Standard & Poor’s upgraded its underlying rating on the John Swett Unified School District’s outstanding general obligation debt to A-plus from A ahead of a $13 million bond issue.
“The raised rating reflects our view of the district’s stable tax base and strong unreserved fund balance position,” analyst Andrew Magee said in a report. The rating also reflects the district’s low unemployment rate, strong incomes, and gradually declining enrollment, the report said.
The GO issue is part of a $20 million authorization approved by voters in November. The bonds are backed by unlimited ad valorem taxes on property within the district.
John Swett is a 1,600-student suburban San Francisco Bay Area district in Contra Costa County, and includes part of the city of Hercules. The district’s jobless rate was below 7.2% in June. That’s less than California’s 11.5% rate. Median household income is “strong” at 125% of the U.S. level, Standard & Poor’s said.
Contra Costa County has been hard hit by the housing market downturn. District home prices have fallen by 30%, according to Standard & Poor’s, but the district’s total assessed value is expected to decline less than 1% in 2010 because California’s Proposition 13 property tax limitations have a smoothing effect on revenues and because the school district is home to a big oil refinery.
“Because the district consists mostly of older housing, the tax base has remained flat despite the decline in prices,” Magee wrote.
A Tosco Corp. refinery — a unit of ConocoPhillips Co., the third-largest U.S. oil company — accounts for 39% of the district’s assessed valuation and has not lost value in tandem with homes in the area.
The district’s state aid payments have been limited by declining enrollments of 1.8% a year over the last five years, but it has maintained its positive fund balances. It expects to finish 2009 with a “strong” unreserved fund balance of 9.6% of expenditures, Standard & Poor’s said. The agency also said the district’s overall net debt is “low” at 1.8% of assessed value.
