Hardin County Water Control & Improvement District No. 1, TX Rating Lowered To 'BBB-' On Assessed Value Decline

CENTENNIAL (S&P Global Ratings) Feb. 5, 2019--S&P Global Ratings lowered its 
rating two notches on Hardin County Water Control & Improvement District 
(WCID) No. 1, Texas' general obligation (GO) debt, to 'BBB-' from 'BBB+'. The 
outlook is stable.

"The downgrade reflects a material decrease in the district's assessed values 
of over 55%, due to extensive damage from Hurricane Harvey; a resulting 
deterioration of reserves to 13% of general fund expenditures; and a 
significant increase in the tax rate to compensate for the substantial 
decrease in assessed valuation," said S&P Global Ratings credit analyst Alex 
Louie. 

The outlook is stable due to an expected recovery in assessed value and fund 
balances as homes are rebuilt in the district, as well as to the anticipated 
insurance proceeds and state grants for flood damage. Although the district is 
expected to improve economic metrics and increase fund balances, currently the 
district's financial, economic, and tax rate metrics are not comparable to 
those of higher-rated peers, and our view is that the current low reserves are 
a credit risk if the district has unexpected expenditures.

An unlimited-ad valorem tax levied on all taxable property within the district 
secures the bonds.