KBRA assigns a long-term rating of AA to the City of Jacksonville Special Revenue and Refunding Bonds, Series 2024. Concurrently, KBRA affirms the long-term rating of AA rating on the City's outstanding Special Revenue Bonds.

The long-term rating of AA is also affirmed on the City's City's Special Revenue (BJP) Bonds, which are payable from Covenant Revenues and further payable from Infrastructure Sales Tax revenues available after satisfaction of the debt service and reserve account funding requirements of the City's Better Jacksonville Bonds.

The Outlook on all bonds is Stable.

Key Credit Considerations

The rating was assigned because of the following key credit considerations:

Credit Positives

• Covenant Revenues increased consistently from 2018-2023, albeit at a growth rate somewhat below the rate of inflation over the period.
• Strong anti-dilution test coverage of maximum annual debt service has been maintained throughout economic cycles. Anti-dilution test coverage has exceeded 4.22x since 2019 and was a strong 4.60x in FY 2023.

Credit Challenges

• Although the City is addressing high fixed costs through previously enacted pension reform measures and careful adherence to its own debt affordability metrics, required pension contributions and debt service obligations are expected to exert continued pressure on the operating budget.
• Additional Special Revenue Bonds are planned to finance the debt funded component of City’s large and growing Capital Improvement Plan. The CIP includes approximately $625 million of costs related to the City’s share of construction costs of the renovated Jaguars Stadium.
• Essential governmental services are statutorily prioritized over debt service on the Special Revenue Bonds.

Rating Sensitivities

For Upgrade

• Achievement of reduced pension funding requirements, sustained decline in pension costs and improved operating flexibility, as anticipated to begin in 2031 when Pension Liability Surtax revenues are expected to flow to the pension system.
• Improvement in wealth indicators, which trail State and national averages.

For Downgrade

• An increase in operating expenditures and/or decline in General Fund revenues that results in a material deterioration of Covenant Revenues relative to Special Revenue Bond debt service.

To access rating and relevant documents, click here.

Methodologies

• Public Finance: U.S. Special Tax Revenue Bond Rating Methodology
• Public Finance: U.S. State Annual Appropriation Obligation Rating Methodology
• Public Finance: U.S. Local Government General Obligation Rating Methodology
• ESG Global Rating Methodology

Disclosures

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.

Doc ID: 1005376

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