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16 Nov 2016
New York, November 16, 2016 -- Issue: 2016 General Obligation Refunding Bonds, Series A; Rating: Aaa; Rating Type: Underlying LT; Sale Amount: $10,000,000; Expected Sale Date: 11/29/2016; Rating Description: General Obligation;
Issue: 2016 General Obligation Refunding Bonds, Series B (2019 Crossover); Rating: Aaa; Rating Type: Underlying LT; Sale Amount: $117,000,000; Expected Sale Date: 11/29/2016; Rating Description: General Obligation;
Issue: Lease Revenue Refunding Bonds, Series 2016B for West Valley-Mission Community College District; Rating: Aa2; Rating Type: Underlying LT; Sale Amount: $3,600,000; Expected Sale Date: 11/29/2016; Rating Description: Lease: Abatement;
Issue: Lease Revenue Refunding Bonds, Series 2016C for West Valley-Mission Community College District (2019 Crossover); Rating: Aa2; Rating Type: Underlying LT; Sale Amount: $41,600,000; Expected Sale Date: 11/29/2016; Rating Description: Lease: Abatement;
Summary Rating Rationale
Moody's Investors Service has assigned an Aaa rating to the West Valley-Mission Community College District's (WVM) 2016 General Obligation Refunding Bonds, Series A and Series B (2019 Crossover). The bonds have anticipated par values of $10 million and $117 million respectively. We have also assigned an Aa2 rating to the district's Lease Revenue Refunding Bonds Series 2016B and Series 2016C (2019 Crossover). The lease obligations have expected values of $3.6 million and $41.6 million respectively. The outlook on the ratings is stable.
The rating assignment reflects the district's exceptionally large assessed value and very strong resident wealth levels in the core of the growing Silicon Valley. The district's fiscal position is robust with strong levels of cash available outside of the general fund that significantly broaden the district's financial resources. The district's debt profile is manageable with a moderate lease burden and average retirement cost obligations.
The rating further incorporates the strengths of California community college districts' general obligation bonds. Not only are these GOs secured by a voter-approved, unlimited property tax pledge, the proceeds of which are constitutionally restricted for debt service payment, the county, rather than the district, will levy, collect, and disburse the GO tax proceeds. The notching differential between the lease and the GO ratings also reflects the strong legal features of California general obligation bonds, which are not shared by the lease-backed debt.
The outlook is stable and is driven by expectation that the district will maintain a broad and stable financial profile inclusive of above average levels of cash and reserves.
Factors that Could Lead to an Upgrade
Factors that Could Lead to a Downgrade
Loss of basic aid status due to change in enrollment or weakening of AV
Significant deterioration of assessed valuation or resident economic profile
Material decline of cash or reserves
The general obligation bonds are secured by the district's voter-approved unlimited property tax pledge. The 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 general obligation bonds.
Use of Proceeds
The proceeds of the lease revenue sale will be used to refund the district's 2009A-1 and 2011B bonds. Proceeds from the GO bonds will be used to refund the 2004 Series A and Series B bonds.
The district serves nine areas within Santa Clara County and a small segment of Santa Cruz County. The service area includes portions of the cities of San Jose, Santa Clara, Saratoga, Los Gatos and Campbell among others. The 2017 enrollment is projected to be 14,550.
The principal methodology used in this rating was US Local Government General Obligation Debt published in January 2014. An additional methodology used in the lease rating was Lease, Appropriation, Moral Obligation and Comparable Debt of US State and Local Governments published in July 2016. Please see the Rating Methodologies page on www.moodys.com for a copy of these methodologies.
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