Moodys.com
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
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 Aa3 UNDERLYING RATING AND Aa3 ENHANCED RATING TO RED LION AREA SCHOOL DISTRICT'S (PA) $6 MILLION G.O. BONDS, SERIES 2011

07 Jul 2011

AFFIRMS Aa3 RATING ON $48 MILLION OF PARITY DEBT OUTSTANDING

Primary & Secondary Education
PA

Moody's Rating

ISSUE

UNDERLYING
RATING

RATING

General Obligation Bonds, Series A of 2011

Aa3

Aa3

  Sale Amount

$6,000,000

  Expected Sale Date

07/20/11

  Rating Description

General Obligation

 

Opinion

NEW YORK, Jul 7, 2011 -- Moody's Investors Service has assigned a Aa3 underlying rating and an enhanced Aa3 rating with negative outlook to the Red Lion Area School District's (PA) $6 million General Obligation Bonds, Series of 2011. The 2011 bonds are secured by the district's general obligation, limited tax pledge subject to Special Session Act I property tax limitations. Concurrently, Moody's has affirmed the Aa3 underlying rating on approximately $48 million of previously issued outstanding parity debt, of which $7.75 million is secured by a limited tax pledge. The current borrowing will be used to fund various capital projects including installation of a geothermal HVAC system at an elementary school, replacement of two boilers and retrofitting of lighting fixtures and wiring to achieve energy efficiencies.

RATING RATIONALE

The Aa3 underlying rating reflects the district's healthy financial position with strong reserve balances, conservative budget management, moderately growing residential tax base, and an above average debt burden.

The Aa3 enhanced rating is based upon the additional security for these bonds provided by the Commonwealth of Pennsylvania's Act 150 School District Intercept Program. The Act provides for undistributed state aid to be diverted to bond holders in the event of a default. The timing of state aid payments relative to the timing of debt service payments is satisfactory for these bonds. The negative outlook on the Aa3 enhanced rating reflects the negative outlook on the Commonwealth of Pennsylvania's rating, as the programmatic intercept rating is linked to the commonwealth's rating.

STRENGTHS:

-Conservative budgeting practices leading to positive operations

-Healthy General Fund reserve position

-Stable residential tax base with average wealth levels

CHALLENGES:

-Rising pension costs and

-Ongoing state aid cuts

-Above average debt burden

DETAILED CREDIT DISCUSSION

HEALTHY RESERVE POSITION SUPPORTED BY STRONG BUDGETARY MANAGEMENT; FINANCES EXPECTED TO REMAIN STABLE DESPITE STATE AID CUTS

Moody's believes the district's financial position will remain stable given currently healthy reserve levels and a proven record of conservative budget management, despite rising pension costs and fiscal 2012 state aid cuts. The district's General Fund balance has improved since 2006, growing to $9.7 million (a satisfactory 12.7% of General fund revenues) in fiscal 2010 from a still adequate $3.4 million (6% of revenues) in fiscal 2006. The district realized strong operating surpluses in both fiscal 2009 and 2010,$3 million and $1.9 million, respectively, which were primarily driven by expenditure savings due to conservative budgeting for retirement, other employee related expenses, and fuel costs.

District officials project a much smaller operating surplus for fiscal 2011, resulting in an increase in the General Fund balance to approximately $10 million, or 13% of unaudited fiscal 2011 General Fund revenues. The adopted fiscal 2012 budget declined by $1 million, or 1.3%, from the prior year and is balanced with the use of $1.5 million in General Fund reserves. It did not include a millage rate increase and expenditure reductions included the elimination of 10 positions. Moody's expects the district's fund balance levels to remain stable in the medium term given its history of conservative budgeting practices. The majority of revenues are derived from property taxes and Act 511 taxes (65% of revenues in fiscal 2010) with adequate tax-collection rates averaging a strong 97.5% on a current basis over the last five years. State aid is the next largest source, accounting for 31% of revenues in fiscal 2010.

STABLE AND LARGELY RESIDENTIAL TAX BASE

Moody's anticipates the school district's $2.58 billion tax base will remain relatively stable with potential modest growth in the near-term given anticipated residential construction driven by recent population growth. The district is located in the still primarily rural southeastern corner of York County (GO rated A2) and is situated within commuting distance of several cities, 20 miles from City of Lancaster (GO rated A1), five miles southeast of the City of York (GO rated Baa1) and forty miles north of the City of Baltimore (GO rated Aa2/stable outlook). Notably, the district's population grew by 17.2% between 2000 and 2010 after expanding by 18.2% in the 1990s driven by the affordability of new residential developments built on converted farmland. Despite population growth over the last two decades, district officials expect enrollment to remain stable over the near term.

Despite the severe recession and slowdown in new building, the district has continued to experience residential development with assessed valuation growth averaging 2.7% annually from 2006 to 2011. District officials expect the tax base will experience growth in 2011 and 2012 as stalled residential housing projects resume. Full valuation experienced stronger growth from 2005 to 2010, averaging 9.2% (including a 1.2% contraction in 2010). Income levels approximate state and national medians, although full value per capita is below average at $67,434 in 2010.

ABOVE AVERAGE DEBT BURDEN

The district's debt burden is above average, but should remain manageable given the district's healthy finances and rapid principal amortization schedule. The district's direct debt burden is 3.4% of full valuation compared to the commonwealth average of 2.5%. Although principal retirement is above average with 72.5% repaid in 10 years, debt service costs represent a slightly higher than average11% of expenditures. The district currently does not have any future borrowing plans. All of the district's debt is fixed rate and it is no longer party to any derivative agreements. The district terminated its sole interest rate swap agreement in 2009 when the conjunction with the conversion of its only variable rate bond series to a fixed rate mode.

WHAT COULD CHANGE THE RATING - UP:

-Substantial tax base growth

-Enhanced wealth levels and demographic profile

-Significant improvements to the district's financial position

WHAT COULD CHANGE THE RATING - DOWN:

-Multi-year General Fund operating deficits

-Tax base deterioration resulting in negative operational impact

-Substantial increase in the debt burden

KEY STATISTICS

2010 Population: 38,264

2010 Full valuation: $2.58 billion

2010 Full value per capita: $67,434

Direct debt burden: 3.4%

Overall debt burden: 4.5%

Payout of principal (10 years): 72.5%

1999 Per capita income (as % of state and US): $20,325 (97% and 94%)

1999 Median family income (as % of state and US): $51,051 (104% and 102%)

2000 Median family housing (as % of state and US): $108,900 (112% and 91%)

FY09 General Fund balance: $7.7 million (10.6% of General Fund revenues)

FY10 General Fund balance: $9.7 million (12.7% of General Fund revenues)

FY11 General Fund balance (unaudited): $10 million (13% of General Fund revenues)

Post-sale parity debt outstanding: $88.3 million (of which $48 million is parity rated debt)

The principal methodology used in this rating was General Obligation Bonds Issued by U.S. Local Governments published in October 2009. 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, public information and confidential and proprietary Moody's Investors Service 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 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.

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

The date on which some Credit Ratings were first released goes back to a time before Moody's Investors Service's Credit Ratings were fully digitized and accurate data may not be available. Consequently, Moody's Investors Service 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 the Credit Policy page on Moodys.com for the methodologies used in determining ratings, further information on the meaning of each rating category and the definition of default and recovery.

Analysts

Michael D'Arcy
Analyst
Public Finance Group
Moody's Investors Service

Jessica A. Lamendola
Backup Analyst
Public Finance Group
Moody's Investors Service

Geordie Thompson
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 Aa3 UNDERLYING RATING AND Aa3 ENHANCED RATING TO RED LION AREA SCHOOL DISTRICT'S (PA) $6 MILLION G.O. BONDS, SERIES 2011
No Related Data.
© 2020 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. AND/OR ITS CREDIT RATINGS AFFILIATES ARE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY'S (COLLECTIVELY, "PUBLICATIONS") MAY INCLUDE SUCH  CURRENT OPINIONS. MOODY'S INVESTORS SERVICE 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 OR IMPAIRMENT. SEE MOODY'S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY'S INVESTORS SERVICE CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS ("ASSESSMENTS"), AND  OTHER 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. AND/OR ITS AFFILIATES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND  PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND  PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY'S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES  ITS 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, ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS OR  PUBLICATIONS WHEN MAKING AN 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.

MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.

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 its 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 CREDIT RATING, ASSESSMENT, OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER.

Moody's Investors Service, Inc., 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 Moody's Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody's Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and Moody's investors Service also maintain policies and procedures to address the independence of Moody's Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody's Investors Service 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 "Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy."

Additional terms 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 investors.

Additional terms for Japan only: Moody's Japan K.K. ("MJKK") is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody's Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody's SF Japan K.K. ("MSFJ") is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization ("NRSRO"). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

​​​​​​​​
Moodys.com