NEW YORK - Standard & Poor's Ratings Services said it has raised its underlying rating (SPUR) on Pima County Unified School District No. 13 (Tanque Verde), Ariz.'s general obligation (GO) debt to AA-minus from BBB-plus, based on the district's very strong income and property wealth indicators and favorable historical financial operating performance supporting a good available reserve position. The outlook is stable.
At the same time, the rating service assigned its AA-minus long-term rating to the district's $5.48 million series 2010A-1 tax-exempt school improvement bonds, $8.52 million series 2010A-2 school improvement bonds (taxable; qualified Build America bonds--direct pay), and $240,000 certificates of ownership of supplemental interest payments.
In Standard & Poor's view, the AA-minus ratings reflect the district's: access to broader employment opportunities in the city of Tucson; growing and very diverse property tax base, with market values growing at a 10.7% average annual rate over the past five fiscal years and, at nearly $2.16 billion in fiscal 2010, representing an extremely strong $174,878 per capita; very strong district income levels, with median household and per capita effective buying incomes at 179.3% and 163.3% of the national rate in 2008; solid financial operating performance, characterized by general fund surpluses in four out of the past five audited fiscal years and the consistent maintenance of good available reserve levels--carry forward reserves totaled 3.59% compared with the 4% revenue control limit maximum permitted amount, for 2010; and low-to-moderate overall net debt burden, coupled with limited future capital needs.
These strengths are somewhat mitigated, however, by historical fluctuations in the district's pupil enrollment, which drives state funding levels, and projected decreases in assessed valuation for fiscal 2011.
"We expect that the district will maintain adequate financial operations and that its capital needs will remain limited beyond the scope of this project," said Standard & Poor's credit analyst Michael Taylor. The district's participation in the greater Tucson metropolitan statistical area economy and employment base provides additional rating stability.
Securing the GO bonds is the district's authority to levy unlimited ad valorem taxes annually to repay debt service.
Located in Tucson, the 77-square-mile Pima County Unified School District No. 13 (Tanque Verde) serves an estimated 2008 population of 12,336.
