KBRA assigns a long-term rating of AAA to the Harris County Flood Control District (TX) Improvement Refunding Bonds, Series 2023A (Sustainability Bonds). KBRA additionally affirms the long-term rating of AAA for the District’s outstanding parity Improvement Bonds. The rating Outlook is Stable.

Key Credit Considerations

The rating actions reflect the following key credit considerations:

Credit Positives

• Sizable and diversifying economy, centered around the Nation’s fourth largest city, which has benefited from above average property tax base growth.
• Historically stable property tax collections through a variety of economic cycles, which KBRA believes demonstrates the area’s economic and tax base resilience.
• Ample headroom between levied District Tax rate and the statutory maximum rate.

Credit Challenges

• Susceptibility to significant storm activity given its domicile on Texas’s Gulf Coast, as evidenced by Hurricane Harvey and other tropical systems, which have necessitated borrowing to bolster infrastructure resiliency.

Rating Sensitivities

For Upgrade

• Not applicable at AAA rating level.

For Downgrade

• A sizable and sustained economic contraction for the County / Houston-The Woodlands-Sugarland MSA, resulting in a material reduction in the tax base.

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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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