Rating Action:
Moody's assigns Aa1 to Mount Lebanon SD, PA's $51.8M 2015 GO bonds
Global Credit Research - 08 Oct 2015
Rating applies to $92.4M in rated debt, post-sale
New York, October 08, 2015 --
Moody's Rating
Issue: General Obligation Bonds, Series of 2015; Rating: Aa1; Sale Amount: $51,815,000; Expected Sale Date: 10-19-2015; Rating Description: General Obligation
Opinion
Moody's Investors Service has assigned a Aa1 rating to the Mount Lebanon School District, PA's $51.8 million General Obligation Bonds, Series of 2015. Concurrently, Moody's has affirmed the Aa1 on the district's $92.4 million in outstanding general obligation debt.
SUMMARY RATING RATIONALE
The Aa1 rating reflects the district's strong finances and large tax base. The rating also incorporates the district's above-average socioeconomic profile.
OUTLOOK
Outlooks are usually not assigned to local government credits with this amount of debt outstanding.
WHAT COULD MAKE THE RATING GO UP
- Positive financial operations leading to stronger General Fund reserves
- Substantial growth in the district's tax base and socioeconomic indicators
WHAT COULD MAKE THE RATING GO DOWN
- Material deterioration of the tax base and socioeconomic indices
- Structural imbalance leading to decreases in reserves and liquidity
OBLIGOR PROFILE
The K-12 school district is located 5.9 miles south of Pittsburgh. The district serves 5,305 students.
Showing posts with label Moody's. Show all posts
Showing posts with label Moody's. Show all posts
Friday, October 9, 2015
Saturday, September 26, 2015
Mt. Lebanon's outstanding debt is now $36.2 million
****
Rating Action:
Moody's assigns Aa2 to Mt. Lebanon, PA's $10M GO Bonds, Series of 2015
Global Credit Research - 25 Sep 2015
Aa2 applies to $36.2M outstanding GO debt
New York, September 25, 2015 --
Moody's Rating
Issue: General Obligation Bonds, Refunding Series of 2015; Rating: Aa2; Sale Amount: $10,000,000; Expected Sale Date: 9/29/2015; Rating Description: General Obligation
OPINION
Moody's Investors Service assigns a Aa2 rating to Mt. Lebanon, PA's $10 million General Obligation Bonds, Refunding Series of 2015. Concurrently, Moody's has affirmed the Aa2 rating affecting $36.2 million in outstanding General Obligation debt.
SUMMARY RATING RATIONALE
The Aa2 rating reflects the municipality's moderately-sized and affluent tax base in suburban Pittsburgh (A1 positive); stable but below average financial position; and modest debt burden.
OUTLOOK
Outlooks are not usually assigned to local government credits with this amount of debt outstanding.
WHAT COULD MAKE THE RATING GO UP
• Increases in fund balance to levels more consistent with higher rating categories
• Continued tax base growth
WHAT COULD MAKE THE RATING GO DOWN
• Additional declines in General Fund balance
• Reversal of recent favorable income tax trend
• Sizeable tax base contraction and weakening of demographic profile
• Significant increase in General Fund supported debt that could further limit financial flexibility
OBLIGOR PROFILE
Mt. Lebanon is located in western Pennsylvania, just outside of Pittsburgh, and has a population of 33,137 (2010 US Census).
LEGAL SECURITY
The bonds are secured by the municipality's general obligation, unlimited tax pledge.
USE OF PROCEEDS
Proceeds from the current issue will be used to partially refund the Series 2010A and Series 2010B bonds for an estimated net present value savings of $439,115, or 4.5% of refunded principal, with no extension of maturity.
Sunday, August 17, 2014
How low can we go?
I found the 2010 lean and clean and smart annual report produced by the Public Information Office on the municipal website. So many changes since 2010!
Concerning the cover of the report, the PIO writes: "What better symbol of Mt. Lebanon’s clean, transparent government than water splashing from the fountain at Clearview Common, a popular Uptown gathering space." I don't think I had submitted any Right To Knows for the municipal side of our government at that point. Former commissioner Dan Miller took pride in sharing documents with residents.
In 2010, our municipal government was tightening its belt. Manager Steve Feller writes: "Kept the undesignated fund balance at above 10 percent, the amount recommended by rating agencies." This year, as a result of our greedy Commission, Moody downgraded our ratings. Moody's reports challenges to be:
Look at the partnerships:
The "Go Zone" is a disaster and has been discussed here on Lebo Citizens.
The Parking Authority was consolidated, but I'm not clear on how the funds are being spent in regard to the latest bond issue.
Retail management and promotions strategy: We couldn't have a finer manager of the Commercial Districts Office, but the TOD is going nowhere, thanks to our commission.
"Coffee with the Manager, a community relations board program that invites residents to discuss issues with the staff informally at a coffee house." and "People don’t always have time to attend public meetings, so they appreciated Coffee with the Manager, a community relations board program that promotes transparent government by inviting residents to meet informally with Manager Steve Feller and other staff members at a local coffee house." Coffee with the Manager is history. Susan Morgans said that it was not well attended. I believe the last coffee was concurrent with the Candidates Forum.
Concerning the cover of the report, the PIO writes: "What better symbol of Mt. Lebanon’s clean, transparent government than water splashing from the fountain at Clearview Common, a popular Uptown gathering space." I don't think I had submitted any Right To Knows for the municipal side of our government at that point. Former commissioner Dan Miller took pride in sharing documents with residents.
In 2010, our municipal government was tightening its belt. Manager Steve Feller writes: "Kept the undesignated fund balance at above 10 percent, the amount recommended by rating agencies." This year, as a result of our greedy Commission, Moody downgraded our ratings. Moody's reports challenges to be:
CHALLENGES:
Below average fund balance
Large overlapping debt with local school district
The spending of $800,000 on artificial turf violates the terms of the ordinance established by the commission. The ordinance states that unassigned funds Cannot be used for regularly scheduled and reoccurring operational expenditures. The artificial turf is to be replaced every eight years.
Recycling is up, "increased participation over two years by 89 percent." Now we are faced with another hidden tax a.k.a. "Pay as You Throw" next month, to encourage more residents to recycle.
Look at the partnerships:
"Share services, form partnerships; right-size and reduce redundanciesThe two year agreement with the school district and the YSA (Youth Sports Alliance, NOT the Youth Soccer Association) was a disaster. Now, the commission has chosen to enter into another maintenance agreement with the school district for Middle and Wildcat Fields.
This is just good common sense. Here are a few examples:
• Signed a new two-year agreement with the school district
and the Youth Soccer Association for continued maintenance
of school athletic fields.
• Implemented the “Go Zone” uniform signage program with
the school district.
• Decided to consolidate parking authority operations into
municipal government by December 31, 2011.
• Developed a retail management and promotions strategy for
Uptown in partnership with Duquesne University."
The "Go Zone" is a disaster and has been discussed here on Lebo Citizens.
The Parking Authority was consolidated, but I'm not clear on how the funds are being spent in regard to the latest bond issue.
Retail management and promotions strategy: We couldn't have a finer manager of the Commercial Districts Office, but the TOD is going nowhere, thanks to our commission.
"Coffee with the Manager, a community relations board program that invites residents to discuss issues with the staff informally at a coffee house." and "People don’t always have time to attend public meetings, so they appreciated Coffee with the Manager, a community relations board program that promotes transparent government by inviting residents to meet informally with Manager Steve Feller and other staff members at a local coffee house." Coffee with the Manager is history. Susan Morgans said that it was not well attended. I believe the last coffee was concurrent with the Candidates Forum.
Changes include the power structure of our municipal government. For instance, the organizational chart shows the Boards are higher on the organizational chart than staff. Now, the staff tells the Boards "how it is."
An interesting read on undesignated funds:
The total fund balance is the difference between assets and liabilities in a specific fund of the municipality. The undesignated portion of the fund balance represents expendable available resources that can be spent for emergencies and future uncertainties. In the General Fund, the municipality’s primary operating fund, the undesignated fund balance decreased by $487,434 from 2009 to 2010. This decrease was caused by use of fund balance in the 2011 budget and a designation for 2012 to help with pension contributions. The municipality has worked to increase the General Fund’s undesignated fund balance from a low of 4.1 percent of operating revenues in 2004. Rating agency and industry standards recommend an undesignated fund balance in the General Fund to be 5 to 15 percent of operating revenues. At year-end 2010, the General Fund undesignated fund balance was 11 percent.
Newcomers should read about real estate trends.
While the real estate market has significantly declined in other areas of the country, the values in Mt. Lebanon have not been as vulnerable. After a dip in average sales price in 2008, the prices in Mt. Lebanon showed recovery in 2009 and remained steady in 2010. The average sales price increased a mere 0.1 percent from 2009 to 2010. The number of properties sold has been constant in the past, but in the last few years has been far more market sensitive.
We are moving in the wrong direction. There is less transparency, more debt and wreckless spending, lower fund balance, poorer ratings, and the staff is out of control. Have I missed anything?
Friday, August 8, 2014
Moody's Downgrades Lebo's Rating UPDATED
Assigns Aa2 to $3.9M 2014 bonds; municipality has $31.9M outstanding post-sale
New York, August 05, 2014 --
Moody's Rating
Issue: General Obligation Bonds, Series 2014; Rating: Aa2; Sale Amount: $3,900,000; Expected Sale Date: 8/13/2014; Rating Description: General Obligation
Opinion
Moody's Investors Service has downgraded the Municipality of Mt. Lebanon, PA to Aa2 from Aa1, affecting $28 million of outstanding General Obligation debt. Concurrently, we have assigned a Aa2 rating to the municipality's $3.9 million General Obligation Bonds, Series 2014.
The bonds, including the municipality's guaranteed parking revenue and sewer revenue bonds, are secured by the municipality's general obligation, unlimited tax pledge.
Proceeds of the current issue will be used to fund seven capital projects, including improvements to municipal-owned parking garages, work on the municipal building's roof, and stormwater projects.
SUMMARY RATING RATIONALE
The downgrade to Aa2 incorporates the municipality's declining fund balance, which is now lower than average for the Aa1 rating category. The rating reflects the municipality's moderately sized and affluent tax base in suburban Pittsburgh (rated A1 stable), a favorable income tax trend, and a modest debt burden.
STRENGTHS:
Affluent tax base in strong regional economy
Favorable income tax trend
CHALLENGES:
Below average fund balance
Large overlapping debt with local school district
WHAT COULD CHANGE THE RATING - UP:
Increases in fund balance to levels more consistent with higher rating categories
WHAT COULD CHANGE THE RATING - DOWN
Further declines in the General Fund balance
Reversal of recent favorable income tax trend
Update August 9, 2014 10:57 AM From the August 12, 2014 Agenda, here are the seven projects to be funded from the bond issue.
New York, August 05, 2014 --
Moody's Rating
Issue: General Obligation Bonds, Series 2014; Rating: Aa2; Sale Amount: $3,900,000; Expected Sale Date: 8/13/2014; Rating Description: General Obligation
Opinion
Moody's Investors Service has downgraded the Municipality of Mt. Lebanon, PA to Aa2 from Aa1, affecting $28 million of outstanding General Obligation debt. Concurrently, we have assigned a Aa2 rating to the municipality's $3.9 million General Obligation Bonds, Series 2014.
The bonds, including the municipality's guaranteed parking revenue and sewer revenue bonds, are secured by the municipality's general obligation, unlimited tax pledge.
Proceeds of the current issue will be used to fund seven capital projects, including improvements to municipal-owned parking garages, work on the municipal building's roof, and stormwater projects.
SUMMARY RATING RATIONALE
The downgrade to Aa2 incorporates the municipality's declining fund balance, which is now lower than average for the Aa1 rating category. The rating reflects the municipality's moderately sized and affluent tax base in suburban Pittsburgh (rated A1 stable), a favorable income tax trend, and a modest debt burden.
STRENGTHS:
Affluent tax base in strong regional economy
Favorable income tax trend
CHALLENGES:
Below average fund balance
Large overlapping debt with local school district
WHAT COULD CHANGE THE RATING - UP:
Increases in fund balance to levels more consistent with higher rating categories
WHAT COULD CHANGE THE RATING - DOWN
Further declines in the General Fund balance
Reversal of recent favorable income tax trend
Tuesday, August 20, 2013
We still don't know the winning bid UPDATED 2X
Last night, Mt. Lebanon School Board Directors approved the second bond issue for the high school renovation. It brought $32,950,000 in proceeds. It will have for the first year, a .2 mill tax increase, a .19 mill tax increase for the second year, and a .2 mill tax increase for the third year. We sold $35,090,000 bonds for proceeds of $32,950,000. The expenses appear to be over $2 million. Scott Goldman was the only director who voted against it. Level funding cost $7,890,000 less than wrapping bonds and borrowing the interest over the life of the bonds, assuming the bonds are not refinanced.
What we don't know is what the net interest cost or the true interest cost of the winning bid. We were told that the winning bid and the cover bid were within .01% of each other. The board did not reveal either cost last night.
In 2009, we were quoted a 3.59% Arbitrage Yield, but in the Act 34 document, it was revealed that the True Interest cost was 4.10%.
Moody's report is here. The podcast to last night's meeting is here.
Update August 20, 2013 12:11 PM Taxpayers file lawsuit to block Woonsocket tax.
Update August 20, 2013 5:53 PM The MTLSD website is down, but I understand this was posted today. Also, residents have called Jan Klein today, asking for the winning bid and was told to file a RTK. Any stockbroker could have answered that question, but you won't get it from the School District .
What we don't know is what the net interest cost or the true interest cost of the winning bid. We were told that the winning bid and the cover bid were within .01% of each other. The board did not reveal either cost last night.
In 2009, we were quoted a 3.59% Arbitrage Yield, but in the Act 34 document, it was revealed that the True Interest cost was 4.10%.
Moody's report is here. The podcast to last night's meeting is here.
Update August 20, 2013 12:11 PM Taxpayers file lawsuit to block Woonsocket tax.
Update August 20, 2013 5:53 PM The MTLSD website is down, but I understand this was posted today. Also, residents have called Jan Klein today, asking for the winning bid and was told to file a RTK. Any stockbroker could have answered that question, but you won't get it from the School District .
| School Board Votes to Issue Bonds to Complete Financing for High School Project August 20, 2013
At the August 19, 2013 School Board meeting, the Board voted to authorize the issuance of General Obligation Bonds, Series of 2013 in the aggregate principal amount of $34,745,000 to provide funds for the completion of the renovations to the high school.
The bidding was favorable with the District being the only competitive bond sale scheduled in Pennsylvania this week, and the second largest and second highest rated sale of only 11 competitive sales across the country on Monday, August 19, 2013. There were a number of bids, and the bids were very close. The winning bidder was Mesirow Financial of New York City. Mesirow is generally not an active bidder on Pennsylvania school district bonds, but said they were enticed to bid due to the strong Aa1 credit of the District and the belief that their investor base would be excited to own these bonds. With this sale, the District will continue to finance the construction of the high school until its completion in 2015.
On August 12, the Board gave direction to the financial advisor and bond counsel to proceed to bid on an anticipated $33 million debt issue to fund the remaining costs of the high school renovation project. The bonds were directed to be wrapped around existing debt so the millage cost to the community will be minimized with the debt payments implemented over a three year period. It is anticipated that the increase in millage will be below .2 mills each of the next three years to complete this financing. |
Tuesday, August 13, 2013
It's a wrap!
The school board has decided to use a wraparound structure for the second bond issue vs. level payment. With the cushion, a.k.a over taxing, that the school board has established, the board has decided to use capitalized interest. The cushion could be used for OPEB, the grievance, the rifle range, etc.
Tim Frenz, again did not have a presentation for the public. He resorted to pointing to his papers, rather than sharing the information on the screen to his left. In all my years of making sales presentations for my $5 million territory, I would have been fired for being so unprofessional. Josephine Posti said it in a nutshell. The public does not have the figures that the board has to see, to know that they are making a good decision. Why not, Josephine? She went after Scott Goldman when he voted in favor of level funding. He calculated that level funding will cost the district $5.6 million LESS. By wrapping this bond, we will be paying 19% MORE. She said that it will cost us more in millage. Scott tried to explain that we have the option to refinance a level bond issuance, as well, while saving taxpayers $5.6 million dollars. Cappucci, Birks, and Posti all pounced on him.
The good news is that Moody's has given Mt. Lebanon an AA1 rating.
I am not pretending that I am an expert on this topic. It is complicated to me, so please listen to the podcast for a better explanation. It is available here.
Tim Frenz, again did not have a presentation for the public. He resorted to pointing to his papers, rather than sharing the information on the screen to his left. In all my years of making sales presentations for my $5 million territory, I would have been fired for being so unprofessional. Josephine Posti said it in a nutshell. The public does not have the figures that the board has to see, to know that they are making a good decision. Why not, Josephine? She went after Scott Goldman when he voted in favor of level funding. He calculated that level funding will cost the district $5.6 million LESS. By wrapping this bond, we will be paying 19% MORE. She said that it will cost us more in millage. Scott tried to explain that we have the option to refinance a level bond issuance, as well, while saving taxpayers $5.6 million dollars. Cappucci, Birks, and Posti all pounced on him.
The good news is that Moody's has given Mt. Lebanon an AA1 rating.
I am not pretending that I am an expert on this topic. It is complicated to me, so please listen to the podcast for a better explanation. It is available here.
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