Standard & Poor's Ratings Services said it has raised its long-term and underlying ratings on Oakmont Public Utility District, Texas' general obligation debt by one notch to BBB from BBB-minus.
The outlook is stable.
"The upgrade is based on recent property tax base growth, which has resulted in a reduction in the overall net debt burden of the district," said Standard & Poor's credit analyst Ann Richardson.
The ratings reflect the district's: strong demand for housing due to its location in the Houston metropolitan area, resulting in healthy property tax base growth; completed infrastructure development, limiting future capital needs requiring the issuance of additional debt; and improved financial position, following three operating surpluses.
Factors limiting a higher rating are: high overall net debt burden; and high direct property tax rate, limiting revenue raising flexibility.
The bonds are secured by an unlimited ad valorem tax levied on all taxable property within the district.
The stable outlook reflects the expectation that the district's high overall net debt burden will moderate over time due to the completed infrastructure development, which will then limit future capital and debt issuing needs.
S&P also expects the district's financial position will continue to improve. It could raise the rating if the district's financial position improves further along with the significant decline of debt burden and tax rate. Conversely if the district were to issue additional bonds without sufficient property tax base growth, or if finances were to worsen, it could lower the rating.
Oakmont PUD encompasses 469 acres in Harris County, 25 miles north of downtown Houston and is within the city's extraterritorial jurisdiction. The district's infrastructure development is essentially complete; all but three developable acres contain utility infrastructure.
