Bangkok--25 Jan--Standard & Poor's
Standard & Poor's Ratings Services assigned its 'AA-' issuer credit rating (ICR) to the Columbia Housing Authority (CHA), S.C. The outlook is stable. Click here to view the report.
The ICR reflects what we view as the authority's strengths, including:
A moderate likelihood of extraordinary government support from the federal government resulting in a one-notch upgrade to 'AA-' from the stand-alone 'A+' credit rating on CHA pursuant to our government-related entity criteria under which we assess a strong link and a limited role of importance between the federal government and CHA;
Effective management of development projects that has increased the authority's diversification of income while meeting the overall affordable housing needs in its mission.
Very strong essentiality for CHA housing evidenced by a very long waiting list of applicants for public housing and housing choice vouchers, which well exceeds the number of units available;
A strong financial position with very strong liquidity, leverage, and capital adequacy ratios despite current long-term debt levels; and
A senior management team whose members have significant public housing industry experience.
These strengths are offset, in our opinion, by the following weaknesses:
The recent trend of reducing federal funding streams, including the underfunding of federal operating fund subsidies and the decrease in federal capital fund grants; and
An aggressive long-term capital plan for development and revitalization that could require significant funding, which could put the authority in the position of increasing its capital contribution and possibly further reducing its net working capital.
"The rating reflects what we view as CHA's strong management in the past three years as evidenced by steady operational performance and financial ratios," said Standard & Poor's credit analyst Valerie White.
We base the stable outlook on our view of CHA's strong financial position, experienced senior management team, and business model that we believe addresses Columbia's long-term redevelopment needs while potentially providing an alternative source of nontraditional revenue for the housing authority. Current and future market demand for low-income housing outweighs CHA's planned portfolio, evidencing a strong need for this segment of the housing market. A key factor to maintaining the rating, however, will be CHA's ability to leverage the needed resources to continue to carry out its development plan, and to manage any new debt obligations. Standard & Poor's believes that CHA's ability to engage in business activities that provide the organization with additional income sources could have a positive affect on the rating on the agency. However, a continued decline in the federal subsidy without CHA having the ability to maintain or increase additional leveraged resources, its net working capital, or its profitability position could, in the long term, impair the authority's financial strength and have a negative credit impact.
CHA has almost 1,900 housing units in 28 properties providing housing for approximately 10,000 families throughout the city of Columbia and Columbia County, S.C. In addition, CHA administers about 3,400 housing choice vouchers.
RELATED RESEARCH
General Criteria: Enhanced Methodology And Assumptions For Rating Government-Related Entities, June 29, 2009
USPF Criteria: U.S. Public Housing Authority Issuer Credit Rating, Nov. 13, 2007
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Media Contact:
Ana Sandoval, New York (1) 212-438-5095,
[email protected]
Analyst Contacts:
Valerie White, New York (1) 212-438-2078
Mikiyon Alexander, New York (1) 212-438-2083
Key Contacts:
Americas Media Relations: (1) 212-438-6667
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[email protected]
Americas Customer Service: (1) 212-438-7280
[email protected]