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KBRA Assigns AAA Rating to Harris County Flood Control District Bonds

Strategic Insights

— 1 min read

The Harris County Flood Control District, Texas Improvement Bonds Refunding Bonds Series 2025, Contract Tax Refunding Bonds Series 2025A, and outstanding Contract Tax Obligations have been assigned a long-term rating of AAA by Kroll Bond Rating Agency, LLC. This rating is also reflected in the affirmation of the long-term rating of AAA for the District's Limited Tax Obligations. The Stable rating outlook acknowledges the district's strong credit profile, driven by a sizable and diversifying economy, stable property tax collections, and a permanent increase in the O&M property tax levy.

Key Takeaways:

  • The Harris County Flood Control District's ratings reflect its strong credit profile, with a sizable and diversifying economy driving stable property tax collections.
  • The district's electorate approved a permanent increase in the O&M property tax levy in November 2024, providing an additional $100 million annually towards mitigating flood risks and protecting the property tax base.
  • The district's abundant headroom between its levied tax rate and the statutory maximum rate supports its credit profile.
  • However, the district's susceptibility to significant storm activity due to its location on the Texas Gulf Coast poses a credit challenge, as evidenced by hurricane activity.
  • The district has borrowed to bolster infrastructure resiliency, a key factor in maintaining its credit profile.
  • The permanent increase in the O&M property tax levy will provide an additional revenue stream to fund flood risk mitigation and property tax base protection.
  • The district's AAA rating reflects its strong economic and tax base resilience, demonstrated through various economic cycles.

Statistics:

  • The district's property tax base growth has been above average, benefiting from its diversified economy.
  • The permanent increase in the O&M property tax levy will provide an additional $100 million annually.
  • The district's levied tax rate is significantly lower than the statutory maximum rate (approximately 65% vs. 100% statutory limit).
  • Approximately 100 million is the estimated annual revenue increase from the permanent O&M tax levy increase.

Sources:

  • Kroll Bond Rating Agency, LLC news release (no specific date)
  • KBRA, "KBRA Assigns AAA Rating to the Harris County Flood Control District, TX" (no specific date)

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