Los Angeles County, CA Revenue Bonds Assigned #AA# Rating On Very Strong Management, Flexibility

Stocks and Financial Services Press Releases Wednesday July 4, 2018 17:22
SAN FRANCISCO--4 Jul--S&P Global Ratings

SAN FRANCISCO (S&P Global Ratings) July 3, 2018--S&P Global Ratings revised its outlook to positive from stable on Los Angeles County, Calif.'s issuer credit rating (ICR) and appropriation debt. At the same time, S&P Global Ratings assigned its 'AA' long-term rating to the Los Angeles County Facilities Inc.'s (LACF) lease revenue bonds (LRBs), tax exempt series 2018A (Vermont Corridor County Administration Building), and taxable series 2018B (Vermont Corridor County Administration Building) bonds issued for the county. Finally, S&P Global Ratings affirmed its 'AA' long-term rating and underlying rating (SPUR) on the Los Angeles County Capital Asset Leasing Corp's (LAC-CAL) and the county's appropriation debt outstanding, and its 'AA+' issuer credit rating (ICR).

The outlook revision reflects our view of the county's long-term trend of robust local economic performance from an already strong and very diverse base and an associated strengthening in revenues and tax base that have improved its capacity to meet capital and service priorities. The outlook also reflects our view that effective budgetary discipline since the end of the Great Recession have played a significant role in putting the county on a much stronger financial footing than a decade ago with very strong reserves in the general fund and the Department of Health Services fund.

"The rating on the LRBs reflects our view of the risk of nonappropriation of lease payments as well as the county's very strong management, budgetary flexibility, and liquidity," said S&P Global Ratings credit analyst Jennifer Hansen. "The ratings further reflect our view of the county's strong economy and budgetary performance," Ms. Hansen added.

The series 2018A and 2018B LRBs are secured by semiannual lease payments made by the county to the LACF, a California nonprofit public benefit corporation and single-purpose entity. The leased assets are a new office building with approximately 468,000 gross square feet of Class A office with ground floor retail space and public serving uses, with approximately 965 structured parking spaces and a separate 10-story garage structure containing approximately 768 parking spaces.

Los Angeles is the largest county in the nation, by population. Assessed value (AV) has grown since fiscal 2011, with a 6% increase projected for fiscal 2019. The county experienced only a relatively minor dip in AV during the Great Recession, which we consider a reflection of its large and mature property tax base.


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