Fitch Rates Regional SD No. 12, CT GOs `AA'

Business Wire, Sept 25, 2000

Business Editors

NEW YORK--(BUSINESS WIRE)--Sept. 25, 2000

Fitch assigns its `AA' rating to Regional School District No. 12, CT's $1,870,000 general obligation bonds.

Dated Oct. 1, 2000, the bonds are scheduled for competitive sale on Sept. 26 and will pay principal annually on each June 1 from 2003-2016. Additionally, the district's $4.1 million of outstanding general obligation bonds are also rated `AA'. Bond proceeds will be used to finance the district's share of project costs associated with roof replacement and paving at the Shepaug Valley Middle/High School.

The `AA' rating primarily reflects this affluent residential district's high wealth levels and the very modest burden that debt service places on district resources. The bonds are full faith and credit obligations of the district and its member towns.

Withdrawal of a member town from the district, or the dissolution of the district, does not relieve the towns or the district from their obligation to repay holders of outstanding indebtedness.

The district, located northeast of Danbury (general obligation bonds rated `AA+' by Fitch) and west of Waterbury (GO bonds rated `BBB'), owns and operates the Shepaug Valley Middle/High School and operates three other schools under a lease agreement with its member towns.

The district was formed in 1967 to facilitate the construction of a regional high school to serve the towns of Bridgewater, Roxbury, and Washington. Total population of the member towns, all incorporated in the 1700s, is estimated at 7,797, up 5.6% from the 1990 census.

Enrollment grew 2.3% annually between 1991-1999 to 1,168 (includes special education students), with most of the growth occurring at the middle/high school. Projections through 2004 show overall enrollment remaining stable.

The district has received national awards for excellence and student test scores are consistently above state and national averages. Approximately 77% of students continue their formal education.

Each town's share of district operating and debt service expenses is based on its proportional share of student enrollment in the prior year. The Town of Washington will contribute approximately 47.5% of the district's fiscal 2001 (ends June 30) budget, compared to 24.9% and 27.7% for the towns of Bridgewater and Roxbury, respectively.

The towns meet their obligations from unlimited ad valorem taxes. Payments are made to the district on a monthly basis in accordance with cash flow requirements. Unspent contributions are returned to member towns, which precludes the accumulation of fund balance by the district.

If any member town fails to appropriate for its proportional contribution to the district, the courts may order immediate payment of any deficiency, along with a set-aside equal to 25% of such deficiency for use in the subsequent year's budget.

The tax base of the member towns is largely high-income residential, with eight of the top 10 taxpayers represented by private residences. The top 10 taxpayers make up only 3.1% of assessed valuation. Taxable values grew 3.6% annually over the past five years, although a 1999 revaluation of property in the Town of Washington somewhat inflated the gains.

Estimated full market value of property per capita is a high $193,000. Income levels in all three member towns are well-above average, ranging from 120% of the state average in Roxbury to 136% in Washington. Unemployment rates for July 2000 were 1.2% in Bridgewater, 1.2% in Roxbury, and 1.7% in Washington, below the Danbury labor market and state averages of 1.8% and 2.4%, respectively.

The stable enrollment trend projected for the next few years should limit capital needs. The district's three primary schools underwent renovations in 1989 and the middle/high school was refurbished in 1994. This borrowing will undertake routine roof and paving improvements and will be partially funded by a state grant.

The district's overall debt level is a low $811 per capita and .4% of property market value. These figures include the borrowing of the underlying member towns. Self-supporting credit is given for the $1.2 million of outstanding principal to be funded by state grants. Principal retirement, including this issue, is a rapid 76% in 10 years.

Fitch is an international rating agency that provides global capital market investors with the highest quality ratings and research. Dual headquartered in New York and London with a major office in Chicago, Fitch rates entities in 75 countries and has some 1,100 employees in more than 40 local offices worldwide.

The agency, which is a combination of Fitch IBCA and Duff & Phelps Credit Rating Co., provides ratings for Financial Institutions, Insurance, Corporates, Structured Finance, Sovereigns and Public Finance Markets worldwide.