KBRA assigns a AAA Rating to Harris County, TX’s Permanent Improvement Refunding Bonds, Series 2023A and Unlimited Tax Road Refunding Bonds, Series 2023A. KBRA additionally affirms the long-term AAA rating for the County’s outstanding Tax and Subordinate Lien Revenue Certificates of Obligation. The rating Outlook is Stable.

Key Credit Considerations

The rating was assigned because of the following key credit considerations:

Credit Positives

■ Sizable and diversifying economy, centered around the nation’s fourth largest city, that has benefitted from above average property tax base growth.

■ Strong financial profile supported by generally favorable operations and considerable balance sheet resources, derived from stable property tax collections.

■ Robust financial management practices, including a comprehensive budgeting process, frequent intra-fiscal year monitoring, and the recent introduction of a funding (reserve) policy for the Contingency Fund.

Credit Challenges

■ Slightly elevated overall net debt burden when considering debt issued by various overlapping entities, which is partially offset by the County’s limited unfunded pension liability.

■ Susceptibility to significant storm activity given its domicile on Texas’s Gulf Coast, as evidenced by Hurricane Harvey and other tropical systems.

Rating Sensitivities

For upgrade

■ Not applicable for this rating level.

For downgrade

■ A sizable and sustained economic contraction for the County / Houston MSA.

■ A material and sustained degradation in operating reserves and available liquidity.

To access rating and relevant documents, click here.

Methodologies

Public Finance: U.S. Local Government General Obligation 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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