Standard & Poor's Ratings Services said it raised its issuer credit rating to A-plus from A on Webster Groves Public Library District, Mo.
At the same time, Standard & Poor's raised its long-term rating on the district's series 2010 certificates of participation to A from A-minus. The outlook on both ratings is stable.
"The higher ICR reflects a significant increase in the liquidity and reserve position following a tax levy increase and land sale," said Standard & Poor' credit analyst John Sauter.
The ICR reflects the district's: solid economic profile marked by very strong income and extremely strong wealth levels, as well as participation in the deep and diverse St. Louis metropolitan area economy; very strong general fund reserves and liquidity, coupled with inherent budget flexibility given the limited purpose nature of library district operations; and low direct debt with no future debt plans.
Offsetting factors include the district's high debt service carrying charges and slow amortization. Additionally, the rating is limited in part by an expectation that reserves will likely not remain as high as current levels (1.25x the budget), though they are expected to remain very strong over the long term.
Securing the COPs are semiannual lease payments, subject to annual appropriation from any legally available revenues of the district. The district uses revenues from a dedicated, though not legally pledged, 9-cent property tax levy to make lease payments. The A rating on the COPs is one notch below the A-plus ICR due to the annual appropriation risk and lack of a full faith and credit unlimited ad valorem tax pledge.
The district provides library services to about 23,000 residents and encompasses almost the entire city of Webster Groves. Both the city and district are along Interstate 44 in southeastern St. Louis County.
"The stable outlook reflects our expectation that the district's strong property tax base will continue to support steady revenues and thereby mostly balanced operations," added Sauter. Though reserves may be spent down in the coming years, we expect the district will continue to meet its 50% fund balance policy.
The agency does not anticipate lowering the rating within the two-year outlook period, given the strength of the tax base and the current reserve position, as well as the limited purpose nature of the district. Should the district continually operate with reserves close to current levels, future rating improvement is possible.
