Cameron Park Community Services District (CA) Affirmed at A+

2008-11-14 00:58:02 -

In the course of routine surveillance, Fitch affirms the 'A+' rating on Cameron Park Community Services District (the district), California's $8.2 million outstanding general obligation (GO) bonds. The Outlook is Stable.
The rating primarily reflects the district's conservative management, solid fund balance levels and low debt levels. Credit concerns include the deterioration of the regional housing market that could pressure revenues going forward. The district is located in El Dorado County, northeast of Sacramento. The district is not incorporated but provides fire, park and recreation services to the roughly 5000 households for which it charges residents a property tax. All other services are provided by the county.
The district began managing its own accounting in fiscal 2008, a duty previously performed by the county. The district has been able to improve its efficiency and consequently realize sizable savings, which it has used to increase reserve levels in expectation of slowing revenues. The district's debt is equal to a low $508 per capita. The initial offering will not be sufficient to complete the construction of the new community center as originally planned. Therefore, the project will be split into three phases; the first two to be completed in the summer of 2010 and the final phase to be postponed for 5-10 years at which point the district may issue more debt. It is Fitch's assessment that the current capital plan is manageable.
The area surrounding the district has experienced significant pressure from the deteriorating housing market, which could pressure revenues going forward. Although the district is only a small portion of the Sacramento MSA, home prices have declined in the area approximately 40% since 2006 according to the National Association of Realtors.
Fitch issued an exposure draft on July 31, 2008 proposing a recalibration of tax-supported and water/sewer revenue bond ratings which, if adopted, may result in an upward revision of this rating (see Fitch research 'Exposure Draft: Reassessment of the Municipal Ratings Framework'.) At this time, Fitch is deferring its final determination on municipal recalibration. Fitch will continue to monitor market and credit conditions, and plans to revisit the recalibration in the first quarter of 2009.
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