Rating Action: Moody's assigns Aa2 to San Rafael City HSD's (CA) GOULT BondsGlobal Credit Research - 29 Aug 2022New York, August 29, 2022 -- Moody's Investors Service has assigned a Aa2 rating to San Rafael City High School District's (CA) Election of 2022 General Obligation Bonds, Series A. The par amount is expected to be $55 million. Moody's maintains a Aa2 rating on the district's outstanding general obligation unlimited tax (GOULT) bonds and a Aa3 issuer rating. The issuer rating reflects the district's ability to repay debt and debt-like obligations without consideration of any pledge, security, or structural features. Post issuance, the district will have about $216 million in GOULT bonds.RATINGS RATIONALEThe Aa3 issuer rating incorporates the district's strong property wealth, solid resident income and ongoing small declines in enrollment. The rating also factors the district's healthy financial position supported by strong reserves and liquidity coupled with its status as a Community Funded district. Also supporting the rating are management's prudent fiscal practices, and strong local support. These favorable credit factors are balanced against the district's elevated leverage and fixed costs.The Aa2 rating on the GO bonds is one notch higher than the issuer rating. The one notch distinction reflects California school district GO bond security features that include the physical separation through a "lockbox" for pledged property tax collections and a security interest created by statute.RATING OUTLOOKOutlooks are usually not assigned to local government credits with this amount of debt outstanding.FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATING- Material declines in leverage and fixed costs- Stable enrollment trendsFACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATING- Substantial weakening of financial position, including reserves and liquidity- Significant increase in leverage and fixed costsLEGAL SECURITYThe bonds are secured by the levy of ad valorem taxes, unlimited as to rate or amount, upon all taxable property within the district. The portion of the levy restricted for debt service is collected, held, and transferred directly to the paying agent by Marin County (Aaa stable) on behalf of the district.USE OF PROCEEDSThe current offering will finance the construction and improvement of various school facilities of the district.PROFILESan Rafael City High School District is located approximately 15 miles north of San Francisco (Aaa stable) in Marin County (Aaa stable). The district provides ninth through twelfth grade education services to students in the City of San Rafael, a portion of the City of Larkspur and unincorporated territory in the county.The district shares its board and administration with the San Rafael City Elementary School District (Aa3 issuer rating) but is a separate legal entity. The high school district's boundaries encompass the San Rafael City Elementary School District and the Miller Creek School District. Enrollment in fiscal 2023 is projected at 2,638.METHODOLOGYThe principal methodology used in this rating was US K-12 Public School Districts Methodology published in January 2021 and available at https://ratings.moodys.com/api/rmc-documents/70054. 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. 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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. 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