Dallas County Utility and Reclamation District, TX GO Bond Rating Raised To 'A+' On Strong Tax Base Growth Reducing Debt
SANTA FE (S&P Global Ratings) Dec. 8, 2022--S&P Global Ratings raised its long-term and underlying ratings to 'A+' from 'A' on Dallas County Utility and Reclamation District (DCURD), Texas' unlimited-tax general obligation (GO) bonds. The outlook is stable.
"The upgrade reflects our view of the district's strong tax base growth, which has led to a steady lowering of its debt burden, while also growing and maintaining very strong reserves," said S&P Global Ratings credit analyst Emily Powers.
The bonds are secured by revenue from an unlimited ad valorem tax on all taxable property within the district.
DCURD provides infrastructure and flood control to 3,636 acres within the Las Colinas mixed-use development area in northwestern Dallas County. At this stage in development, the district is fully built out with utility infrastructure, with various commercial projects ongoing. Tax base growth has led to continued moderation of the district's debt burden and lower tax rates for residents which are now at levels we consider moderately high and moderate, respectively. The district has consistently posted positive operating results and has sustained its general fund balance reserves to a level we consider very strong at 132% of expenditures in fiscal 2021, with an additional fund balance increase anticipated for 2022, given management's conservative budgeting and the district's steady tax base growth. The district has a sizable $194.4 million in authorized but unissued debt remaining, though management noted that there are no plans to issue debt for its capital needs, as it has been cash-funding most capital in recent years as an attempt to lessen its debt burden, which it has managed to do while also decreasing its direct tax rate.
"Given expectations for continued tax base growth, in conjunction with no debt plans and the expectation for sustainability of robust reserves levels, we expect DCURD's rating to remain stable over the next two years," added Ms. Powers.
We assessed DCURD's environmental, social, and governance (ESG) risks relative to its economy, management, financial measures, and debt and liability profile, and view all of them as neutral to our credit analysis.
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| Primary Credit Analyst: | Emily Powers, Santa Fe + 1 (312) 233 7030; emily.powers@spglobal.com |
| Secondary Contact: | Joyce Jung, Centennial + 1 (212) 4380629; joyce.jung@spglobal.com |
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