DALLAS — Standard & Poor's placed Van Independent School District's underlying A rating on watch for a possible downgrade after a tornado caused an estimated $40 million of damage to the East Texas community.
The May 10 tornado damaged or destroyed hundreds of homes, killed two people and caused several injuries in the town of Van and surrounding Van Zandt County.
"While the exact long-term effects the tornado will have on the local economy, and consequently on government revenues and short-term cash flows, are unknown at this time, we expect that some property tax-based revenues will be lost," said Standard & Poor's credit analyst Lauren Spalten. "In addition, any declines in enrollment due to population displacement may also place strain on the district's operations and state aid."
The district issued $8.7 million of bonds in March that were backed by the Texas Permanent School Fund, providing triple-A ratings.
"We will likely resolve this CreditWatch in the next 90 days, and we will continue to monitor and review information provided by the district and any other material credit factors," Spalten said.
