Issue: General Obligation (Limited Tax) Various Purpose Bonds, Series 2013; Rating: A2; Sale Amount: $3,100,000; Expected Sale Date: 12-25-2012; Rating Description: General Obligation Limited Tax
Issue: Various Purpose (General Obligation Limited Tax) Bond Anticipation Notes, Series 2013; Rating: MIG 2; Sale Amount: $3,957,000; Expected Sale Date: 12-25-2012; Rating Description: Note: Bond Anticipation
Moody's Investors Service has assigned an A2 underlying rating with negative outlook to Richland County's (OH) $3.1 million Various Purpose (General Obligation Limited Tax) Bonds, Series 2013 and a MIG 2 rating to $4.0 million Various Purpose (General Obligation Limited Tax) Bond Anticipation Notes, Series 2013. Concurrently, Moody's has affirmed the county's outstanding A2 long-term rating and negative outlook on the county's $41 million of outstanding GOLT debt and the MIG 2 rating on the county's $1.3 million of outstanding short term debt.
SUMMARY RATING RATIONALE
The bonds and notes are secured by the county's general obligation pledge, subject to the state-imposed 10-mill limitation. The Series 2013 bonds will provide long term financing to retire a portion of the county's outstanding Various Purpose (GOLT) Notes, Series 2012A that mature on January 9, 2013. The notes were originally issued to pay the costs of constructing an alternative sentencing correctional facility, county jail and offices for the prosecuting attorney. The Series 2013 notes will retire a portion of the county's outstanding Various Purpose (GOLT) Notes, Series 2012B, which mature on January 9, 2013, and provided new money to renovate the County Home and make various sewer utility improvements. The county plans to use cash on hand to pay down approximately $58,000 in principal on the notes. The assignment and affirmation of the A2 rating reflects the county's persistently narrow financial position; sizable tax base that has seen some valuation and commercial growth; manageable debt burden with limited future borrowing plans. The MIG 2 rating is based on the credit quality reflected in the A2 underlying rating; expected market access for the take out refinancing; and adequate planning for alternative take out options. The assignment of the negative outlook reflects the extremely narrow General Fund position that lacks a clear plan for rebuilding reserves and pressures within the regional economy that are expected to continue over the near to medium-term. Any deterioration in or failure to rebuild reserves could provide pressure on the county's rating.
- Continued year over year growth in permanent sales tax collections which serve as county's largest revenue source
- Recent stabilization in tax base valuations
- Reliance on one-time revenues to achieve balanced operations
- Limited General Fund liquidity
The county's negative outlook is based on the extremely narrow General Fund position, lack of a clear plan for rebuilding General Fund reserves, and pressures within the regional economy that are expected to continue over the near to medium-term. These factors could lead to a deterioration in reserves and make it difficult to rebuild reserves and maintain positive operations to a level commensurate with the county's current rating.
What could change the rating - UP (or removal of the negative outlook):-Measurable progress towards restoring General Fund liquidity in a timely fashion
-Ongoing stabilization of key revenue streams leading to sustained structural balance
-Positive economic indicators such as declining unemployment or increased retail sales activity
What could change the rating - DOWN:
-Any erosion of liquidity in the General Fund
-Inability to rebuild General Fund reserves and improve overall operational stability across all funds
-Deterioration of key operating revenues
-Accelerating job losses or continued economic decline leading to weakening of sales tax trends
PRINCIPAL METHODOLOGY USED
The principal methodology used in rating the long term bonds was General Obligation Bonds Issued by U.S. Local Governments published in October 2009. The principal methodology used in rating the short term notes was Bond Anticipation Notes and Other Short-Term Capital Financings published in May 2007. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.
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Chandra Ghosal 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: 212-553-1653Jack Dorer MD - Public Finance Financial Institutions 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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