New York, May 04, 2017 -- Issue: General Obligation Bonds Election of 2014, Series B (2017); Rating: A1; Rating Type: Underlying LT; Sale Amount: $25,000,000; Expected Sale Date: 05/23/2017; Rating Description: General Obligation
Issue: General Obligation Bonds Election of 2016, Series A (2017); Rating: A1; Rating Type: Underlying LT; Sale Amount: $30,000,000; Expected Sale Date: 05/23/2017; Rating Description: General Obligation
Summary Rating Rationale
Moody's Investors Service has assigned an A1 rating to Western Placer Unified School District, CA's Election of 2014, Series B (2017) and Election of 2016, Series A (2017) General Obligation Bonds with an expected par amount of $55.0 million. Concurrently, Moody's has affirmed the A1 rating on the district's $26.5 million of outstanding General Obligation debt.
The district's A1 GO rating reflects the district's well sized and diverse assessed valuation that has resumed strong growth after undergoing significant multi-year declines during the recession. The district has a strong resident wealth profile that is above average for the area and also factored into the rating assignment. The district's reserve position is somewhat weaker than typical for a Moody's-rated school district and reflects projected draw-downs in fiscal 2017 and 2018. These deficits will result in the balance going from a very healthy level that was well above the median for the sector in fiscal 2009 to a current level that is significantly narrowed and in line with the single-A rating category. The rating also reflects the district's very high direct debt levels that include a large lease burden.
The rating also reflects the nature of the GO pledge, which is secured by an unlimited property tax pledge of all taxable property within the District boundaries. Debt service on the rated debt is secured by the district's voter-approved unlimited property tax pledge. Placer County rather than the district will levy, collect, and disburse the district's property taxes, including the portion constitutionally restricted to pay debt service on GO bonds.
Outlooks are usually not assigned to local government credits with this amount of debt outstanding.
Factors that Could Lead to an Upgrade
Material reduction of the district's lease burden
Sustained improvement to the district reserve and liquidity position
Significant growth in the assessed valuation
Factors that Could Lead to a Downgrade
Continued deficits resulting in weaker financial position then currently projected
Material increase to the district's lease obligations
Material declines in district assessed value
The GO bonds are secured by the district's voter-approved unlimited property tax pledge. Placer County rather than the district will levy, collect, and disburse the District's property taxes, including the portion constitutionally restricted to pay debt service on GO bonds.
Use of Proceeds
The 2014 Election Series B Bonds are being issued to finance the acquisition and construction of a new high school and improvements to the existing high school by updating/replacing of aging classrooms and support facilities, and instructional technology needed for improved teaching, replacing portable classrooms, repairing/replacing roofs, worn-out floors, electrical systems, seismic upgrades and improving energy efficiency to save money and support instruction within the District. The 2016 Election Series A Bonds are being issued to finance the acquisition and construction of a new elementary school to prevent overcrowding and to upgrade/ enhance/ expand Glen Edwards Middle School by repairing classrooms, leaky roofs, ensuring safe drinking water, improving student safety, and updating and constructing science, math, computer labs, and a new gymnasium.
Western Placer encompasses approximately 175 square miles and is located in the western portion of the County, within commuting distance of the city of Sacramento. The district operates seven elementary schools, two middle schools, one high school, one continuation high school, and one charter home school program, serving a population of just under 6,500 students.
The principal methodology used in this rating was US Local Government General Obligation Debt published in December 2016. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.
For ratings issued on a program, series or category/class of debt, this announcement provides certain 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 certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain 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.
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