Please Note
We brought you to this page based on your search query. If this isn't what you are looking for, you can continue to Search Results for ""
The maximum number of items you can export is 3,000. Please reduce your list by using the filtering tool to the left.
Close
Close
Email Research
Recipient email addresses will not be used in mailing lists or redistributed.
Recipient's
Email

Use semicolon to separate each address, limit to 20 addresses.
Enter the
characters you see
Enter the above code here:
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
New Issue:

MOODY'S ASSIGNS A2 RATING TO FORD COUNTY USD 443'S (DODGE CITY, KS) LEASE PURCHASE AGREEMENT CERTIFICATES OF PARTICIPATION, SERIES 2011

Global Credit Research - 08 Sep 2011

TOTAL OF $41 MILLION OF RATED LONG-TERM DEBT OUTSTANDING, INCLUDING CURRENT ISSUE

Primary & Secondary Education
KS

Moody's Rating

ISSUE

RATING

Lease Purchase Agreement Certificates of Participation, Series 2011

A2

  Sale Amount

$3,130,000

  Expected Sale Date

09/09/11

  Rating Description

Certificates of Participation

 

Opinion

NEW YORK, Sep 8, 2011 -- Moody's Investors Service has assigned A2 rating to Ford County Unified School District 443's (Dodge City, KS) Lease Purchase Agreement Certificates of Participation, Series 2011. Concurrently, Moody's has affirmed the A1 rating on the district's outstanding GOULT debt and the A2 rating on the district's outstanding lease revenue debt. Post-sale, the district will have $32.0 million of outstanding GOULT debt and $9.0 million of outstanding lease revenue debt, including the current offering.

SUMMARY RATINGS RATIONALE

The certificates are secured by lease payments made by the district, subject to annual appropriation. Proceeds of the certificates will be used to fund capital equipment purchases for improvements and additions to a building which will create a new middle school in the district. The A2 rating on the certificates reflects the risk of annual non-appropriation and essentiality of the project. Affirmation of the A1 general obligation rating reflects the district's moderately-sized tax base in southwest Kansas (GO rated Aa1/negative outlook) with growing enrollment; satisfactory financial operations despite recent cuts to state aid revenues; and somewhat elevated debt burden that is expected to remain manageable.

STRENGTHS

-Conservative budgeting leading to increases in alternate reserve funds

-Increasing enrollment trends

CHALLENGES

-Reductions in state per pupil funding

-Below average income indices

-Narrow window for debt service payments and lease payments to trustee

DETAILED CREDIT DISCUSSION

ESSENTIAL PURPOSE; SATISFACTORY SECURITY FOR CERTIFICATE HOLDERS; NARROW REPAYMENT

The essential purpose of the project, as represented by the Board, provides strong motivation for the district to make timely appropriations for annual rental payments on the certificates. The new facility will provide the district with a second middle school to accommodate the need for increased capacity due to growing enrollment. The current offering is secured by the base rent payments made by the school district under the lease. The lease is annually renewable by district appropriation. The lease term begins in November of 2011 and will terminate on June 30, 2012 (the last day of the district's fiscal year), with subsequent terms at the start of each fiscal year (July 1). The district is required under the Lease Purchase Agreement to provide written notice of non-appropriation at least 90 days prior to the end of each lease term. The district expects to make debt service payments from its General Fund. Maximum annual debt service (MADS) on the COPs is approximately $2 million in fiscal 2015. Debt service for the current issue is expected to be combined with previously established lease payments to maintain overall level lease payment debt service. Lease payments are due to the trustee on June 1st and December 1st, the dates when debt service of the certificates are due, which we note is a narrow window for repayment. Despite this narrow window, this is somewhat mitigated by the district's historically timely payment of debt service and essentiality of the project. The trustee (Security Bank of Kansas City) is assigned a leasehold interest in the financed project and has the right to take possession of or re-let the facility upon default or non-renewal of the lease. The board of education has expressed its intent to continue to appropriate lease payments through final maturity, which is expected to be in 2016.

RURAL TAX BASE COVERS OVER 400 SQUARE MILES IN SOUTHWESTERN KANSAS; MAJOR BEEF PROCESSING CENTER

The district's tax base is expected to experience moderate growth due to the presence of available land and the stability of the district's major employers. The district covers 426 square miles in southwestern Kansas and includes Dodge City, a regional center of commerce for surrounding areas. The district's moderately-sized $1.2 billion tax base is dominated by the beef processing industry. The district's two largest employers are Cargill (Senior unsecured rated A2/stable outlook) and National Beef, which employ approximately 2,700 and 2,690, respectively. District officials report that a casino recently opened in Dodge City, expanding the employment base. As a reflection of its rural tax base, income levels track well below both state and national levels with 2000 per capita and median family income at 76% and 85% of the state, respectively. Unemployment in the district has historically trended well below state and national levels and continues to do so. The district's June 2011 unemployment rate of 4.5% remains significantly lower than state (at 6.7%) and national (9.3%) levels for the same time period, respectively. The district has experienced increased levels of enrollment since 2009. In fiscal year 2011, enrollment increased 3.8% to 6,442. Officials expect enrollment to continue to increase in fiscal 2012 by at least 25 students, or approximately 150 students at most.

SATISFACTORY FINANCIAL POSITION; RESTRICTIVE STATE FUNDING FORMULA LIMITS FINANCIAL FLEXIBILITY

Moody's expects the district's financial operations to remain satisfactory due to adequate reserve levels and prudent financial management. Like all Kansas school districts, the district's revenue raising flexibility is limited by the state education funding structure, which reduces state aid by year-end unencumbered cash balances in a district's main operating funds which are the General Fund and Supplemental General Fund (Local Option Budget). Therefore, Kansas school districts typically keep reserves in other operating funds that do not offset against state aid, and Moody's examines these balances as a measure of a district's financial flexibility. Districts typically transfer the majority of year end General Fund and Supplemental General Fund balances to the Special Education Fund or the Contingency Reserve Fund. While Special Education Fund balances cannot be transferred back to the General Fund or Supplemental General Fund, larger balances afford districts flexibility by allowing them to adjust future transfer amounts if necessary. Districts are also allowed to maintain a Contingency Reserve Fund, which can be used for any purpose and in fiscal 2010 and 2011 can equal up to 10% of a district's General Fund budget. The fiscal 2010 ending cash balance for the Special Education Fund was $1.0 million, or a satisfactory 16.6% of that fund's revenues. The fiscal 2010 Contingency Reserve Fund increased by $1.1 million to $4.3 million, or approximately 10% of General Fund revenues. Combined, the fund balances in the two funds equal an adequate 12.6% of General Fund revenues. Additionally, the district maintains some financial flexibility in its ability to levy supplemental taxes for its General Fund operations in the form of its Supplemental General Fund, or Local Option Budget (LOB). The district recently increased its Supplemental General Fund to 30% of the General Fund. Management reports no plans to increase it to the statutory limit of 31%, which is subject to voter approval.

While audited figures are not available, preliminary unaudited figures for year-end fiscal 2011 indicate that the district increased the fund balance in the Special Education Fund by $400,000 to approximately $1.4 million, while the Contingency Reserve Fund balance remained at $4.3 million. The district also maintains a Capital Outlay Fund which is funded by a separate levy and which the district has authorization of up to four mills, but did not levy any millage for the Capital Outlay Fund in fiscal 2012. Officials indicate that millage was alternatively applied toward the LOB fund due to increased state matching funds associated with that fund. While the balance in the Capital Outlay Fund cannot be used for general operations, it may be used for equipment purchases, technology upgrades, and building repairs, thereby helping to offset some of the burden on the General Fund and Supplemental General Fund. In fiscal 2010, the Capital Outlay Fund ended the year with a balance of $4.2 million. In conjunction with the current project, balances in both the Capital Outlay Fund and Contingency Reserve Fund are expected to provide supplemental cash funding of approximately $6.4 million toward the cost of the middle school project associated with the current issuance.

For the current fiscal year 2012, the district adopted a budget based on level enrollment, although as mentioned above, officials anticipate at least modest enrollment growth. The district anticipates balanced operations, although a reduced fund balance in the Capital Outlay fund is expected as a result of cash contributions toward the middle school project. In addition, the Contingency Reserve Fund balance will be reduced to 6% as required by the state.

HIGH LEVELS OF RAPIDLY RETIRED DEBT; NO FUTURE BORROWING EXPECTED

The district's well above average debt burden of 7.1% is expected to be manageable due to a modestly growing tax base, limited future borrowing needs and rapid principal retirement (100% repaid in ten years). As evidenced by the lower direct debt burden of 3.6%, a significant portion of the overall debt burden is comprised of overlapping debt, with Dodge City issuing the largest amount applicable to the district. The state's School District Capital Improvement Fund (CIF) somewhat mitigates the high debt levels; funding from the CIF assists districts in making principal and interest payments on voted general obligation bond issues. It is currently estimated that this source of state funding will pay approximately 52% of the district's debt service in fiscal 2012 (though this figure can fluctuate over time). Officials do not report any future borrowing plans at this time.

WHAT COULD CHANGE THE RATING - UP

-Significant expansion of the district's tax base

-Increased resident wealth indices

WHAT COULD CHANGE THE RATING - DOWN

-Significant declines in enrollment

-Significant deterioration of the district's tax base

-Failure to appropriate for or make timely lease payments

KEY STATISTICS

2010 District population (estimated): 32,396 (10.1% increase since 2000)

Estimated full value: $1.2 billion

Estimated full value per capita: $38,322

Debt burden: 7.1% (3.6% direct)

Principal retirement (10 years): 100%

2000 per capita income as a % of state/nation: 76.0% / 72.1%

2000 median family income as a % of state/nation: 85.1% / 84.4%

FY2010 Combined Special Education and Contingency Reserve Fund balance: $5.3 million (12.6% of General Fund revenues)

FY 2011 Enrollment: 6,442 (1.7% annual average increase since 2006)

Post-sale GO debt outstanding: $32.0 million

Post-sale COP debt outstanding: $9.0 million

PRINCIPAL METHODOLOGY

The principal methodology used in this rating was The Fundamentals of Credit Analysis for Lease-Backed Municipal Obligations published in October 2004. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides relevant regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides relevant regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides relevant regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

Information sources used to prepare the rating are the following: parties involved in the ratings, parties not involved in the ratings, and public information.

Moody's considers the quality of information available on the rated entity, obligation or credit satisfactory for the purposes of issuing a rating.

Moody's adopts all necessary measures so that the information it uses in assigning a rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Please see Moody's Rating Symbols and Definitions on the Rating Process page on www.moodys.com for further information on the meaning of each rating category and the definition of default and recovery.

Please see ratings tab on the issuer/entity page on www.moodys.com for the last rating action and the rating history.

The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Analysts

Thomas Aaron
Analyst
Public Finance Group
Moody's Investors Service

Soo Yun Chun
Backup Analyst
Public Finance Group
Moody's Investors Service

Henrietta Chang
Senior Credit Officer
Public Finance Group
Moody's Investors Service

Contacts

Journalists: (212) 553-0376
Research Clients: (212) 553-1653


Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
USA

MOODY'S ASSIGNS A2 RATING TO FORD COUNTY USD 443'S (DODGE CITY, KS) LEASE PURCHASE AGREEMENT CERTIFICATES OF PARTICIPATION, SERIES 2011
No Related Data.

 

© 2014 Moody's Corporation, Moody's Investors Service, Inc., Moody's Analytics, Inc. and/or their licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

 


CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. ("MIS") AND ITS AFFILIATES ARE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND CREDIT RATINGS AND RESEARCH PUBLICATIONS PUBLISHED BY MOODY'S ("MOODY'S PUBLICATION") MAY INCLUDE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY'S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY'S OPINIONS INCLUDED IN MOODY'S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY'S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY'S ANALYTICS, INC. CREDIT RATINGS AND MOODY'S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY'S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY'S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY'S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY'S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

 


MOODY'S CREDIT RATINGS AND MOODY'S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS FOR RETAIL INVESTORS TO CONSIDER MOODY'S CREDIT RATINGS OR MOODY'S PUBLICATIONS IN MAKING ANY INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.

 


ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT.

 


All information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided "AS IS" without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing the Moody’s Publications.

 


To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.

 


To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

 


NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER.

 


MIS, a wholly-owned credit rating agency subsidiary of Moody’s Corporation ("MCO"), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MIS have, prior to assignment of any rating, agreed to pay to MIS for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,500,000. MCO and MIS also maintain policies and procedures to address the independence of MIS's ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading "Shareholder Relations — Corporate Governance — Director and Shareholder Affiliation Policy."

 


For Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY'S affiliate, Moody's Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody's Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to "wholesale clients" within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY'S that you are, or are accessing the document as a representative of, a "wholesale client" and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to "retail clients" within the meaning of section 761G of the Corporations Act 2001. MOODY'S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail clients. It would be dangerous for "retail clients" to make any investment decision based on MOODY'S credit rating. If in doubt you should contact your financial or other professional adviser.

© 2014 Moody's Investors Service, Inc., Moody’s Analytics, Inc. and/or their affiliates and licensors. All rights reserved.
Regional Sites: