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San Luis Obispo Cnty Comm College Dist, CA -- Moody's assigns Aa2 to San Luis Obispo County CCD's (CA) Election of 2014 GO Bonds, Series C

·13 min read

Rating Action: Moody's assigns Aa2 to San Luis Obispo County CCD's (CA) Election of 2014 GO Bonds, Series C

Global Credit Research - 21 Jan 2021

New York, January 21, 2021 -- Moody's Investors Service has assigned a Aa2 rating to San Luis Obispo County Community College District's (CA) Election of 2014 General Obligation Bonds, Series C. The expected par amount is $70.0 million. We maintain Aa2 ratings on the district's outstanding parity debt, which currently totals $110.8 million.

RATINGS RATIONALE

The Aa2 rating reflects the district's large and primarily residential tax base poised for continued growth and favorable wealth and incomes of district residents. The rating also takes into account the district's sound financial position supported by solid reserves and liquidity that we expect will remain stable given management's target of maintaining reserves at a minimum of 12% of general fund expenditures. The district's low debt burden and above-average pension burden are also reflected in the rating. The rating further incorporates the above-average legal strength of the California community college district general obligation pledge.

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 of this rating action, and we do not see any material immediate coronavirus related credit risks for San Luis Obispo County Community College District. Management continues to offer almost all of its courses online and expects to do so at least through the end of the spring semester. The district is funded at "hold harmless" under the Student Centered Funding Formula (SCFF), so the recent small declines in enrollment will not impact SCFF revenue. In addition, the district has received CARES Act funding to help cover costs related to the pandemic.

RATING OUTLOOK

Moody's does not usually assign outlooks to local governments with this amount of debt outstanding.

FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATING

- Attainment of Community Funded status

- Continued growth in reserves and liquidity

FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATING

- Sustained declines in reserves and liquidity

- Material increase in fixed costs that further constrain financial flexibility

LEGAL SECURITY

The bonds are general obligations of the district payable solely from ad valorem property taxes. San Luis Obispo County and Monterey County (Aa2) are empowered and obligated to annually levy such ad valorem property taxes, for the payment of the principal of and interest on the bonds upon all property subject to taxation within the district without limitation of rate or amount. The portion of the levy restricted for debt service is collected, held and transferred directly to the paying agent by the counties on behalf of the district.

USE OF PROCEEDS

Bond proceeds will fund various capital improvement projects such as a new campus center, technology upgrades and district-wide HVAC/roof replacements.

PROFILE

San Luis Obispo County Community College District has three locations which include the San Luis Obispo Campus, the North County Center and South County Site located at Arroyo Grande High School. The district is governed by a five-member Board of Trustees. Enrollment for fiscal 2021 totals 8,432 funded full time equivalent students.

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.

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 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.

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 www.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 www.moodys.com.

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.

Alexandra Cimmiyotti Lead Analyst Regional PFG West Moody's Investors Service, Inc. 405 Howard Street Suite 300 San Francisco 94105 US JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Thomas Jacobs 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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