Moody’s and Standard & Poor’s recently reviewed the outstanding Series 2016 Air Force Base Refunding TIF Bonds and the currently proposed Series 2018 AFB TIF Bonds. Both agencies issued ratings in the “A” category, with stable outlook, for the 2016 bonds. And, both assigned a similar rating to the proposed new issue of up to $15 million.
Moody’s issued an A2 rating with stable outlook. Standard & Poor’s issued an A rating with stable outlook, which includes an upgrade from the A- originally assigned to the 2016 refunding issue. (TIF is short for Tax Increment Financing.)
“Myrtle Beach, SC (Aa2, stable) will continue to benefit from a growing tourism sector and continued economic development,” Moody’s Investor Service said in its credit opinion of December 5, 2018. “Strong trends in assessed value growth continue to support the city’s Tax Increment Revenue rating of A2.”
Strengths that Moody’s noted in its report on the Market Common district included: a maturing district with growing residential and tourism aspects; strong management with well-established development plans; and, conservative debt service coverage projections.
“The tax increment district will experience growth in the midterm given an improved economy that is seeing increased residential and commercial investment,” Moody’s report noted. The district was established in 1994, following the closure of the Myrtle Beach Air Force base, and covers approximately 4,000 acres. It includes The Market Common (103.7 acres), Grand Park (with a 30-acre lake), the International Technology and Aeronautic Park, Whispering Pines Golf Course and Myrtle Beach International Airport.
Moody’s report further noted that “assessed values have increased at an average annual rate of 14% since 2013, with stronger growth in recent years, including nearly 25% growth in 2017. Growth in the district is driven by increased demand in residential and multifamily units. Similarly, market valuation increased, reaching $705.6 million in 2017, up significantly from $575.2 million in 2015.”
If approved by City Council, the new TIF bond issue will be used to build a third deck on the DeVille Street parking garage, make other public parking improvements, update the Howard Avenue playground, add restrooms to Valor Memorial Garden, install infrastructure to support additional commercial development on the XYZ parcel, expand the Law Enforcement Center Annex on Mustang Street and install CCTV cameras and equipment for streets and parking areas in the district.
With these strong investment grade ratings, the City of Myrtle Beach will offer the new bonds with no debt service reserve fund, saving approximately $100,000 a year that can accelerate projects or increase amounts distributed to the taxing districts for their unrestricted use.