Fitch Affirms Hillsborough City School District (CA) $37.3MM ULTD GOs at 'AAA'
NEW YORK-(Business Wire)-September 29, 2009 - In the course of routine surveillance, Fitch Ratings affirms its 'AAA' rating on Hillsborough City School District, California's (the district) $37.3 million in outstanding unlimited tax general obligation (GO) bonds (Election of 2002), series A and B. The Rating Outlook is Stable.
The 'AAA' rating reflects the district's high wealth levels, strong tax base growth, and sound financial position. The Outlook reflects the relatively low impact of recessionary pressures on this prosperous district, and the continued strength of local housing markets despite the broad mortgage market distress in the state of California.
This district's tax base grew by a strong 5.6% at its most recent valuation, and has not suffered any recent contraction despite the prevailing trends in property values throughout California. Due to this wealthy base, the district is essentially independent of state-derived revenue, which Fitch views as a strong credit positive in the context of the state's current fiscal emergency. The district encompasses the city of Hillsborough, which is home to some of the most affluent individuals in the San Francisco Bay area.
Hillsborough City School District's financial position remains solid. Although the audited unreserved fund balance was lower in fiscal year 2008 (FY08) ($2.1 million and 10% of spending and transfers out) than at Fitch's last review in FY04 ($2.7 million and 16% of spending), the district projects reserves will grow to $2.8 million and 14% of spending (on a budgetary basis) by fiscal 2010 year-end due to prudent fiscal practices. The district also enjoys additional available reserves outside the general fund ($0.8 million), and also diversified revenue in the form of a permanent parcel tax that grows by roughly 5% each year. The district suffered a total investment loss of $0.9 million in Lehman commercial paper ($0.6 million in the general fund), but will be able to absorb the write-down in its FY09 audit given its balance sheet strength.
The district's debt levels are high on a per capita basis, but modest given its wealthy tax base. Overall net debt has risen slightly to $13,632, (2.2% of market value) from $9,389 per capita (1.9%) in FY04.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, 'www.fitchratings.com'. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE.
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