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Piner-Olivet Union School District, CA -- Moody's assigns Aa3 to Piner-Olivet Union School District, CA's 2021 GO Bonds

·12 min read

Rating Action: Moody's assigns Aa3 to Piner-Olivet Union School District, CA's 2021 GO Bonds

Global Credit Research - 17 Dec 2020

New York, December 17, 2020 -- Moody's Investors Service has assigned Aa3 ratings to Piner-Olivet Union School District, CA's $6.0 million General Obligation Bonds, Election of 2010, Series 2021 and $6.0 million General Obligation Refunding Bonds, Series 2021 (Federally Taxable) (Forward Delivery). We maintain Aa3 ratings on the district's outstanding general obligation (GO) bonds, affecting about $14.2 million rated debt.

RATINGS RATIONALE

The Aa3 rating reflects the district's average sized and growing residential tax base which is exposed to elevated wildfire risk. The 2017 Santa Rosa wildfires destroyed over 1,400 homes within the district's Coffey Park neighborhood, reducing the district's 2019 assessed valuation and driving recent enrollment loss. However, the tax base has since recovered as of 2020 and will realize continued growth through modest development and an ongoing rebuild of the destroyed homes.

The Aa3 rating also reflects the district's above average resident wealth and income profile and the district's stable financial operations and very strong reserves. The rating further reflects the district's manageable debt, pension and other-post employment benefit liabilities, as well as the above-average legal strength of the California (Aa2 Stable) school districts general obligation bonds.

We regard the coronavirus pandemic as a social risk under our ESG framework, given the substantial implications for public health and safety. The coronavirus crisis is not a key driver for this rating action, and we do not see any material immediate credit risks for Piner-Olivet Union School District. In fiscal 2021, the state will fund school districts based on last year's average daily attendance level, effectively holding the district harmless for enrollment losses in the current year. In addition, the district has received about $0.9 million CARES Act funding to help cover costs related to the pandemic.

RATING OUTLOOK

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

FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS

- Significant and sustained growth in assessed valuation

- Stabilized enrollment and maintenance of strong financial position

FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS

- Material, protracted decline in assessed valuation

- Deterioration of financial position, including reserves and liquidity

LEGAL SECURITY

The district's general obligation bonds are secured by the district's voter-approved unlimited property tax pledge. Sonoma County, rather than the district will levy, collect, and disburse the district's property taxes, including the portion constitutionally restricted to pay debt service on general obligation bonds.

USE OF PROCEEDS

The Election of 2010, Series 2021 GO bonds represent the second issuance of a $20.0 million authorization approved by voters in 2010. Proceeds will be used finance various capital improvement projects throughout the district.

The Series 2021 GO refunding bonds will refinance, on a forward delivery basis, a portion of the district's outstanding Election of 2010, Series A GO bonds for interest savings.

PROFILE

Piner-Olivet Union School District, CA encompasses 24 square miles in Sonoma County, specifically in northwest Santa Rosa (Aa2). As of fiscal 2021, the district provides K-6th grade education to approximately 261 students at its Jack London Elementary School and also operates four charter schools. Total enrollment at the district, including charter school students, is projected to be 1,226 students in fiscal 2021.

METHODOLOGY

The principal methodology used in these ratings 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_1243406.

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.

Kirstyn Lee Lead Analyst Regional PFG West Moody's Investors Service, Inc. One Front Street Suite 1900 San Francisco 94111 US JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Chandra Ghosal Additional Contact Municipal Supported Products 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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