The Santa Clarita Community College District’s “AA” bond ratings have been reaffirmed by two independent financial ratings firms — Standard & Poor’s and Fitch — in advance of the college’s upcoming bond refunding, scheduled to take place later this month. In addition, the college’s $20.4 million in outstanding certificates of participation (COPs) received an affirmed “AA-” status.
The two agencies issued their reports in response to a resolution passed by the Santa Clarita Community College District Board of Trustees on Jan. 16, 2013 to move ahead with the refunding of a portion of the Measure C and Measure M general obligation bonds.
Bond refunding is similar to refinancing a mortgage, with savings achieved from lower interest rates. The undertaking of this process creates the potential for millions of dollars in savings to be passed on to local property owners in the form of lowered property taxes.
The college’s “AA” rating is in keeping with most other community colleges and K-12 school districts across the state. While some K-12 districts have been able to receive an “AAA” rating, no community college currently enjoys that status. By way of comparison, the state of California’s GO bonds have an “A” rating.
Standard & Poor’s rating was based on strengths demonstrated by the district including:
• strong available general fund reserves
• low-to-moderate overall debt with no additional debt plans
The Fitch rating was based on the following:
• improved long-term financial prospects based on the passage of Proposition 30 and the elimination of mid-year budget cuts
• a strong economic base in the Santa Clarity Valley
“We are pleased to once again earn an ‘AA’ bond rating from both Standard & Poor's and Fitch Rating Agencies,” said Sharlene Coleal, College of the Canyons vice president of business services. “The ‘AA’ ratings underscore the college’s commitment to strong fiscal management despite severe state funding cuts due to the recession. With the improving economic conditions in the state of California and the passage of Proposition 30, the future for education is bright and we look forward to continuing to be a good partner with our community.”
Next week, all of the bonds will be evaluated on a financial basis to determine a savings threshold to provide the greatest savings to the taxpayer. With the positive ratings and a full analysis based on sound fundamentals, it is anticipated that the refunding of the bonds will go smoothly.
The district will be able to report the final outcome on Wednesday, Feb. 27, 2013.
College of the Canyons Bond History
In November 2001, local voters approved the college’s general obligation bond, Measure C, which authorized the district to issue approximately $82.1 million of bonds to raise desperately needed funds for college facility upgrades and expansions. Campus projects paid for by Measure C included the construction of Aliso Hall and Aliso lab, Seco Hall, and the West P.E. building and gymnasium.
In November 2006, local voters approved a second general obligation bond, Measure M.
Measure M authorized the district to issue $160 million of bonds needed to carry out the construction of a variety of additional campus modernization and expansion projects, including the Dr. Dianne G. Van Hook University Center, a second campus in Canyon Country, the new Library and TLC facility, and the Mentry Hall expansion.