KBRA assigns a long-term rating of AA to the City of Jacksonville, FL Special Revenue Bonds, Series 2025. Concurrently, the long-term rating of AA on the City's outstanding Special Revenue Bonds is affirmed.

The long-term rating of AA is also affirmed on the 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 ratings reflect the following credit considerations:

Credit Positives

• Covenant Revenues, in aggregate, have demonstrated stability over economic cycles, thus allowing for maintenance of anti-dilution test coverage of more than 4.3x MADS in each of the last five fiscal years.
• Debt ratios are very manageable, both on a per capita basis and as a percentage of the full market value of real property.

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 will likely exert continued budgetary pressure.
• Additional Special Revenue Bonds are planned to finance the debt funded component of planned general capital improvements totaling approximately $1.2 billion through FY 2029.
• Essential governmental services are statutorily prioritized over debt service on the Special Revenue Bonds.

Rating Sensitivities

For Upgrade

• Reduced pension funding requirements, sustained decline in pension costs and improved operating flexibility, as anticipated beginning in 2031 with the flow of Pension Liability Surtax revenues into the pension system.
• An improvement in wealth indicators, which trail State and national averages.

For Downgrade

• An increase in operating expenditures, decline in General Revenues, or increase in Special Revenue Bond debt service that causes the ratio of Covenant Revenues to Special Revenue Bond debt service to approach the 2.0x MADS anti-dilution test threshold.

To access ratings 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), one of the major credit rating agencies (CRA), is a full-service CRA 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 (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan’s Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.

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