S&P: Posey County Indiana Jail Building Corp., IN 2016 Bonds Assigned 'AA-' Rating
The bonds are secured by semiannual lease rentals paid by the county directly to the trustee. Lease rentals are payable from ad valorem property taxes, as well as by county option income taxes (COITs). The county intends to use COIT revenues to pay debt service, and forego a tax levy.
"The 'AA-' rating solely reflects the ad valorem tax pledge, which we view as the stronger of the two," said S&P Global Ratings credit analyst John Sauter.
The county plans to use bond proceeds, in addition to more than $3.5 million of cash on hand, to renovate and expand the county jail.
Posey County has an estimated population of 25,316 in the far southwest corner of the state, bordering both Illinois and Kentucky. The county seat of Mt. Vernon is about 20 miles west of Evansville.
"The stable outlook reflects our expectation that Posey County will maintain its very strong available cash reserves and operationally balanced financial results, given its stable revenues and low fixed costs," added Mr. Sauter. While the county has both tax base and employment concentration, we do not anticipate deterioration in the population or job base. We therefore do not anticipate changing the rating within the two-year outlook horizon.
We could raise the rating if there is softening of either the tax base or employment concentration, which would likely be outside of the outlook horizon. More formalized financial management practices could also contribute to a higher rating in the future. Conversely, we could lower the rating if the budget falls out of balance and, or if cash reserves are drawn down by substantial amounts.