LOS ANGELES — A Billings, Mont., school district's general obligation school building bond rating was affirmed at Aa3 by Moody's Investors Service ahead of a $32.9 million sale on Sept. 15.
Moody's also affirmed the Aa3 rating on $79.5 million in outstanding general obligation bonds issued by Yellowstone County Elementary School District No. 2 in the Aug. 21 report.
"The Aa3 rating reflects the district's sizeable tax base, manageable debt burden, improving, but still narrow general fund reserves, and strong GO bond legal structure," Moody's analysts said. "The rating also takes into consideration the district's taxpayer concentration, average resident wealth levels, and increasing enrollment and elevated pension metrics."
The district serves Billings, the largest city in Montana with a population of 109,059.
Voters approved a $122 million bond measure Nov. 5, 2013, to pay for school expansion to deal with overcrowding after Yellowstone County School District No. 2 experienced a 25% increase in enrollment to 11,522 at its K-8 schools from 2008 to 2013, school officials told The Bond Buyer.
The state has experienced population growth as a result of the oil boom on the border of Montana and North Dakota.
The Bakken and Three Forks oil fields, which span 14,700 square miles in parts of Montana, North Dakota and South Dakota, have spurred an economic boom in those states since drilling began in 2008. More than 4,000 oil wells have been drilled in the Bakken and Three Forks since 2008, according to bond documents.
The district issued the first $80.9 million in GO bonds for school construction to deal with enrollment growth in January 2014.
The proceeds of the current issuance will be used for various capital improvements throughout the district, according to Moody's.
The bonds are general obligations of the district payable from general ad valorem taxes. The district has covenanted to levy annual ad valorem taxes on all taxable property within the district, without limitation as to rate or amount.
Significant and sustained increases in general fund reserves and liquidity and significant increase in taxable values or resident wealth levels could cause the rating to go up.
The deterioration of general fund reserves and significant declines of taxable values could cause the rating to go down.
