New York, January 06, 2021 -- Moody's Investors Service has assigned a Aa1 rating to Mt. San Jacinto Community College District, CA's $105.0 million Election of 2014 General Obligation Bonds, Series C. Concurrently, Moody's has affirmed the Aa1 ratings for the district's $157.8 million outstanding general obligation unlimited tax (GOULT) bonds. We have also assigned a stable outlook to the district.
RATINGS RATIONALE
The Aa1 GOULT rating reflects the district's robust and diverse tax base, solid resident income levels, and healthy financial position supported by proactive and conservative fiscal management. The rating also incorporates the district's manageable debt and pension burdens, modest OPEB liabilities, and the above-average legal strengths of California community college district GO bonds.
We regard the coronavirus outbreak as a social risk under our ESG framework, given the substantial implications for public health and safety. We do not see any material immediate credit risks for Mt. San Jacinto CCD, CA given its ability to transition operations online and the expected relative stability of state funding for fiscal 2021. In addition, the district has sufficient reserves and liquidity which will allow it to handle state aid deferrals during fiscal 2021 without having to conduct short term borrowing.
The situation surrounding coronavirus and resulting recession continues to evolve and the longer-term impact will depend on both the severity and duration of the crisis. If our view of the credit quality of Mt. San Jacinto CCD changes, we will update our rating and outlook for the district at that time.
RATING OUTLOOK
The stable outlook reflects our expectation that the district's tax base will continue to be robust, its debt and pension burden will remain manageable and that the district will maintain a healthy financial position. The outlook also reflects our expectation that the district's conservative and proactive management will allow the district to navigate through operational and economic impacts caused by the coronavirus without materially impacting its long-term credit quality.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS
- Material improvements to resident income levels
- Attainment of basic aid status
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS
- Protracted decline in assessed value
- Material weakening of financial position, including reserves and liquidity
- Any issues with college accreditation
LEGAL SECURITY
The GOULT bonds are secured by the levy of ad valorem taxes, unlimited as to rate or amount, upon all taxable property within the district. The portion of the levy restricted for debt service is collected, held, and transferred directly to the paying agent by Riverside County (Aa3 stable) on behalf of the district.
USE OF PROCEEDS
Proceeds of the Election of 2014 General Obligation Bonds, Series C will finance the acquisition, construction, modernization and renovation of district sites and facilities.
PROFILE
Mt. San Jacinto Community College District, CA provides higher education in central and southwestern Riverside County. The district operates one college, Mt. San Jacinto Community College, on campuses in San Jacinto, Menifee, San Gorgonio Pass and Temecula. The college is currently fully accredited by the Accrediting Commission for Community and Junior Colleges of the Western Association of Schools and Colleges. The district's fiscal 2021 projected full time equivalent student (FTES) count is 12,188.
METHODOLOGY
The principal methodology used in these ratings was US Local Government General Obligation Debt published in July 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBM_1230443. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.
REGULATORY DISCLOSURES
For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.
For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security 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.
The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.
These ratings are solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.
Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.
Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1243406.
At least one ESG consideration was material to the credit rating action(s) announced and described above.
The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.
The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the UK and is endorsed by Moody's Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.
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