KBRA Assigns Travis County Hospital District, TX Certificates of Obligation AA+, Stable Outlook

KBRA assigns a AA+ rating with a Stable Outlook to the Travis County Hospital District, TX Certificates of Obligation, Series 2023A (Limited Tax) and Taxable Series 2023B (Limited Tax). The Certificates are payable from receipts of a separate, distinct and continuing ad valorem tax levied, within the limits prescribed by law, on all taxable property within the District. At the election creating the District, County voters authorized an ad valorem tax rate of $0.25 per $100 of taxable property, with such limit applicable to all District purposes, including operations and debt service. In addition to the ad valorem tax pledge, the Certificates are secured by and payable from surplus revenues derived from the District’s healthcare facilities, with such pledge being limited to $1,000 per year.

Key Credit Considerations

Credit Positives:

• Strength and diversity of the District's large and growing tax base.

• Solid legal framework supporting Certificate repayment.

Credit Challenges:

• Capital needs associated with an expansive footprint and the provision of direct care in select specialties.

• Challenges inherent to serving an indigent population that is largely uninsured or underinsured.

Rating Sensitivities

For Upgrade:

• Capital needs associated with an expansive footprint and the provision of direct care in select specialties.

For Downgrade:

• Sharp secular deceleration in tax base growth pressuring organic growth of ad valorem tax support.

The Stable Outlook reflects KBRA’s expectation that tax base growth will continue in line with historical trends, facilitating on going ad valorem tax support for both District operations and debt service. The Outlook further assumes that future capital improvements and patient care activities will be accommodated within budget and without necessitating significant increases in the tax rate.

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Methodologies

Public Finance: General Property Tax/Assessment Revenue Methodology

Public Finance: U.S. Not-For-Profit Healthcare Rating Methodology

ESG Global Rating Methodology

Disclosures

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.

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