Business Insider: Moody's assigns Aa1 to Austin Community College District, TX's Series 2018 Limited Tax Bonds; Outlook Stable

10 Jul 2018

New York, July 10, 2018 -- Moody's Investors Service has assigned an Aa1 rating to Austin Community College District, TX's $136 million Limited Tax Bonds, Series 2018. Moody's maintains a Aa1 issuer rating and a Aa1 rating on the college's outstanding general obligation limited tax (GOLT) debt. Moody's also maintains a Aa2 lease revenue debt rating on the Austin Community College District Public Facility Corporation, which issues debt on behalf of the college district. The outlook on all ratings remains stable.

RATINGS RATIONALE

The Aa1 issuer rating reflects the district's large and growing tax base fueled by the vibrant economy of Austin. The ratings is also based on the district's low tax rate with ample headroom to raise its debt service tax levy. The ratings are constrained by the college district's financial position, which is strong but not in line with peers at the Aaa rating level.

The Aa1 general obligation limited tax (GOLT) rating is the same as the Moody's internal assessment of the issuer's hypothetical general obligation unlimited tax (GOULT) debt, reflecting the district's ample taxing headroom which offsets the limitation under the property tax caps, lack of full faith and credit pledge, and inability to override the statutory tax cap.

The Aa2 lease revenue rating reflects the annual risk of non-appropriation of lease payments as well as the more essential nature of the projects.

RATING OUTLOOK

The stable outlook reflects our expectation that the district will continue to maintain stable finances and that Austin's strong economy will support the tax base for the foreseeable future.

FACTORS THAT COULD LEAD TO AN UPGRADE

- Materially improved unrestricted net position and liquidity

FACTORS THAT COULD LEAD TO A DOWNGRADE

- Substantial tax base decline

- Declines in liquidity or a deterioration in net position

- Significant additional debt without offsetting increases in the tax base

LEGAL SECURITY

The bonds are direct obligations of the district payable from ad valorem taxes levied, within the limitations prescribed by law, against all taxable property within the district.

USE OF PROCEEDS

Bond proceeds will be used to continue construction on a wide range of campus improvements and expansions.

PROFILE

Austin Community College District is a public junior college district that serves the City of Austin and the surrounding area with total enrollment of 45,543 as of Fall 2017.

METHODOLOGY

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.