In addition, Fitch affirms the following ratings:
The Rating Outlook is Stable.
The bonds are expected to sell the week of
The GO bonds are general obligations of the district, payable solely from the proceeds of ad valorem taxes, without limitation as to rate or amount.
The COPS are limited obligations secured by lease rental payments for the use of certain district properties, subject to abatement. They are additionally supported by the district's covenant to budget and appropriate lease payments.
KEY RATING DRIVERS
IMPROVED REVENUE PROSPECTS: The district continues to benefit from a recovering economy and improved state finances.
OPERATING BALANCE RESTORED: The district finished the 2013 fiscal year with a small surplus and preliminary results for fiscal 2014 reflect continued positive operating results. Fund balances are adequate and remain well above state-mandated levels.
STRONG ECONOMIC BASE: The district benefits from its access to and participation in the broad
AFFORDABLE DEBT; SLOW AMORTIZATION: Overlapping debt levels are moderate, but amortization is slow due to the district's extensive use of long-dated capital appreciation bonds (CABs).
MAINTENANCE OF OPERATING BALANCE: Management's inability to maintain operating balance would create downward pressure on the rating. Upward rating movement is somewhat limited by the district's reliance on state funding and would likely require sustained improvement in reserve levels to offset historical revenue volatility.
The district is located in northern
IMPROVED REVENUE PROSPECTS
The district relies heavily on state funding for operations and has benefited from recent improvements in the state's economy and revenue collections. Unrestricted general fund revenues for the district rose by 4.3% in fiscal 2013 following a 10.8% decline in 2012. Management reports further gains for fiscals 2014 and 2015 based on recent state funding increases.
OPERATING BALANCE RESTORED
Rising revenues have helped the district to restore operating balance following several years of funding reductions. The district finished fiscal 2013 with a small general fund operating surplus following a deficit in 2012 and reports continued balanced operations for fiscal 2014. Fitch expects that budgeted increases in state revenues will help extend this positive trend for fiscal 2015.
Cash balances have also increased with the general improvement in the district's financial position. The district issued
STRONG ECONOMIC BASE
The tax base of the district is largely residential and has withstood the recent housing crisis better than many outlying communities in southern California. Assessed valuation (AV) for the district fell by 8% between 2009 and 2013 but returned to growth in 2014 with a 2.2% increase. A further increase of 7.7% in 2015 will raise AV above its pre-recession peak. Year-over-year home value increases of 19% through
Wealth and income indicators for the city of
MANAGEABLE DEBT LEVELS; SLOW AMORTIZATION
Overlapping debt levels for the district are moderate at 3.6% of AV, but amortization is very slow due to the district's extensive use of long-dated CABs. Approximately 19.9% of outstanding principal and interest accreted through maturity is scheduled for repayment within the next 10 years. The district will retain
The district is a participant in two state-sponsored defined benefit pension plans and faces ongoing increases in contribution rates to address current low funding levels. The district fully funds its annual required contribution for other post-employment benefits (OPEBs) and maintains a revocable trust equal to approximately one-half of its
Additional information is available at 'www.fitchratings.com'.
In addition to the sources of information identified in Fitch's Tax-Supported Rating Criteria, this action was additionally informed by information from Creditscope and Zillow.com.
--'U.S. Local Government Tax-Supported Rating Criteria' (
U.S. Local Government Tax-Supported Rating Criteria
Source: Fitch Ratings
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