Temecula Valley Unified School District Community Facilities District, No. 89-1, CA Bond Rating Raised To 'AA' From 'A-'


Rating Action Summary:

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CENTENNIAL (S&P Global Ratings) April 22, 2019--S&P Global Ratings raised its long-term rating to 'AA' from 'A-' on Temecula Valley Unified School District (USD) Community Facilities District, No. 89-1, Calif.'s series 2012 special tax refunding bonds. The outlook is stable.
"The raised rating reflects the application of our updated methodology 'Special Assessment Debt' and our view of the district's strong economic fundamentals, strong to very strong district characteristics, and very strong financial profile," said S&P Global Ratings credit analyst Michael Parker.
Under our new criteria, published April 2, 2018, the district's financial profile is strong, with a maximum-loss-to-maturity (MTLM) ratio of 32% of special tax revenue compared with a 1.6% top 10 taxpayer concentration. In addition, district characteristics reflect our view of the district's fully developed and large tax base, in addition to very strong overall value-to-lien (VTL) ratios, which we consider a credit strength.
The rating reflects our view of the district's:
  • Strong economic fundamentals, reflecting a strong median household effective buying income (EBI), access to a broad and diverse metropolitan statistical areas (MSA), a historically volatile real estate market, and relatively low unemployment rates;
  • Strong to very strong district characteristics, such as little taxpayer concentration, a fully developed tax base consisting of all residential parcels, a strong size based on 2,125 total parcels, and a very strong overall VTL ratio; and
  • Very strong financial profile, reflecting the MLTM ratio, minimal taxpayer concentration, and a fully funded debt service reserve.
The stable outlook reflects our expectation that the local economy will remain strong given its access to a broad and diverse MSA, strong incomes, and low unemployment rates. The stable outlook also reflects the district's built-out status of development. We anticipate that the district's collection rates, along with the reserve funds, will be sufficient for debt service payments. We do not anticipate changing the rating over the two-year outlook horizon.
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