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Jefferson (County of) NY -- Moody's assigns Aa3 to Jefferson County's (NY) General Obligation Bonds

Rating Action: Moody's assigns Aa3 to Jefferson County's (NY) General Obligation Bonds

Global Credit Research - 02 Sep 2020

New York, September 02, 2020 -- Moody's Investors Service has assigned a Aa3 rating to the Jefferson County's Public Improvement (Serial) Bonds, 2020. The bonds have an expected par value of $6.8 million. The county also has a Aa3 Issuer Rating and a Aa3 rating on the county's outstanding general obligation limited tax (GOLT) bonds. The issuer rating is equivalent to the county's hypothetical general obligation unlimited tax rating (GOULT); there is no debt associated with the GOULT security.

RATINGS RATIONALE

The rating assignment reflects the county's well-sized tax base that is anchored by the presence of the Fort Drum Army Base. The stability and size of the base as an employer and economic driver helps to counterbalance rising unemployment and wealth levels that are below the national medians. The rating also captures the recent strength of the county's financial operations inclusive of its highest ever reserves in fiscal 2019. As a result, the county is in good position to manage expected revenue declines in fiscal 2020 that will result in some reduction to reserves. The degree of reserve reduction will be tempered by the continuation of cost controls through at least the end of the year. The county's debt position and retirement costs are manageable and will likely remain so given the county's lack of additional long-term debt plans.

We consider the bonds being issued and the outstanding debt to be GOLT because of limitations under New York State law on property tax levy increases. The lack of distinction between the GOLT rating and the Issuer rating reflects the ability to override the property tax cap and the faith and credit pledge in support of debt service.

We regard the coronavirus outbreak as a social risk under our ESG framework, given the substantial implications for public health and safety. Jefferson County is not susceptible to immediate material credit risks related to coronavirus as it is benefitting from the gradual easing of economic and public health restrictions throughout the area and has absorbed only minimal fiscal costs as a result of the outbreak. The longer term impact will depend on both the severity and duration of the crisis and its impact on the economy and, in particular, sales tax revenues and state aid. The situation surrounding Coronavirus is rapidly evolving. If our view of the credit quality of Jefferson County changes, we will update the rating and/or outlook at that time.

RATING OUTLOOK

Outlooks are not typically assigned to local government credits with this amount of debt outstanding.

FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATING

- Significant growth in the county's tax base

- Sustained growth of reserves and liquidity

- Material improvement of resident wealth levels

FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATING

- Significant deterioration of the tax base

- Material erosion of liquidity and reserves

- Prolonged period of revenue weakness without offsetting expenditure reductions

LEGAL SECURITY

The bonds and are secured by a general obligation pledge as limited by New York State's legislative cap on property taxes (Chapter 97 (Part A) of the Laws of the State of New York, 2011) as well as the pledge of its faith and credit.

USE OF PROCEEDS

Proceeds of the bonds will be used to redeem $9,000,000 of bond anticipation notes maturing on October 30, 2020.

PROFILE

Jefferson County is the tenth largest in the state by land area and is located in the northwestern portion of New York State bounded by Lake Ontario to the west, the St. Lawrence River and St. Lawrence County to the north, Lewis County to the east and Oswego County to the south. The City of Syracuse lies 60 miles to the south and Canada is on its Northern and Western borders. The 2019 Census population estimate for the County is 109,834, a decrease of 6,395 people. A majority of the residents are located in or near the area of the County which includes the City of Watertown, Town of LeRay, and the Fort Drum military base.

METHODOLOGY

The principal methodology used in this rating was US Local Government General Obligation Debt published in July 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBM_1230443. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.

For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1133569.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Michael Wertz Lead Analyst Regional PFG Northeast Moody's Investors Service, Inc. 7 World Trade Center 250 Greenwich Street New York 10007 US JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Robert Weber Additional Contact Regional PFG Northeast JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Releasing Office: Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653

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