Standard & Poor's Ratings Services said it raised to BBB from BBB-minus its rating on Lewisville, Texas' insured series 2011 combination contract revenue and special assessment refunding and utility system bonds, issued for Lewisville Castle Hills Public Improvement District No. 3.
The outlook is positive.
"The raised rating reflects our view of the district's essentially built-out development and subsequent reduction of its overall debt-to-assessed value ratios," said Standard & Poor's credit analyst Omar M. Tabani.
The positive outlook reflects a one-in-three likelihood that the rating service could further raise the rating within two years if the debt-to-assessed value ratio declines continue, coupled with the district's continued financial improvement.
The rating reflects Standard & Poor's view of the district's: access to the Dallas-Fort Worth area's deep and diverse economy; essentially complete infrastructure development within a master-planned community, thereby limiting future debt-supported capital needs; and very low total property tax rate.
Factors limiting the potential for a higher rating, in Standard & Poor's view, are: a high, albeit declining, overall net debt burden; and low, though improving, general fund reserves.
"The positive outlook reflects a possible higher rating within the next two years if continued property tax base growth allows for continued overall debt-to-assessed value ratio decreases, and if the district can continue its recent pattern of improving fund balances following the negative fiscal year-end 2011 general fund balance," Tabani added. "Conversely, should the district's financial position deteriorate, we could revise the outlook to stable."
The 260-acre district is located entirely within the extraterritorial jurisdiction of Lewisville, Texas.
