Southgate Recreation & Park District, CA ICR, Debt Ratings Raised One Notch On Tax Base Growth, Robust Fund Balances

SAN FRANCISCO (S&P Global Ratings) Feb. 1, 2019--S&P Global Ratings raised its 
issuer credit rating (ICR) to 'AA' from 'AA-' on the Southgate Recreation and 
Park District, Calif. In addition, S&P Global Ratings raised its long-term 
rating to 'AA' from 'AA-' on the district's series 2015 refunding bonds and 
raised its underlying rating (SPUR) to 'AA-' from 'A+' on the district's 
series 2010 certificates of participation. The outlook on all ratings is 

"The rating action is based on the district's robust assessed value growth, 
which has led to improved market value per capita, as well as the district's 
continued maintenance of very strong fund balances," said S&P Global Ratings 
credit analyst Benjamin Geare.

Our credit opinions reflect our view of the district's:

  • Access to employment in the large and diverse Sacramento metropolitan statistical area;
  • Very strong available fund balances;
  • Financial flexibility given the discretionary nature of the expenditures; and
  • Low debt levels, including no pension liability, with limited additional capital needs.

The stable outlook reflects our view that the district's economic base will 
remain large and diverse. The outlook reflects our expectation that the 
district will maintain sound financial operations and very strong available 
fund balances in the next two years. We don't expect to change our ratings 
during the two-year outlook period.

We could raise the ratings if the district's economy significantly 
diversifies, and if the median household effective buying income and market 
value per capita increase. 

Although we do not anticipate doing so, should the district draw down its 
reserves below a level we consider very strong, we could lower the ratings.

The district has roughly $10 million in outstanding direct debt.

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