Pleasant Hill Recreation & Park District, CA GO Rating Raised To 'A+' On Improving Economy, Financial Position
CENTENNIAL (S&P Global Ratings) Aug. 8, 2017--S&P Global Ratings raised its long-term rating and underlying rating (SPUR) to 'A+' from 'A' on Pleasant Hill Recreation and Park District, Calif.'s outstanding general obligation (GO) bonds and assigned its 'A+' rating to the district's series 2017 GO refunding bonds. The outlook is stable. At the same time, S&P Global Ratings withdrew its rating on the district's series 2013 certificates of participation, which did not sell in the public market and were ultimately issued as a private placement. "The raised ratings reflect our view of the district's continually strengthening local economy and improved financial position, exhibited by consistently strong reserve levels over the last four audited fiscal years," said S&P Global Ratings credit analyst Alyssa Farrell. Revenue from unlimited ad valorem taxes levied on taxable property in the district secures the GO bonds. Proceeds from the series 2017 bonds will be used to refund the district's election of 2009, series 2010A, GO bonds. The ratings reflect our view of the district's:
- Access to, and participation in, the greater San Francisco area economy and employment base with what we view as very strong incomes and extremely strong property wealth levels;
- Sizable and very diverse property tax base that has seen only modest effects from the national economic and housing downturns; and
- Strong reserves that are reinforced by a formal reserve policy.
Partly offsetting the above strengths, in our view, are the district's:
- History of negative operations and fund balance position, although financial performance has substantially improved in recent years;
- Elevated debt service carrying charges with high overall net debt per capita and below-average amortization; and
- Alternative financing that we believe represents a source of contingent liquidity risk nearly equal to the district's available cash.
The stable outlook reflects our view of the district's steadily growing local economy and improved financial position, with the district maintaining its reserves at what we consider strong levels. The outlook further reflects our expectation that the district will continue to maintain its strong financial position over the next two years, supported by a formal reserve policy and an overall stable local economy, and that there will be no events of default related to the district's alternative financing. We do not expect to change the ratings during the two-year outlook horizon. We could raise the ratings if the district's overall net debt burden were to moderate to a moderate level on a per capita basis, or should the district reach and sustain what we consider very strong reserves, particularly if AV continues to climb in the context of favorable regional economic conditions. Should the district's financial position significantly deteriorate as a result of a return to negative operations or a general weakening in the local economy, or if the district is required to substantially draw on its liquidity to address an acceleration of its alternative financing, we could lower the ratings. RELATED RESEARCH
- Alternative Financing: Disclosure Is Critical To Credit Analysis In Public Finance, Feb. 18, 2014
- Credit FAQ: Financial Management Assessment In U.S. Public Finance, June 27, 2006
Certain terms used in this report, particularly certain adjectives used to express our view on rating relevant factors, have specific meanings ascribed to them in our criteria, and should therefore be read in conjunction with such criteria. Please see Ratings Criteria at www.standardandpoors.com for further information. Complete ratings information is available to subscribers of RatingsDirect at www.globalcreditportal.com and at www.spcapitaliq.com. All ratings affected by this rating action can be found on the S&P Global Ratings' public website at www.standardandpoors.com. Use the Ratings search box located in the left column.
| Primary Credit Analyst: | Alyssa B Farrell, Centennial (1) 303-721-4184; alyssa.farrell@spglobal.com |
| Secondary Contact: | Chris Morgan, San Francisco (1) 415-371-5032; chris.morgan@spglobal.com |
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