New York, November 14, 2012 --
Issue: Debt Certificates, Series 2012; Rating: A2; Sale Amount: $10,000,000; Expected Sale Date: 11/26/2012; Rating Description: General Obligation Limited Tax
Issue: Debt Certificates, Series 2013; Rating: A2; Sale Amount: $3,900,000; Expected Sale Date: 11/26/2012; Rating Description: General Obligation Limited Tax
Moody's Investors Service has assigned an A2 rating to Champaign & Piatt Counties Community Unit School District 3 (IL) $10.0 million Debt Certificates, Series 2012 and $3.9 million Debt Certificates, Series 2013. Concurrently, Moody's has affirmed A1 rating on the district's outstanding general obligation unlimited tax debt. Post-sale, the district will have $17.1 million of general obligation unlimited tax debt and $13.9 million of general obligation limited tax debt outstanding.
SUMMARY RATING RATIONALE
Debt service on the certificates is secured by the district's general obligation pledge to make payment from any and all legally available sources of revenue though debt service is expected to be paid from county-wide sales tax collections. Proceeds of the certificates will be used to finance the construction of a pre-kindergarten, kindergarten, and administration center as well as other capital projects throughout the district. The one-notch distinction between the rating on the debt certificates and that of debt secured by the district's general obligation unlimited tax pledge reflects the lack of a dedicated levy to pay debt service. Affirmation of the district's A1 general obligation unlimited tax debt rating reflects the district's moderately sized and growing tax base, satisfactory financial profile despite delays in state funding, and an elevated debt burden mitigated by non-levy support.
- Property tax cap legislation not applicable to Champaign County (general obligation rated Aa2/no outlook), which allows the district to capture appreciation and new construction valuation
- Presence of alternate liquidity in the Working Cash Fund
- Above average resident income profile
- Reliance on state funding exposes the district to the State of Illinois' (GO rated A2/stable) budgetary pressures
- Uncertainty regarding funding obligations of the State's teachers pension system
WHAT COULD MOVE THE RATING UP:
- Sustained growth in the district's available General Fund reserves and liquidity
- Continued growth and diversification of the district's tax base
WHAT COULD MOVE THE RATING DOWN:
- Failure to maintain adequate reserves and liquidity
- Deterioration of the district's tax base and resident income profile
PRINCIPAL METHODOLOGY USED
The principal methodology used in this rating was General Obligation Bonds Issued by U.S. Local Governments published in October 2009. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.
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Kathryn Gregory Associate Analyst Public Finance Group Moody'sInvestors Service, Inc.100 N Riverside Plaza Suite 2220 Chicago, IL 60606 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653Mark G. Lazarus Analyst Public Finance Group JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 Releasing Office: Moody's Investors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653(C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.
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