favorable the interest rate, terms and costs are when
issuing debt.

With the current economic situation, Patricia Bliss and I have discussed and are very
pleased to report that the City has maintained the AA general obligation rating and
the A- utility revenue bond rating. While the sales tax bond rating was downgraded
from a stable outlook AA to AA-, it remains quite high for a municipality within the
State of Florida and is still a significant achievement to be in the AA category for sales
tax bonds. (Attachments)

Employee Commendation. We received an email from Steve "Stef" Stefanides, the
Chairman of Christmas Island Style, thanking the City for support and assistance in this
past weekend’s Christmas Island Style street parade. Mr. Stefanides further wrote, “A
special thanks to Capt Baer and Lt. Goetz for heading up the security detail which saw
no problems that evening. The assistance of the Marco Police Foundation was also
invaluable as we all kept safety as our number one priority.”

Employee Awards Luncheon. On December 11th the City recognized employees
receiving professional and service awards over the past year with a pot-luck luncheon.
Employees provided the meal and covered the expenses for this first recognition
luncheon, and the Awards Luncheon Committee, led by Barbara Lawrence, really did
a terrific job with the event. Councilors Gibson, Recker and Waldack attended, as did
Councilor Kiester’s wife, Jane.
                                                             City Manager’s Weekly Update
                                                                        November 6, 2009
                                                                               Page 2 of 2

Beach Music Festival. During the fall of 2008 the City staff worked with the Chamber of
Commerce and area hotels to develop off-season or shoulder season events on
Marco Island, as a means to encourage visitors and business on the Island during the
times that have historically been slow for these businesses. Out of this discussion the
Marco Island Marriott developed the concept for the first annual Marco Island Beach
Music Festival, scheduled for December 18 & 19, 2009.

The festival begins with a Friday night beach concert featuring "The Landsharks" and
local sensation "Casey Weston." Saturday festivities include a skim board competition
with local Marco and Naples talent, a Marco Island Art League exhibition, a
sandcastle competition and the area's top restaurants will battle for bragging rights at
the "Best Burger in Paradise" competition. The day/event concludes with the start of
the Christmas Island Style Boat Parade on Saturday evening. Tickets are reasonably
priced at $5.00 and the proceeds will be donated to support The Joy of Giving
benefiting the local Naples/Marco Island children.

This is a nice event that benefits many of the businesses in the community, and reflects
our discussions of building business in the shoulder season. If you have an opportunity
you may wish to express your appreciation to Rick Medwedeff and the Marriott staff
for bringing this together. (Attachment)

Please call me at 389-5001 if you have questions, and I always appreciate your service
to this City.




Steven T. Thompson, City Manager
FITCH AFFIRMS 'AA' RATING ON MARCO ISLAND, FLORIDA
Fitch Ratings-New York-11 December 2009: Fitch Ratings takes the following rating actions on
Marco Island, Florida (the city) as part of its continuous surveillance effort:

--Affirms the 'AA' rating on the city's approximately $7.6 million in outstanding general obligation
(GO) bonds. The Rating Outlook is Stable.
--Downgrades the city's approximately $5.3 million in outstanding 1/2 cent sales tax revenue bonds
from 'AA' to 'AA-' and revises the Rating Outlook to Negative from Stable.

RATING RATIONALE FOR THE 1/2 CENT SALES TAX:

--The downgrade on the sales tax bonds reflects the recent significant volatility in pledged revenues
and associated decline in debt service coverage.
--The Negative Outlook is based on the declines in revenue deepening in recent months, which
indicate coverage may weaken further.

WHAT COULD TRIGGER A DOWNGRADE:

--Further deterioration of debt service coverage could put downward pressure on the rating.

RATING RATIONALE FOR THE GO BONDS:

--Financial management has historically been strong with conservative budgeting policies,
sustained structural balance and robust reserve levels.
--The area economy, which is concentrated in economically sensitive tourism, has experienced a
significant impact from the current economic downturn.
--Debt levels are moderately high with extremely rapid amortization and manageable capital needs.

KEY RATING DRIVER:

--The city will need to continue to manage the impacts of the current economic downturn as well as
the seasonal nature of its population and economy.

SECURITY:

The general obligation bonds are secured by the full faith and credit of the city.
The 1/2 cent sales tax revenues bonds are secured by the city's portion of the 1/2 cent sales tax
levied and collected by the state and distributed to each county and its incorporated municipalities
based on a population driven formula.

CREDIT SUMMARY:

Located off the coast of western Florida, Marco Island is a popular tourism destination with the
peak season population roughly tripling the year-round population. Wealth levels continue to be
amongst the highest in the state. The city is approaching build-out with the majority of growth
coming from renovations and expansions of current properties. Unemployment rates, which are
only available at a county level, have increased markedly with the current economic downturn to
13.1% for September 2009 from 8.4% a year prior. Due to the concentration in tourism, the county
has historically experienced a moderate amount of seasonality in its unemployment rates with
higher rates in the late summer to early fall. Foreclosures rates for the city are roughly twice the
national average but lower than those of the state and county.

Financial operations for the city have historically been strong, highlighted by conservative
budgeting policies and strong management. Most notably, the city has a self-imposed spending cap
which limits all governmental funds spending to an annual increase of 3% plus COLA. Despite
planned fund balance drawdowns in fiscal 2007 and fiscal 2008 for one-time capital projects, the
city has maintained an unreserved fund balance at over 40% of spending since the city's inception.
Unaudited fiscal 2009 results indicate a small surplus of roughly $400,000. The fiscal 2010 budget
is balanced with no use of reserves.

Overall debt levels for the city are moderate on a per capita basis but low as a percentage of
assessed value (AV), reflecting both the seasonal nature of the city's population and its high home
values. Capital needs are limited. The fiscal 2010-2014 capital improvement plan (CIP) totals $22.5
million and was originally anticipated to be fully funded through future bond issuance however
these debt plans have since been pushed back due to economic conditions.

Contact: Rachel A. Barkley +1-212-908-0514, New York; or Kelly McGary +1-813-224-0492,
Tampa.

Media Relations: Cindy Stoller,           New     York,   Tel:   +1   212    908   0526,    Email:
cindy.stoller@fitchratings.com.

Additional information is available at 'www.fitchratings.com'.

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND
DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY
FOLLOWING                           THIS                         LINK:
HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS.     IN   ADDITION,
RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE
ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED
RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT
ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF
INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES
AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION
OF THIS SITE.
 FITCH AFFIRMS MARCO ISLAND, FLORIDA'S UTILITY REV
                   BONDS AT 'A-'
Fitch Ratings-New York-11 December 2009: Fitch Ratings takes the following ratings action on
Marco Island, Florida (the city) as part of its continuous surveillance effort:

--Approximately $115.4 million in outstanding utility revenue bonds affirmed at 'A-'.

The Rating Outlook is Stable.

RATING RATIONALE:

--Debt service coverage has historically been sound and stable.
--The system is highly leveraged, as is common for recently acquired systems, with above average
capital needs.
--Once the current sewer conversion project and corresponding wastewater treatment plant
(WWTP) expansion are completed, capital needs should decrease as the system is approaching
build out and infrastructure is reportedly in good condition.
--High rates are partially offset by the high wealth levels and city council's demonstrated
willingness to increase them as needed to maintain adequate coverage.
--Area economy is heavily concentrated in tourism leading to significant demand fluctuations
throughout the year.

KEY RATING DRIVER:

--The system will need to balance its capital needs while maintaining adequate debt service
coverage and liquidity.

SECURITY:

The bonds are secured by net revenues of the system in addition to capital facilities fees.

CREDIT SUMMARY:

Purchased from two private entities in fiscal 2004, the system provides water and sewer services
within city limits as well as nearby Marco Shores. The customer base is mainly residential and has
experienced minimal growth for the water system since its inception. Growth for the sewer system
has been greater as the city has begun to incorporate the city's roughly 50% of remaining properties
from septic tanks into the city system as part of its septic tank replacement program (STRP). The
STRP plans to convert all septic tanks by the end of fiscal 2012. Capacity for both portions of the
system remains adequate despite marked fluctuations in flow with seasonal population and tourism
trends. The water system is able to rely on over three years of treated stored water during the peak
season. Fluctuations for the sewer system are currently less severe but the city is planning an
expansion of its current WWTP to coincide with the increased customer base from the STRP.

Debt service coverage has been sound and stable with senior lien coverage historically remaining
over 1.6 times (x). Unaudited fiscal 2009 numbers indicate coverage remains strong at 1.87x.
Future projections indicate coverage will soften moderately over the next few years as the city
issues additional debt but is expected to remain over 1.4x, which remains consistent with the rating
category. Liquidity has fluctuated in recent years as revenue and expenditures from the city's major
capital projects are recorded in the general fund but remains strong at over 300 days cash on hand
for fiscal 2008.

The system is highly leveraged, as is common with new systems, although this is partially offset by
the seasonal population and high percentage of multi-family properties. Capital needs are above
average with a fiscal 2010-2014 capital improvement plan (CIP) totaling $92.8 million.
Approximately 3/4 of total needs stem from the city's STRP program and the accompanying
expansion of the WWTP. Assessment revenues applied to all properties in order to fund the STRP
account for over 40% of total funding. Additional debt plans include roughly $46 million of parity
bonds in fiscal 2010. Capital needs are expected to decrease once the STRP is completed as system
infrastructure is reportedly in good condition and the city is approaching build out.

Located off the coast of western Florida, Marco Island is a popular tourism destination with the
peak season population roughly tripling the year round population. Wealth levels continue to be
amongst the highest in the state. The city is approaching build out with the majority of growth
coming from renovations and expansions of current properties. Unemployment rates, which are
only available at a county level, have increased markedly with the current economic downturn to
13.1% for September 2009 from 8.4% a year prior. Due to the concentration in tourism, the county
has historically experienced a moderate amount of seasonality in its unemployment rates with
higher rates in the late summer to early fall. Foreclosures rates for the city are roughly twice the
national average but lower than those of the state and county.

Contact: Rachel A. Barkley +1-212-908-0514, New York; or Kelly McGary +1-813-224-0492,
Tampa.

Media Relations: Cindy Stoller,           New     York,   Tel:   +1    212    908   0526,    Email:
cindy.stoller@fitchratings.com.

Additional information is available at www.fitchratings.com.

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND
DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY
FOLLOWING                           THIS                         LINK:
HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS.     IN   ADDITION,
RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE
ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED
RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT
ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF
INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES
AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION
OF THIS SITE.
Schedule of Festival Events
     •       Friday December 18, 2009
          o 6:30PM – 7:30PM performance by local Country Western sensation Casey Weston
                     http://www.caseyweston.com

          o 8PM – 10PM Beach Concert, special guests The Landsharks
                     http://www.landsharksband.com/


     •       Saturday, December 19th
          o 8AM – 11AM Beach Festival Events
                     Jetset Surf Shop sponsored Skim Boarding Competition 8a – 3p

                     Sandcastle building Instruction & Contest Lesson at 10a – 11a Competition 12n Lesson 1p Competition 3p
                              Featuring World Renowned Sand Sculptor John Gowdy
                              Morning instructional clinic followed by afternoon competition

                     Sailing Clinic 10a – 3p
                              Learn how to sail with instruction from the best Captain Tom & Alan Brown

                     11AM – 3PM Best Burger in Paradise Competition
                              Local restaurants compete for bragging rights showcasing various patties ranging from Kobe beef,
                           seafood, vegetarian, etc.Local judges and guests will crown chef.

                               Local Particpating Restaurants: Quinn's on the Beach, 400 Pazzi's, Cafe de Marco, Verdi's, Captain
                           Brien's, Joey's Pizza, CJ's on the Bay and Arturo's Italian Restaurant.

                     Marco Island Art League Exhibit and Sale

                     6PM – Marco Island’s Christmas Island Style Boat Parade
                              Boats and private vessels up to 50 feet in length set sail along the waterway to compete for the
                           coveted People’s Choice award, determined by viewers.



      PARKING:                  SPECIAL EVENT PARKING $ 5.00
      Guests’ to pay as they arrive to alleviate any delay in departures from lot.

				
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