Moodys.com
Close
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 MIG 1 RATING TO OCONOMOWOC AREA SCHOOL DISTRICT'S $10 MILLION TAX AND REVENUE ANTICIPATION PROMISSORY NOTES

15 Sep 2011

AFFIRMS Aa2 RATING ON $62.5 MILLION OF OUTSTANDING GENERAL OBLIGATION DEBT

Primary & Secondary Education
WI

Moody's Rating

ISSUE

RATING

Tax and Revenue Anticipation Promissory Notes, Series 2011

MIG 1

  Sale Amount

$10,000,000

  Expected Sale Date

09/20/11

  Rating Description

Tax and Revenue Anticipation Notes

 

Opinion

NEW YORK, Sep 15, 2011 -- Moody's Investors Service has assigned a MIG 1 rating to Oconomowoc Area School District's $10 million Tax and Revenue Anticipation Promissory Notes. Concurrently, Moody's has affirmed the Aa2 rating on $65.1 million of the district's outstanding general obligation long-term debt.

STRENGTHS

-Increasing enrollment trends

-Sustained operating surpluses, resulting in improved reserve levels

CHALLENGES

-Reserve levels below state school district medians

SUMMARY RATINGS RATIONALE

The notes are secured by the district's pledge of taxes levied for operation and maintenance purposes, state aid, and all other available revenues for the fiscal 2011-2012 year. The MIG 1 rating reflects the district's sufficient revenues, satisfactory liquidity position, reasonable cash flow projections, and the credit strength of the district's Aa2 underlying rating. Affirmation of the Aa2 underlying rating reflects the district's sizeable and affluent tax base, satisfactory financial position with increased reserve levels and manageable debt profile.

NOTE HOLDER SECURITY IS DERIVED FROM SUFFICIENT REVENUES AND REASONABLE CASH FLOW PROJECTIONS

The tax and revenue anticipation notes (TRANS) are secured by a combination of district revenues for fiscal 2012, primarily property taxes, state and federal aid. The borrowing, typical for many Wisconsin school districts, is necessitated by traditional low points in the cash flow cycle as revenues are realized at discrete points throughout the fiscal year (state aid comes largely in September, December, March and June; property taxes in January, February and August), while expenditures occur on a smoother and more even schedule throughout the year. Given that the district's revenues are more heavily composed of local property taxes than most other districts in the state, at about 85.8% of fiscal 2010 General Fund revenues, the effect is somewhat more pronounced. The borrowing amount this cycle ($10.0 million) represents a moderate decline in comparison to amounts borrowed in recent years, which the district attributes to an improved financial position.

Last year's TRANS matured on August 25, 2011, with the current issuance dated October 4, demonstrating the repayment of the prior series is not contingent upon this borrowing. The current borrowing will provide cash flow for expected deficits that begin in November and continue through January 2012, when the first installment of property taxes arrives. $5.5 million of the TRANS matures on January 25, 2012, while the remaining $4.5 million matures on August 27, 2012, with an ending projected coverage of approximately 2.78 times. By state law, the county must remit property taxes due to the district by August 20th each year, allowing for a relatively narrow window between when the final property tax revenues are due and when the TRANS must be repaid. This concern is somewhat mitigated by the fact that the district has historically received property tax receipts within several days of the final due date, and the credit strength of Waukesha County (GO rated Aaa/Stable outlook).

ABOVE AVERAGE WEALTH INDICES; INCREASING ENROLLMENT

The district's tax base is expected to remain relatively stable, as a moderate level of development continues to be somewhat offset by modest declines in property values resulting from the economic downturn. Located 30 miles west of Milwaukee (GO rated Aa1/negative outlook) along I-94, Oconomowoc School District encompasses 120 square miles, including the city of Oconomowoc (GO rated Aa2), portions of Delafield (GO rated Aa2) and several surrounding towns. Inclusive of declines in 2009 and 2010, the district's sizeable suburban tax base, currently at $5.2 billion, has grown at a 3.3% five-year average annual rate. Most recently, the 2010 valuation reflects a 2.1% decline. Looking ahead, district officials expect values to remain relatively flat.

A diverse array of employment opportunities are available within Waukesha County (GO rated Aaa/Stable outlook), with manufacturing, services and retail sectors all well represented. Some residents also commute to Milwaukee and Madison (GO rated Aaa/Stable outlook) area employment centers. Notably, the City of Oconomowoc recently agreed to a settlement with Dayton Hudson (Target Corporation) (Long term issuer rating A2/Stable outlook), the district's largest taxpayer, over an appeal of the company's assessed valuation. As a result, the district is required to remit a rebate settlement in January 2012 of $425,000. The district plans to levy back for the $425,000 in 2012, which will impact collections in 2013. Reflecting the growing nature of the district, enrollment has increased steadily, increasing 3.8% in fiscal 2011 to 5,024. Enrollment is a key determinant in state per pupil funding, and the district projects enrollment growth will continue to more than 6,000 students by fiscal year 2016. At 7.3% in June of 2011, unemployment in Waukesha County tracked below state (8.1%) and national (9.3%) averages for the same time period.

SATISFACTORY FINANCIAL OPERATIONS CHARACTERIZED BY IMPROVED RESERVE LEVELS

The district's satisfactory financial operations are expected to remain stable, as management has demonstrated a commitment to conservatively budgeting and using one-time revenues to either increase reserves or earmark for one-time capital projects. Following several years of significant deterioration in the General Fund balance, leaving reserves at a negative $2.7 million, or a negative 7.4% of General Fund revenues in fiscal 2004, the district's new financial management team arrived in the middle of fiscal 2005 and returned operations to structural balance in 2006. In each year since, the district has managed to achieve positive operations, evidenced by the district's year end fiscal 2010 General Fund balance of $5.5 million, or a satisfactory 11.0%. Much of the fiscal 2010 surplus is attributable to non-recurring federal aid which the district used to increase reserves.

While audited figures are not yet available, officials indicate that the district end fiscal year 2011 with a sizeable $4 million surplus, increasing reserves to approximately $10 million. The surplus is attributable to federal aid, personnel cost savings associated with the provisions of the state budget, as well as a contingency built into the budget. For the fiscal year 2012 which began on July 1, the district met a deficit reduction target of $2.8 million through a combination of personnel savings such as increased employee pension contributions, attrition and increased state aid due to enrollment growth. Notably, the district plans to undertake a significant technology capital project beginning in fiscal 2012, which will add fiber optic connectivity between all district facilities. The project will be funded through the use of reserves, and is expected to cost $2 million between fiscal 2012 and fiscal 2013.

DEBT PROFILE EXPECTED TO REMAIN MANAGEABLE; SOME FUTURE BORROWING EXPECTED

At 2.5% (1.4% direct) of full value, the district's debt burden approximates state and national averages and is expected to remain manageable. As a result of continued enrollment growth, the district expects to request voter approval for borrowing associated with the construction of an additional elementary school. The district is still in the process of determining the amount of planned borrowing, and anticipates that the borrowing will occur no earlier than 2013. All of the district's debt is fixed rate, and the district is not a party to any interest rate swap agreements.

WHAT COULD CHANGE THE RATING - UP

-Sustained operating surpluses leading to significantly increased reserves

-Continued expansion of the district's tax base and strengthened income indices

WHAT COULD CHANGE THE RATING - DOWN

-Ongoing trend of operating deficits resulting in declining reserve levels

-Deterioration of the district's tax base

KEY STATISTICS

2011-12 TRAN borrowing as % of pledged revenues: 17.1%

Projected cash balance following repayment (January 25, 2012): $10 million (17.1% of pledged revenues)

Projected cash balance following repayment (August 27, 2012): $7.6 million (13.0% of pledged revenues)

2010 Full value: $5.2 billion

Direct debt burden as $ of full value: 1.4%

Overall debt burden as % of full value: 2.5%

Payout (10 years): 54.2%

Fiscal 2010 General Fund balance: $5.5 million (11.0% of revenues)

2000 Per capita income as a % of state: 139.7% (137.7% of US)

2000 Median family income as a % of state: 125.9% (133.1% of US)

PRINCIPAL METHODOLOGY

The principal methodology used in this rating was Short-Term Cash Flow Notes published in May 2007. 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

Edward Damutz
Backup Analyst
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 MIG 1 RATING TO OCONOMOWOC AREA SCHOOL DISTRICT'S $10 MILLION TAX AND REVENUE ANTICIPATION PROMISSORY NOTES
No Related Data.
© 2019 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 ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MOODY’S PUBLICATIONS 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 OR IMPAIRMENT. SEE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S RATINGS. 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 AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS OR MOODY’S 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.

CREDIT RATINGS AND MOODY’S 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 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 CREDIT RATING OR 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 rating, agreed to pay to Moody’s Investors Service, Inc. for ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. 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 “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 rating, agreed to pay to MJKK or MSFJ (as applicable) for 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