Press Release|Public Finance

KBRA Affirms AA+ Rating for Midland County Hospital District, Limited Tax General Obligation Refunding Bonds; Outlook is Stable

11 Aug 2023   |   New York


KBRA affirms a long-term AA+ rating for the Midland County Hospital District, Limited Tax General Obligation Refunding Bonds. The Outlook is Stable.

KBRA’s analysis of the District primarily focuses on an assessment of the pledged ad valorem tax revenues within the County, where the security features include: (1) LTGO Bonds are secured by voter-approved ad valorem taxes assessed on all taxable property within the District; (2) Under Texas Constitution and state law, hospital districts are the only type of local health care providers in Texas that may impose taxes if approved by the voters; (3) Midland Central Appraisal District possesses the District’s tax revenues initially where such collected taxes are held in trust for bondholders; and, (4) These revenues may be used solely for the payment of debt service on the bonds and may not be used for any other purpose. Additionally, this analysis includes a review of Midland’s overall operations as a not-for-profit healthcare provider.

Key Credit Considerations

The rating was affirmed because of the following key credit considerations:

Credit Positives

  • Midland is the only safety net healthcare provider in the County and plays a critical role within the community’s health mission.
  • A growing tax base continues to generate strong property tax revenues for the District.
  • The current tax rate of $0.0814/$100 provides ample room and flexibility for the District to increase the rate further to meet future debt service, if needed.

Credit Challenges

  • Top 10 taxpayers are concentrated in the oil & gas industry, representing 32.46% of TAV.

Rating Sensitivities

For upgrade

  • Diversification to its tax base.

For downgrade

  • Significant economic downturn that results in a sharp reduction in pledged ad valorem tax revenues.

To access rating and relevant documents, click here.


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