DALLAS — The Houston Community College District will start the year with a $300 million issue of general obligation bonds, two months after voters approved $425 million of debt to expand the system.

The deal, expected to come to market next week, earned the Aa1 rating and a stable outlook from Moody's Investors Service.

The rating reflects the system's large tax base expanding into two counties and solid financial performance, according to Moody's.

"The rating also incorporates the system's debt burden that doubles but remains manageable with the current and expected additional issuance, and a strong and active management team," analysts added.

Ratings from Standard & Poor's and Fitch Ratings have not been issued for the upcoming deal. Ratings for bonds issued last year were AA-plus from both agencies with stable outlooks.

Since 2007, the district has grown by 40%, and is currently operating at 92% capacity, officials said. Most of HCC's facilities are either near capacity or have exceeded capacity.

HCC's Coleman College for Health Sciences was originally built to accommodate 1,500 students, but now serves 3,500, with some students having to schedule their lab hours past midnight.

Voters approved the bond authorization Nov. 6, though both the city of Houston and the Houston Independent School District were asking voters for a record level of combined debt at the same time. More than $2.7 billion of bonds in the nation's fourth-largest city won approval.

The Houston district is the fourth largest community college system in U.S., encompassing a population base of about 2.2 million.

While rising sharply in 2009 with the start of the national recession, unemployment levels in the Houston area have fallen dramatically this year.

Taxable values fell 3.5% in fiscal year 2011, down from the strong, historical gains that averaged approximately 11% annually in fiscal years 2006-2010.

As at many community colleges, recent enrollment growth has been strong in large part due to weaker economic conditions. Despite recent tuition increases, tuition rates remain affordable and attractive in recruiting students, at roughly a third of the cost of tuition at the local state university.

State funding levels have not kept pace with recent growth trends, however. Funding on a per student basis has steadily declined since fiscal 2006. Countering that trend, federal revenues for Pell grants have trending upwards since fiscal 2008, equaling nearly $76 million or a high 82% of federal revenues in fiscal 2010.

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