[Sign Up Now] to Receive Our FREE Daily SCVTV-SCVNews Digest by E-Mail

Inside
Weather
Santa Clarita CA
Clear
Clear
74°F
 
Calendar
Today in
S.C.V. History
October 21-22
2007 - Buckweed fire chars 38,000 acres, destroys 21 homes in Canyon Country and Agua Dulce [story]


measure e

Note: This pertains to the Measure M bonds that were approved by voters 10 years ago. The remainder of the authorization is scheduled for sale in November. In 2016, voters approved a successor bond, known as Measure E.

 

Fitch Ratings has assigned an ‘AAA’ rating to the following general obligation bonds to be issued by the Santa Clarita Community College District, California:

–$20 million 2016 GO bonds, election of 2006, series 2016.

In addition, Fitch has affirmed the following ratings:

–Issuer Default Rating (IDR) at ‘AA’;

–$192.8 million outstanding GO bonds at ‘AA’;

–$15.5 million outstanding certificates of participation (COPs) at ‘AA-‘.

The distinction between the ‘AAA’ rating on the series 2016 bonds and the ‘AA’ IDR reflects Fitch’s assessment that bondholders are legally insulated from any operating risk of the district.

The Rating Outlook is Stable.

The bonds are expected to price the week of Nov. 7 via negotiated sale. Proceeds of the bonds will fund various capital improvements and pre-pay outstanding debt.

SECURITY

The GO bonds are secured by unlimited ad valorem property taxes levied on all taxable property in the district. The district’s COPs are supported by a covenant to budget and appropriate lease rental payments for the use of certain essential assets and rated one notch below the IDR.

KEY RATING DRIVERS

SPECIAL REVENUE ANALYSIS: The ‘AAA’ series 2016 unlimited tax general obligation (ULTGO) bond rating is based on a dedicated tax analysis without regard to the district’s financial operations. Fitch has been provided with legal opinions by district counsel that provide a reasonable basis for concluding that the tax revenues levied to repay the bonds would be considered ‘pledged special revenues’ in the event of a district bankruptcy.

STRONG TAX BASE; LOW DEBT: The economic resource base supporting the GOs is diverse, growing at a healthy pace and reasonably stable in downturns. The unlimited nature of the tax offsets any concern about tax base volatility. Overall debt is low relative to the economic resource base.

RATING SENSITIVITIES

MATERIAL CHANGES TO TAX BASE: Significant and long-lasting decline in the district’s tax base and economy, while not anticipated, could result in downward ratings movement.

IDR SENSITIVE TO FINANCIAL PERFORMANCE: The ‘AA’ IDR could come under downward pressure if the district fails to maintain satisfactory financial flexibility, including reserves sufficient to withstand historical revenue volatility, throughout the economic cycle.

CREDIT PROFILE

The district is located in northern Los Angeles County (IDR ‘AA’/Stable Outlook) along Interstate 5, approximately 35 miles from downtown Los Angeles, and includes the city of Santa Clarita and adjacent unincorporated areas. The district operates two campuses with full-time equivalent enrollment of approximately 16,000. The local tax base is largely residential and has benefited from ongoing housing development, above-average population growth, and access to the broad and diverse Los Angeles regional economy.

SERIES 2016 DEBT SERVICE LEVY VIEWED AS SPECIAL REVENUE

Fitch believes that taxes levied for bond repayment would be considered pledged special revenues under the U.S. bankruptcy code and therefore the lien on pledged revenues for the 2016 bonds would survive and would not be subject to the automatic stay (i.e., payment interruption) in the event the district were to file for bankruptcy.

Fitch has reviewed and analyzed legal opinions provided by district counsel, specific to the series 2016 bonds, and believes they provide a reasonable basis to conclude that these revenues would be treated as pledged special revenues due to certain provisions of the state constitution (primarily Proposition 13), which limit and direct the use of pledged property tax revenues for bond repayment. No such opinion has been provided for the district’s outstanding GO bonds.

As a result, Fitch analyzes the series 2016 bonds as dedicated tax bonds. This analysis focuses on the district’s economy, tax base and debt burden without regard to financial operations because Fitch believes that bondholders are insulated from any operating risk of the district. Fitch typically analyzes the ratio of available revenues to debt service for dedicated tax bonds, but the unlimited nature of the tax rate pledge on the district’s bonds eliminates the need for such calculations.

STRONG TAX BASE SUPPORTS BONDS

The district’s large and diverse tax base and economy provide a strong basis for repayment of the ULTGO bonds that is unlikely to be reduced by normal or even severe cyclical fluctuations.

The tax base is growing at a healthy pace after experiencing moderate declines during the last recession. Assessed value (AV) has risen at a 6.1% compound annual growth rate (CAGR) over the past two decades and prospects for further growth in the district appear solid. The district includes substantial developable land and a variety of major residential and commercial development projects are underway. Taxpayer concentration is minimal.

Tax rates are low and unlikely to rise to a level that pressures the rating even under relatively severe stress scenarios. The general tax rate of 1% of AV is established in the state constitution and may not be increased. Tax override levies for overlapping jurisdictions are similarly low at a combined 0.19% of AV for 2016.

IDR EXTENDS ANALYSIS TO OPERATING RISKS

The ‘AA’ IDR reflects the district’s strong operating performance, low liabilities, considerable expenditure flexibility, and history of strong revenue growth. While the district has no legal ability to independently raise revenues, it has benefited from strong enrollment growth and retains ample ability to offset declines in state funding by reducing expenditures through service level and staffing reductions. As a result, Fitch expects operating performance to remain sound, with largely balanced financial operations and stable reserves.

Revenue Framework: ‘a’ factor assessment

District revenues have grown strongly over the past 15 years due to rising enrollment, and have also been bolstered more recently by state economic improvement; however, the district’s legal ability to raise revenues is constrained by Proposition 13, which requires voter approval for tax increases.

Expenditure Framework: ‘aa’ factor assessment

The district has solid ability to adjust spending to match revenues due to its control over part-time staffing levels, which can fluctuate with demand or state funding of enrollment. On average, growth in spending is likely to be in line with revenue growth over time.

Long-Term Liability Burden: ‘aaa’ factor assessment

The district participates in two state-run pension plans and funds the bulk of its capital needs from voter-approved property tax levies, resulting in a long-term liability total that is a low burden on resources. Voters’ approval in June of $230 million in additional GO bonding authority will increase the district’s debt load materially over time, but overall liabilities are anticipated to remain low.

Operating Performance: ‘aaa’ factor assessment

Expenditure cutting flexibility and solid financial reserves leave the district very well positioned to address cyclical downturns. Budgets are conservative and the district maintained solid financial flexibility through the last recession and in subsequent years.

Revenue Framework

State aid and local property taxes provide the majority of district revenues, which are ultimately determined by a formula based on enrollment and overall state revenues.

Historical revenue growth has exceeded inflation and U.S. economic performance due primarily to long-term enrollment growth. Fitch expects future revenue growth to remain robust based on continued population and enrollment gains in combination with rising state per-pupil funding levels resulting from growth in the state’s economy.

Like other California local governments, the district has no independent legal ability to raise revenues due to state constitutional provisions requiring voter approval for tax increases. The district also has no discretion to raise tuition revenues, as rates are established on a statewide basis.

Expenditure Framework

Personnel costs for teachers and staff comprise the vast majority of district expenditures.

Such expenditures are planned on the basis of revenue levels established in the state’s annual budgets, and are expected to increase at roughly the same rate. Unanticipated mid-year revenue reductions can upset this balance but have been rare historically.

The district has considerable spending flexibility and can manage service levels through adjustments to enrollment and teaching staff. Roughly half of the district’s employees are adjunct professors and the district has substantial discretion to adjust their hours of employment. Fixed costs for debt service and retiree benefits are moderate and only a modest burden on discretionary revenues. Pension contribution rates for teachers are scheduled to rise over the next several years but should remain affordable.

Long-Term Liability Burden

Overall debt and pension liabilities are low relative to the district’s resource base at less than 8% of personal income. Amortization of existing direct debt is slow due to the district’s past issuance of long-dated capital appreciation bonds, and appears likely to slow further with planned issuance from a recently approved $230 million GO bond authorization. Overall liabilities are expected to remain low based on continued population and personal income growth.

Operating Performance

Fitch expects the district to achieve balanced operations over the long term, with aggregate available fund balances, including those outside the general fund, totaling well above 10% of general fund spending. The district maintained relatively stable fund balances through the recession and would likely make use of its notable expenditure flexibility to address any future revenue shortfall. The district’s financial flexibility is enhanced by the substantial reserves for capital and employee benefits that could be returned to the general fund at its board’s discretion.

The district maintained adequate reserves during the last recession with no material deferral of required spending. Budgets continue be balanced during the recovery and reserve levels have held stable.

Since the initial review of the district’s IDR under Fitch’s revised criteria for U.S. state and local governments in May, the revenue framework assessment has been revised to ‘a’ from ‘aa’ to highlight the district’s revenue-raising constraints and for consistency with Fitch’s approach to similarly-situated credits, and the operating performance assessment has been revised to ‘aaa’ from ‘aa’ based on additional consideration of the financial flexibility afforded by the district’s substantial reserves outside the general fund.

Additional information is available at ‘www.fitchratings.com‘.

In addition to the sources of information identified in the applicable criteria specified below, this action was informed by information from Lumesis and InvestorTools.

Applicable Criteria

U.S. Tax-Supported Rating Criteria (pub. 18 Apr 2016)

https://www.fitchratings.com/site/re/879478

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1012706

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1012706

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTPS://WWW.FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY’S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH’S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

 

fitchratingschartdefinition

Comment On This Story
COMMENT POLICY: We welcome comments from individuals and businesses. All comments are moderated. Comments are subject to rejection if they are vulgar, combative, or in poor taste.
REAL NAMES ONLY: All posters must use their real individual or business name. This applies equally to Twitter account holders who use a nickname.

0 Comments

You can be the first one to leave a comment.

Leave a Comment


HIGHER EDUCATION LINKS
LOCAL COLLEGE HEADLINES
Thursday, Oct 19, 2017
Northridge, CA – CSUN Athletics officially opened its new satellite athletic training facility on Thursday at an event featuring Athletic Director Dr. Brandon Martin, Assistant Athletic Director for Sports Medicine/Head Athletic Trainer Steven Grech, student-athletes, coaches, staff and campus partners.
Thursday, Oct 19, 2017
California State University, Northridge is partnering with the California State University Entertainment Alliance to host a morning of workshops designed to offer students and members of the public advice on building successful careers in the entertainment industry.
Wednesday, Oct 18, 2017
The fall 2017 Star Party at College of the Canyons' Canyon Country campus on Friday, Oct. 27 will focus on the pathways to space exploration that exist for star-gazers who are captivated by the many mysteries of the universe.
Wednesday, Oct 18, 2017
The California Community Colleges Chancellor’s Office, in response to President Trump’s recent decision to rescind the Deferred Action for Childhood Arrivals program, has declared Oct. 16-20 "DACA Advocacy Week."
Wednesday, Oct 18, 2017
COC and the Hart District will host the 2017 College & Career Fair in the college’s Honor Grove on Saturday, Oct. 21 from 9 a.m. to noon.
Keep Up With Our Facebook

Latest Additions to SCVNews.com
2007 - Buckweed fire chars 38,000 acres, destroys 21 homes in Canyon Country and Agua Dulce [story]
Tonight on SCV NewsBreak, a sexual assault suspect was arrested Thursday night. Plus, some great weekend events. Watch these stories and more on tonight's edition of SCV NewsBreak.
SCV NewsBreak for Friday, October 20, 2017
Forever Fit SCV, a Santa Clarita sports and personal fitness training company, will host a "Pumpkin Workout" at its Centre Pointe location on Saturday, October 28, starting at 9 a.m.
Oct. 25: Pumpkin Workout Benefits American Cancer Society
The next regular meeting of the Governing Board of the William S. Hart Union High School District is set for Wednesday, Oct. 25 at 7 p.m.
Oct. 25: Hart School District Governing Board Meeting
The LA County Public Defender has won the Silver Eagle Award for its Public Defender Jail Liaison Program during the 31st Annual Productivity and Quality Awards Ceremony on Oct. 18 at the Dorothy Chandler Pavilion.
LA County Public Defender Soars with Silver Eagle Award
The Los Angeles County Health Officer has issued a heat alert as high temperatures have been forecast for the Los Angeles Basin on Monday, October 23 through Tuesday, October 24.
Heat Alert for SCV, L.A. County on Monday, Tuesday
The Academy Museum of Motion Pictures has received three major gifts toward the creation of the museum in Los Angeles, bringing fundraising to more than $300M, nearly 80 percent of its $388M campaign goal.
Motion Picture Museum Nears $388M Campaign Goal
Caltrans added nearly 1,200 lane miles of pavement repair and 66 bridges to its growing list of projects to be delivered sooner than planned, thanks to the imminent influx of revenue from the Road Repair and Accountability Act of 2017 (SB 1), the transportation funding and reform package passed in April.
Nearly $3.4 Billion in Transportation Projects to Be Accelerated
The city of Santa Clarita and SCV Veterans Memorial, Inc. invite the public to attend a special ceremony unveiling the new Fallen Warriors Monument at Veterans Historical Plaza in Newhall on Wednesday, November 8 starting at 10 a.m.
Nov. 8: City Unveils Fallen Warriors Monument in Newhall
Crime Prevention deputies from the Santa Clarita Valley Sheriff's Station along with Los Angeles County Probation Department officers conducted probation compliance searches Friday throughout the Santa Clarita Valley.
SCV Deputies Check Probationers, Aid in Domestic Violence Call
Here is the Santa Clarita Valley Sheriff Station's public safety report for Canyon Country (West), aka Zone 7, for October 2 through October 8, 2017
Crime Blotter: Robbery, Grand Theft in Canyon Country West
A suspect has been arrested in the investigation of an alleged sexual assault, according to Santa Clarita Valley Sheriff's Station officials.
Suspect Arrested in Alleged Sexual Assault
Motor vehicle collisions are the leading cause of death for teens in the United States and a concern the California Highway Patrol addresses with its "Start Smart" program.
CHP Helps New Drivers with ‘Start Smart’ Classes
The California High-Speed Rail Authority punted one of the most important decisions during its monthly meeting Thursday, stoking concerns the entity is not moving quickly enough on the $64 billion project.
California’s Bullet Train Board Delays Award of Key Contract
An extensive investigation by the county of Los Angeles Department of Consumer and Business Affairs in conjunction with the office of California Attorney General Xavier Becerra has resulted in a lawsuit announced today by the Attorney General against retailer Curacao.
AG Sues Retailer Curacao for Allegedly Preying on Consumers
1873 - Santa Barbara lawyers Charles Fernald and J.T. Richards purchase Rancho San Francisco for $33,000 (75 cents an acre) in a sheriff's sale [story]
CHESTERFIELD, MO — NewGround, a St. Louis-based experiential design-build firm, recently teamed up with Logix Federal Credit Union to work on a large scale facility project, a new corporate headquarters building for the full-service credit union in the Burbank, California area.
Valencia Will Soon be Home to Logix Federal Credit Union Headquarters
The CSUN women's volleyball team (10-9, 4-3 Big West) opens the second half of the Big West season this week as the Matadors head up the coast this week for road tests at No. 23 Cal Poly (17-2, 7-0 Big West) and UC Santa Barbara (4-15, 3-4 Big West). CSUN, coming off a tough five-set loss to Hawai'i at home, is 3-4 in seven road matches this season but has won two of three Big West road contests.
Matadors Volleyball Testing Their Skills on the Road
No. 5 College of the Canyons defeated L.A. Mission College 3-0 on Wednesday to earn its eighth consecutive match and fifth straight sweep. Set scores were 25-15, 25-11, and 25-20.
Cougars Volleyball Earns Fifth Straight Sweep
CSUN Women's Soccer (7-4-5, 3-1-1 BWC) looks to move up in the Big West standings this week as it hosts UC Irvine on Thursday at 7:00 p.m.
Matadors Get Ready for Big West Matchups
Behind Julio Rubio's goal in the 11th minute CSUN defeated UC Riverside 1-0 in Big West Conference men's soccer action Wednesday night.
Matadors Lone Goal Enough to Hold Off UC Riverside
Northridge, CA – CSUN Athletics officially opened its new satellite athletic training facility on Thursday at an event featuring Athletic Director Dr. Brandon Martin, Assistant Athletic Director for Sports Medicine/Head Athletic Trainer Steven Grech, student-athletes, coaches, staff and campus partners.
Matadors Student-Athletes Welcome New Training Facility
Want unique gifts and a shopping experience unlike any other?
Nov. 18-19: City’s Annual Two-Day Fine Craft Show
City officials gathered Wednesday for the Grand Opening of "Three Oaks," the first 100 percent affordable family development in Santa Clarita.
Affordable Housing Comes to Santa Clarita
The Gibbon Conservation Center will celebrate Halloween for the first time on Saturday, Oct. 28 from 10:00 a.m. - 1:00 p.m.
Oct. 28: Gibbon Conservation Center Celebrates First Halloween
California State University, Northridge is partnering with the California State University Entertainment Alliance to host a morning of workshops designed to offer students and members of the public advice on building successful careers in the entertainment industry.
Oct. 23: CSUN Workshop; Succeeding in Entertainment Industry
Spotlight Arts Center, a local non-profit that provides free performing and visual arts classes to children in the Santa Clarita Valley, will hold its Fall Festival, Sunday, Oct. 22 from 11:00 a.m. - 3:00 p.m.
Oct. 22: Fall Festival Spotlight Arts Center
The College of the Canyons Athletics department is inviting all players, coaches and cheerleaders associated with a Santa Clarita Valley youth sports league or cheer organization to attend Saturday's Cougar football game free of charge.
Oct. 21: SCV Youth Teams Invited to Free COC Football Game
College of the Canyons freshmen Joanna Roecker and Cassandra Lee both turned in scores of 79 to lead the Cougars to a second place team finish at the Western State Conference (WSC) event hosted by Glendale College at Brookside Golf Course on Monday.
COC Falls Short at WSC Glendale
Beginning Monday, October 23, 2017, the city of Santa Clarita will increase the frequency of street sweeping throughout all areas of the City.
Oct. 23: City Begins Increased Street Sweeping Frequency
In a battle for Western State Conference, East Division supremacy, it was College of the Canyons that came out on top Tuesday night, as the Cougars scored two second half goals to secure a 2-0 win against visiting Antelope Valley College. Justine Hoeft and Jennifer Roney collected goals for the Cougars (11-2, 2-0).
COC Secures Win Against AVC With Two Second-Half Goals
The upcoming 10-year anniversary of the Buckweed Fires offers Santa Clarita residents a reminder of the ever-present fire danger in Los Angeles County, as blazes ravage the northern half of the state, as well.
Officials Reflect on 10-Year Anniversary of Buckweed Fires
Deputies from the Santa Clarita Valley Sheriff's Station, with help from a Smartphone GPS system, were able to locate a lost hiker Wednesday night at Towsley Canyon.
Smartphone GPS Locates Lost Towsley Canyon Hiker
Dreamation Craft Guild will be hosting a boutique at Canyon High School, Nov. 18, from 10:00 a.m. – 3:00 p.m. to benefit the family of John Phippen, the Santa Clarita resident who was killed in the Las Vegas shooting.
Nov. 18: Holiday Marketplace Benefiting John Phippen Family
SACRAMENTO, Calif. – To ensure drivers, passengers, and children are properly restrained while traveling California’s roadways, the California Highway Patrol (CHP) has partnered with the California Office of Traffic Safety on a new traffic safety campaign entitled, “California Restraint Safety Education And Training” (CARSEAT).
CHP’s New Traffic Safety Campaign Focuses on Saving Lives, Reducing Injuries