High ratings set stage for PCC issuance of revenue bonds
January 9, 2019
College anticipates 2019 groundbreaking for Applied Technology Center
Tucson, AZ -- Fitch Ratings and Moody’s Investors Service, two of the nation’s largest credit rating agencies, returned excellent ratings for Pima Community College as the College prepares to issue revenue bonds for its Centers of Excellence projects.
The bond funds, anticipated to generate more than $60 million, will support development and growth of Centers of Excellence in Applied Technology, Public Safety and Security, and Health Professions. These, along with Centers of Excellence in Information Technology, Hospitality, and the Arts, are part of a long-term vision for the College.
“Pima is preparing the workforce of the future,” Chancellor Lee D. Lambert said. “We are developing industry-driven, student-centered programs and facilities so that our students and community can thrive in the 21st century.”
The Governing Board authorized the issuance of revenue bonds in September 2018. The bonds will be repaid from College funds and do not require voter approval.
Fitch Ratings assigned the College a default rating of AA and the revenue bonds at AA-, both with a stable outlook.
From Fitch: “District leadership has actively worked to close recent budget gaps that arose largely from the trend of annual enrollment losses and the reduction and eventual phase-out of its state appropriation, in addition to management’s efforts to realign spending with the state’s expenditure limitation framework that is based on current enrollment. … The district’s right-sizing efforts produced positive results in fiscal 2017, with operation posting a modestly positive 3% operating margin. Near-final, unaudited fiscal 2018 operating results suggest another positive margin of 9%, outpacing the year’s flat enrollment performance.
“.... Fitch expects the district will continue to maintain the highest level of financial resilience based on historical spending. Fitch expects the district to maintain the highest level of financial resilience based on historical fiscal performance.”
Moody's assigned the College an Aa3 Stable, which is equivalent to the Fitch rating.
From Moody’s: “The Aa3 reflects Pima County Community College District's (PCC or the district) excellent strategic positioning given its prominent role as a low-cost provider of higher education and vocational training in the increasingly economically vibrant Tucson, Arizona metropolitan area. PCC benefits from its large operating scale and robust property tax support from its Pima County tax base. Financial reserve levels and unrestricted liquidity are strong relative to community college peers providing a sound cushion for expenses and for a growing, yet manageable debt burden.”
These ratings indicate a very strong capacity to meet financial commitments.
“Pima has worked hard to strengthen our financial position, allowing us to make significant, much-needed investments in our programs and facilities,” said Dave Bea, Executive Vice Chancellor for Finance and Administration.
Centers of Excellence
The College has been working with employers to develop programs and facilities that meet current and anticipated workforce needs.
Groundbreaking is expected on Pima's $45 million Applied Technology Center of Excellence in mid-2019. The project will transform the campus and surrounding neighborhood.
Pima expects to issue the bonds in mid-January.
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