Miami-Dade County Industrial Dev. Auth., FL — Moody’s assigns Ba2 to Miami Community Charter Schools, Inc., FL’s revenue bonds; outlook is stable
Rating Action: Moody’s assigns Ba2 to Miami Community Charter Schools, Inc., FL’s revenue bonds; outlook is stableGlobal Credit Research – 13 Jan 2022New York, January 13, 2022 — Moody’s Investors Service has assigned a Ba2 rating to the Miami-Dade County Industrial Development Authority’s Educational Facilities Revenue Bonds (Miami Community Charter Schools, Inc. Project), Series 2020A ($6.9 million), Taxable Series 2020B ($285,000), Series 2022A ($11.3 million) and Taxable Series 2022B ($175,000). Moody’s has also assigned a stable outlook.RATINGS RATIONALEThe Ba2 rating assignment reflects Miami Community Charter School’s (MCCS) operations within a challenging service area that includes strong competition from a large number of traditional public and charter school options. Within this environment, MCCS serves a highly transient population with that is exposed to a variety of socio-economic factors that make consistently maintaining high academic output particularly challenging. While academic performance had recently improved from very low levels, it is showing some indications of weakening as a result of learning loss driven by the pandemic. Academic weakness in prior years led the charter’s sponsor to place the elementary school on a one-year review before granting a five year charter renewal. Overall, MCCS has a well-established history of multiple charter renewals and adequate prospects for additional renewal. Governance is considered a key credit driver in this rating. MCCS has also demonstrated an ability to manage competition as indicated by stable enrollment growth and sizeable waiting lists. The financial performance of MCCS shows satisfactory cash and stable operations. Leverage will increase significantly with the issuance of the 2022 bonds. The rating also considers MCCS’s legal covenants, which include a somewhat weaker than typical debt service coverage covenant.RATING OUTLOOKThe stable outlook reflects Moody’s expectation that MCCS will continue to produce consistent enrollment and effectively manage the charter renewal process. The outlook also anticipates that cash and coverage will remain in line with the rating and that the construction of the new school facilities will be completed on time and foster some additional enrollment growth.FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS- Sustained operating surpluses that result in material improvement to liquidity and coverage- Steady and material enrollment growth- Consistent improvement to academic outcomes and stronger competitive profileFACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS- Operating deficits that drive declines to debt service coverage and liquidity- Deterioration of academic performance resulting in pressure on charter renewal – Enrollment declines LEGAL SECURITY The bonds are issued by the Miami-Dade County Industrial Development Authority (IDA) but are not a debt, liability or general obligation of the IDA.The bonds are payable and secured by the Trust Estate, which consists of the consolidated gross revenues and amounts derived from recourse to the mortgage.USE OF PROCEEDSThe 2020 bonds were issued to refund the 2010 issuance, which was originally issued to fund the acquisition and construction of the middle and high school. Proceeds of the 2022 bonds will be used to finance the construction of new middle and high school facilities and repurpose the existing middle and high school facilities for use as the elementary school.PROFILEThe Miami Community Charter Schools, Inc. operates an elementary, middle, and high school, which opened in 2004, 2007, and 2009 respectively. The schools are operated pursuant to three separate charters granted by the Miami-Dade County Public Schools. As sponsor of the charters, Miami-Dade County Public Schools have the authority to terminate or renew the charter based on MCCS’s performance relative to various conditions.The schools are located in Florida City, Florida about an hour south of the City of Miami and contiguous with Homestead, Florida. Florida City also borders Everglades National Park.METHODOLOGYThe principal methodology used in these ratings was US Charter Schools published in September 2016 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBM_1039451. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.REGULATORY DISCLOSURESFor further specification of Moody’s key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. 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