Vibrant Jobs Market Bolsters Loudoun Town's Financial Outlook

PURCELLVILLE, VA — The town of Purcellville's healthy tax base and a strategy of smart commercial and residential development are helping to improve the town's standing among credit rating agencies. On Dec. 11, Fitch Ratings upgraded Purcellville's credit rating to AA+ from AA due in part to the town's ability to increase revenues and its fiscal responsibility.

Fitch highlighted how the Purcellville Town Council has the legal ability to increase the property tax rate on the town's residents, which is the largest revenue source, without limitation. According to Fitch, Purcellville's estimated 2018 population of 10,025 has expanded at a healthy pace, increasing nearly 30 percent since 2010. However, population growth is expected to slow as the 3.4 square mile town approaches full build-out.

"The proximity to the vibrant employment markets of Northern Virginia and desired location in the rural reaches of the greater Washington D.C. metro area drives the town's impressive income metrics," Fitch said. Purcellville's labor force is highly skilled, with 50 percent older than 25 holding a bachelor's degree compared to the national average of 31 percent, according to Fitch.

Credit ratings act as barometers of the financial and economic health of the government. Strong ratings improve a town's access to credit markets at favorable interest rates. Potential investors (creditors) see these ratings as a key determinant when deciding whether to participate in a town’s debt issuances, an important funding source for capital improvement projects.

Before issuing a bond, municipalities typically must have a bond rating from one of the top three agencies, Standard and Poor's, Moody's, or Fitch. Along with the Fitch rating, Purcellville has a AAA rating with Standard and Poor's, the highest possible credit rating provided by the agency, and an Aa2 with Moody's, a strong investment grade rating.

"This credit upgrade is further evidence of the strength of our local economy with engaged citizens, low unemployment, a skilled workforce, and attractiveness to businesses," Purcellville Mayor Kwasi Fraser said Friday in a statement.

Over the past five years, the town has reduced its debt obligation by more than $6 million and "boldly resisted development pressures that would have compromised our town's uniqueness," Fraser said. "Given this credit rating upgrade, I am confident that we will remain fiscally responsible and that we will not assume unnecessary new debt," he said.

Purcellville's finance director, Elizabeth Krens, said the town's "commitment to long-term financial planning and fiscal policy compliance is reflected in the continued strengthening of the credit ratings received from all three national credit rating agencies."

In its analyst, Fitch said Purcellville's fiscal 2020 general fund budget of $11.2 million is a $1.1 million increase over its fiscal 2019 budget. The budget keeps the real property tax rate unchanged at 22 cents per $100 of assessed value. The budget includes a $200,000 transfer of cash reserves to support a new police facility capital improvement project. The operating budget increase mostly funds improvement to public safety to improve response times and service.