Brenham, TX's Certs of Obligations Rtd 'A-' by S&P

Business Wire, Sept 3, 1998

NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire 9/3/98--Standard & Poor's today assigned its single-'A'-minus rating to Brenham, Texas' combination tax and utility system revenue certificates of obligation series 1998.

The rating reflects: -- A growing local economic base that serves as a retail and service

center for a broad area, -- Concentrated tax base, -- Sound financial performance, and -- A manageable debt burden.

The city of Brenham is located in Washington County about 74 miles northwest of Houston. The economy is developing to include a variety of manufacturing and some services. The city is home to Blue Bell Creameries, one of the largest ice cream factories in the country. It is one of the city's leading employers, providing 774 jobs. Other leading employers include the Brenham State School and Brenham Independent School District with 1,062 and 680 employees, respectively. Blinn Junior College is another major component of the economy. The college's 2,500 students patronize local retail establishments and the college employs 623. The Brenham Business Center is a 160-acre industrial park currently under construction which the city hopes will attract high technology companies. The infrastructure for the industrial park is expected to be completed in about six months. Per capita effective buying income is low at 79.8% of state and 75.5% of national averages. Despite those numbers, per capita retail sales are high at 219% of state and 203% of national averages, attesting to Brenham's role as Washington County's economic center. Assessed value (AV) increased 34.5% from 1993-1998 to $510.8 million with solid per capita market values of $43,899. The tax base is concentrated with the 10 leading taxpayers representing 29.6% of AV. However, no single taxpayer dominates the base.

Financial performance has been sound. A small $9,000 operating deficit in fiscal 1997 reduced the unreserved general fund balance to $516,000 or 10.2% of expenditures. The city is projecting positive financial operations for fiscal 1998.

Proceeds of this bond issue will be used to finance the construction of a Recreation Park and Aquatic Center and pay for streets and utilities in the Brenham Business Center. Overall net debt is manageable at $1,655 per capita and 3.8% of true value. Following this issue, debt service expenditures will represent a significant 18% of budget.

The amortization schedule is a little faster than average with 59% of principal maturing in 10 years. The city has no plans for additional debt in the near future.

OUTLOOK: STABLE The outlook reflects the city's role as a retail and service center and anticipates continued sound financial performance coupled with economic growth, Standard & Poor's said.---CreditWire

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