Rating Action: Moody’s downgrades North Montco Technical Career Center, PA’s revenue rating to Aa2; assigns Aa2 issuer ratingGlobal Credit Research – 26 Mar 2021New York, March 26, 2021 — Moody’s Investors Service has assigned a Aa2 issuer rating to North Montco Technical Career Center, PA (the “TCC”). The issuer rating reflects the TCC’s ability to repay debt and debt-like obligations without consideration of any pledge, security, or structural features. Concurrently, Moody’s has downgraded the revenue rating on the TCC’s bonds to Aa2 from Aa1, affecting $6.6 million in rated debt outstanding. This action concludes a rating review of direction uncertain initiated on January 26, 2021 in conjunction with the release of the US K-12 Public School Districts Methodology.Please click on this link http://www.moodys.com/viewresearchdoc.aspx?docid=PBM_PBM907003676 for the List of Affected Credit Ratings. This list is an integral part of this Press Release and identifies each affected issuer.RATINGS RATIONALEThe TCC’s Aa2 issuer rating reflects the service area’s strong resident income and wealth, and the growing enrollment trend which is expected to stabilize due to the facility’s lack of additional capacity. The rating also incorporates the healthy and improving reserve position, low liabilities, and modest fixed costs. The pandemic has not had a material impact on the TCC, as it receives its revenues from its participating school districts, state aid, and federal grant money.The revenue rating was downgraded one notch because it is equivalent to the Aa2 issuer rating, as the revenue rating reflects North Montco Technical Career Center’s non-contingent general promise to pay its debt service in the form of sublease rental payments. The debt service is ultimately secured by the participating school districts’ full faith and credit, general obligation pledges.RATING OUTLOOKOutlooks are not typically assigned to local governments with this amount of debt outstanding.FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS- Strengthening in resident wealth- Continued growth in reserve position- Significant reduction in leverageFACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS- Material decline in reserve position- Sustained enrollment declines- Deterioration of resident wealth and income- Large increase in leverageLEGAL SECURITYThe TCC’s debt is ultimately secured by the revenue that it receives from participating school districts, other than Perkiomen Valley School District (“PVSD”), which prepaid its share of the costs of the financed project. The TCC is the sub-lessee of the facility from the Pennsylvania State Public School Building Authority (SPSBA), which is the lessee of the facility from the TCC and the participating school districts.Debt service – in the form of sublease rental payments – is paid to the trustee, as assigned by the SPSBA. The below-mentioned participating school districts, other than PVSD, are obligated to pay allocable shares of any rentals payable by the TCC, including the sublease rentals. Additionally, other than PVSD, the participating school districts have pledged their full faith and credit, general obligation taxing power to pay their required share of debt service payments. Withdrawal from the TCC does not relieve a district of its obligation to pay its allocable share of sublease rentals.PROFILENorth Montco Technical Career Center is an Area Vocational Technical School created pursuant to the provisions of the Pennsylvania School Code of 1949 for the purpose of providing vocational, technical and career education to the students in its participating districts: Methacton School District (Aa2), North Penn School District (Aa1 stable), Perkiomen Valley School District, Souderton Area School District (Aa3), and Wissahickon School District (Aaa stable). The TCC enrolls approximately 1040 students and provides 22 different programs, including auto collision repair, automotive technology, biotechnology, computer integrated machining, construction carpentry, cosmetology, culinary arts, mechatronics, and welding & fabrication. The TCC also provides an allied health program at Abington – Lansdale Hospital.METHODOLOGYThe principal methodology used in these ratings was US K-12 Public School Districts Methodology published in January 2021 and available at http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBM_1202421. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.REGULATORY DISCLOSURESThe List of Affected Credit Ratings announced here are all solicited credit ratings. Additionally, the List of Affected Credit Ratings includes additional disclosures that vary with regard to some of the ratings. Please click on this link http://www.moodys.com/viewresearchdoc.aspx?docid=PBM_PBM907003676 for the List of Affected Credit Ratings. This list is an integral part of this Press Release and provides, for each of the credit ratings covered, Moody’s disclosures on the following items:- Rating Solicitation- Issuer Participation- Participation: Access to Management- Participation: Access to Internal Documents- Disclosure to Rated Entity- EndorsementFor further specification of Moody’s key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody’s Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody’s rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider’s credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. 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