Rating Action: Moody's assigns Aa2 to City of San Antonio, TX Public Facilities Corporation's Lease Revenue Bonds Series 2022; stable outlookGlobal Credit Research - 11 Aug 2022New York, August 11, 2022 -- Moody's Investors Service has assigned a Aa2 rating to the City of San Antonio, TX Public Facilities Corporation's Lease Revenue Refunding and Improvement Bonds, Series 2022 (Convention Center Facilities Project). The par amount is estimated at $275.4 million. The city has existing Public Facilities Corporation lease revenue bonds rated Aa2, which will be refunded in part by the current sale. The outlook is stable.RATINGS RATIONALEThe Aa2 rating, two notches below the city's Aaa issuer and general obligation limited tax rating, reflects the legal structure of the bonds that includes the need for annual appropriation of lease payments and the less essential nature of the project financed by the bonds (upgrades and expansion of the city's convention center facilities). Though a less essential asset, the convention center remains an important asset to the city because tourism is one of its main economic drivers. The rating also considers the limited impact of the lease payments on the city's general fund. The bonds will not benefit from a debt service reserve fund. However, the city maintains contingency funds to manage volatility in its intended source of payment, being hotel occupancy taxes.San Antonio's Aaa issuer and general obligation bond ratings reflects multiple strengths including a large and growing economy anchored by significant institutional presence, a history of strong operating performance and favorable reserves offset by high debt and resident income that is lower than the national average.RATING OUTLOOKThe outlook for the City of San Antonio is stable. The city's economic fundamentals including a large tax base, which will continue to support strong revenue performance and the ability to maintain solid reserves. These attributes will be key to balancing sustained demand for the city and its services which will keep debt levels high.FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATING- Not applicable given the current legal structure and the city's current issuer ratingFACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATING- Non-appropriation of lease payments- Downgrade of the city's issuer ratingLEGAL SECURITYThe lease revenue bonds are payable from lease payments which will be made by the city to the trustee for the benefit of the corporation. The obligation of the city to make the lease payment is a current expense of the city, payable solely from legally available funds subject to annual appropriation. The city intends to make the lease payments from hotel occupancy tax revenue.Lease payments are due on the fifth of the month (March 5 and September 5) in which debt service payment is due (March 15 and September 15), providing an adequate 10-day buffer. The lease remains in effect until the bonds and any parity bonds are paid in full.The bonds do not benefit from a debt service reserve fund.USE OF PROCEEDSMost of the proceeds (about $244.7 million) will refund a portion of the existing Series 2012 lease revenue bonds for an expected net present value savings and no extension of final maturity. The remainder (about $30.7M) of the proceeds will fund improvements to the city's convention center facilities including escalator/elevator replacement, and mechanical, electrical, and plumbing upgrades. The original Series 2012 bonds were used for an expansive upgrade of the convention center.PROFILEThe City of San Antonio is the county seat of Bexar County (Aaa stable) and is the seventh largest city in the nation and the second most populous metropolitan area in Texas (Aaa stable). The local economy is anchored by three primary sectors: military, financial services, and tourism. The current population is estimated at 1.5 million.The City of San Antonio Public Facilities Corporation is a nonprofit local government entity created to assist the City of San Antonio in financing, refinancing or providing public facilities (i.e. property devoted to public use).METHODOLOGYThe principal methodology used in this rating was Lease, Appropriation, Moral Obligation and Comparable Debt of US Local Governments Methodology published in March 2022 and available at https://ratings.moodys.com/api/rmc-documents/385579. Alternatively, please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology. REGULATORY DISCLOSURESFor 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 on https://ratings.moodys.com/rating-definitions.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 issuer/deal page for the respective issuer on https://ratings.moodys.com.The rating has been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.This rating is solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website https://ratings.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://ratings.moodys.com/documents/PBC_1288235.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on https://ratings.moodys.com.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the UK and is endorsed by Moody's Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody's office that issued the credit rating is available on https://ratings.moodys.com.Please see https://ratings.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 issuer/deal page on https://ratings.moodys.com for additional regulatory disclosures for each credit rating. Adebola Kushimo Lead Analyst REGIONAL_SOUTHWEST Moody's Investors Service, Inc. 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