Moody’s gives one Weld district lowered rating

KERSEY – A rural Weld County school district’s dependence on the oil and gas industry for its property-tax base has led to a lowered rating of its bonds as an investment.

Citing the fact that 93.4 percent of the assessed value in the Kersey-based Platte Valley Re-7 School District is tied to oil and gas interests, Moody’s Investors Service, which has been in the bond-rating business for 105 years, last week assigned an A2 rating to the $16.7 million bond issue passed by the district’s voters in November.

Voters in two other Weld County school districts — Grover-based Pawnee Re-12 and Ault-based Highland Re-9 — also passed bond issues in November. All three received enhanced ratings of Aa2, the second-highest investment rating available, but Platte Valley received an underlying rating of A2, one step below Aa2. Still, Moody’s considers A2 an “upper medium” rating.

Enhanced ratings take into account Colorado’s State Intercept Program, which serves as insurance against default, but Platte Valley’s administration had asked for the standalone rating as well so that its bonds could be judged on their own merits.

Moody’s listed “substantial industrial and taxpayer concentration with a dependence on oil” and “small scale of operations” as challenges for the Platte River district, which has nearly 1,200 students. Some district strengths were listed as well, however, including strong financial management, adequate reserves, individual wealth that is slightly above average and relatively low unemployment.

The report by Moody’s analysts said the rating could improve if the district’s industries and taxpayers could diversify away from the energy sector, if enrollment grew and if the district could add to its reserves.

Triggered by development tied to the oil and gas industry, the Platte Valley district’s assessed value has grown to a 2015 estimated value of $2.2 billion, nearly 50 percent higher than it had in 2013.

The Platte Valley district encompasses a wide area east of Greeley, extending several miles north and south of U.S. Highway 34 and nearly halfway to Fort Morgan.

Pawnee and Highland also received their enhanced ratings this month but didn’t request the standalone rating.

Ninety-seven percent of property values in Pawnee, which has fewer than 100 students, are dependent on oil and gas interests. It planned to sell its bonds Jan. 6. The district serves the northeastern Weld County communities of Pawnee, Hereford and Keota.

Highland, which serves the communities of Ault, Pierce, Nunn and Carr, has about 850 students. It split the $10.7 million bond issue passed by voters into two sales. The first, for $8.5 million, was to close today, with the remaining $2.2 million in bonds to be sold in January.

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