KBRA Affirms AA+ Rating, Stable Outlook for Midland County Hospital District, Limited Tax General Obligation Bonds
9 Aug 2024 | New York
KBRA affirms a long-term AA+ rating for the Midland County Hospital District, Limited Tax General Obligation 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.
The Stable Outlook reflects KBRA’s expectation that the pledged ad valorem tax revenues will continue to grow in line with historical growth trends to support the District’s operations and debt services and that the experienced management team will continue to manage Midland’s debt profile and hospital operations effectively.
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 $0.0731/$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 31.95% of TAV for FY 2024.
Rating Sensitivities
For Upgrade
- Diversification to its tax base.
For Downgrade
- Significant economic downturn that results in sharp reduction in pledged ad valorem tax revenues.
To access rating and relevant documents, click here.