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Johnson County Public Building Commission bonds upgraded to ‘AAA’

Johnson County Public Building Commission’s rating from S&P Global Ratings for its Series 2017B bonds has been upgraded from “AA+” to “AAA” while affirming a stable financial outlook.

Last year, as a result of S&P Global’s review of the tax lid passed by the Kansas legislature, S&P Global had downgraded the debt issued by the Public Building Commission to “AA+” from “AAA,” while all other county debt remained “AAA.” Upon further review by S&P Global, the county’s PBC ratings are back up to “AAA.” Moody’s Investor Services & Fitch Ratings had previously confirmed their “AAA” rating of all county debt including PBC.

“We are pleased with the additional review that S&P Global conducted, reconfirming the triple-A-rating of our Public Building Commission debt,” said Chairman Ed Eilert.

S&P Global Ratings announced the “AAA” upgrade in a May 31 report posted online and submitted to the Department of Budget and Financial Planning. The Public Building Commission’s Series 2017B lease purchase revenue improvement and refunding bonds were upgraded.

“During the PBC’s 2017 debt sale, S&P rated the bonds one notch off of the county’s general obligation bonds,” said senior budget analyst Nate Blum. “This reflected the application of the credit rating agency’s non-ad valorem criteria and took into account the state tax lid, which limits the power of Kansas cities and counties to levy property taxes.”

On Jan. 22, 2018, S&P revised the guidelines and issued a revised rating for non-ad valorem debt, now on par with the county’s general creditworthiness (GO) bond rating. The upgraded rating moves the PBC Series 2017B debt in line with prior “AAA” ratings.

Johnson County Government created its own Public Building Commission (PBC), in accordance with state statutes, as a separate legal entity with a governing body composed of the members of the Board of County Commissioners.

In October 2017, the county announced receiving top ratings for its general obligation bonds by the nation’s bond-rating agencies — Moody’s Investor Services, S&P Global Ratings and Fitch Ratings.

PBC has the authority to acquire, build and/or renovate facilities and to lease facilities to the county. The PBC also has authority to issue revenue bonds to finance the acquisition, construction and/or renovation of facilities with repayment of the bonds financed with lease revenue from Johnson County.