Fitch Ratings has assigned an 'A+' rating to the School
Board of Seminole County, Florida's (the district) approximately $55.8
million certificates of participation (COPs), series 2006A and 2006B.
The Series A COPs ($26.6 million) will fund improvements at 2 district
high schools and the Series B COPs ($29.2 million) will advance refund
a portion of the district's Series 1998A COPs. The COPs are expected
to sell on or about April 5 via negotiation with a syndicate led by
Citigroup.
Fitch also affirms the 'A+' rating on the district's $241 million in outstanding COPs. The Rating Outlook is Stable.
The 'A+' rating on the school board's COPs reflects sound lease provisions and the district's underlying credit quality. Credit characteristics include Seminole County's above-average demographic indicators, the school district's very low debt levels and a fully funded capital plan, and solid financial operations. Following this issuance, the district will leverage an above average 1.07 mills of the portion of the 2.0 mill capital outlay levy available for COPs repayment. This risk is largely mitigated by a front loaded debt service structure and above average COP amortization rate relative to many Florida school districts that use less of their capital outlay millage for debt service.
The COPs are secured by lease payments made by the district to the trustee as assignee of the Seminole County School Board Leasing Corp., which is a not-for-profit corporation created to assist the district in lease-purchase financing. The obligation of the district to make lease payments is a limited obligation, payable solely from funds appropriated by the district from available revenues. The 2006A and 2006B COPs are being issued pursuant to a master lease agreement, which provides strong incentives for appropriation. In the event of non-appropriation, the board must surrender all leased facilities to the trustee. Approximately 26% of the district's 61 school facilities are included under the master lease.
Financial operations are sound and characterized by healthy reserves, generally in excess of the board-approved policy.
The district ended fiscal 2005 with an $8.6 million operating surplus, increasing the unreserved general fund balance to $30 million equal to a sound 8.1% of spending. The district expects to reduce reserves by about $6 million in the current fiscal year, a result of overestimating enrollment and incurring higher than budgeted utility costs. The district projects ending fiscal year 2006 with an unreserved general fund balance equal to at least 6% of expenditures, in excess of its policy of 4%. State revenue sources generated roughly 64% of district general fund revenues in fiscal 2005 making the district somewhat vulnerable to fluctuations in state funding, typical for most Florida school districts. Taxable assessed valuation has grown 8% on average annually since fiscal 2000.
The district's five-year, fully-funded capital improvement plan (CIP) equals $397 million and includes all facilities required to accommodate projected enrollment growth of 2% annually. The current CIP does not include 3 new schools the district will need if the existing requirements associated with state mandated class size reduction remain in place. The district continues to enjoy revenue from the 10-year extension of the county's one-cent infrastructure sales tax approved by voters in 2001. One-quarter of the proceeds of the tax are allocated to the school board and are expected to provide roughly $54 million for capital investment through 2010. The district will consider issuing additional COPs in fiscal 2007.
Situated in central Florida, Seminole County is about 23 miles northeast of Orlando and central Florida's main tourism attractions. Though tourism plays a significant role in the local economy, an increased presence of financial services and high technology firms broadens the economic base. Population growth has been steady, up 10% since the 2000 census to 401,609, after growing 27% in the 1990s. District officials indicate that the county is largely built-out with few large tracts of land available for new residential development. County per-capita incomes are above the state and national averages average and unemployment levels track below state and national averages.
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.
Fitch also affirms the 'A+' rating on the district's $241 million in outstanding COPs. The Rating Outlook is Stable.
The 'A+' rating on the school board's COPs reflects sound lease provisions and the district's underlying credit quality. Credit characteristics include Seminole County's above-average demographic indicators, the school district's very low debt levels and a fully funded capital plan, and solid financial operations. Following this issuance, the district will leverage an above average 1.07 mills of the portion of the 2.0 mill capital outlay levy available for COPs repayment. This risk is largely mitigated by a front loaded debt service structure and above average COP amortization rate relative to many Florida school districts that use less of their capital outlay millage for debt service.
The COPs are secured by lease payments made by the district to the trustee as assignee of the Seminole County School Board Leasing Corp., which is a not-for-profit corporation created to assist the district in lease-purchase financing. The obligation of the district to make lease payments is a limited obligation, payable solely from funds appropriated by the district from available revenues. The 2006A and 2006B COPs are being issued pursuant to a master lease agreement, which provides strong incentives for appropriation. In the event of non-appropriation, the board must surrender all leased facilities to the trustee. Approximately 26% of the district's 61 school facilities are included under the master lease.
Financial operations are sound and characterized by healthy reserves, generally in excess of the board-approved policy.
The district ended fiscal 2005 with an $8.6 million operating surplus, increasing the unreserved general fund balance to $30 million equal to a sound 8.1% of spending. The district expects to reduce reserves by about $6 million in the current fiscal year, a result of overestimating enrollment and incurring higher than budgeted utility costs. The district projects ending fiscal year 2006 with an unreserved general fund balance equal to at least 6% of expenditures, in excess of its policy of 4%. State revenue sources generated roughly 64% of district general fund revenues in fiscal 2005 making the district somewhat vulnerable to fluctuations in state funding, typical for most Florida school districts. Taxable assessed valuation has grown 8% on average annually since fiscal 2000.
The district's five-year, fully-funded capital improvement plan (CIP) equals $397 million and includes all facilities required to accommodate projected enrollment growth of 2% annually. The current CIP does not include 3 new schools the district will need if the existing requirements associated with state mandated class size reduction remain in place. The district continues to enjoy revenue from the 10-year extension of the county's one-cent infrastructure sales tax approved by voters in 2001. One-quarter of the proceeds of the tax are allocated to the school board and are expected to provide roughly $54 million for capital investment through 2010. The district will consider issuing additional COPs in fiscal 2007.
Situated in central Florida, Seminole County is about 23 miles northeast of Orlando and central Florida's main tourism attractions. Though tourism plays a significant role in the local economy, an increased presence of financial services and high technology firms broadens the economic base. Population growth has been steady, up 10% since the 2000 census to 401,609, after growing 27% in the 1990s. District officials indicate that the county is largely built-out with few large tracts of land available for new residential development. County per-capita incomes are above the state and national averages average and unemployment levels track below state and national averages.
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.