KBRA Assigns AA Rating, Stable Outlook, to Jacksonville Transportation Authority Senior Lien Local Option Gas Tax Refunding Revenue Bonds, Series 2024 and Senior Lien Local Option Gas Tax Refunding Revenue Bonds, Series 2025

KBRA has assigned a long-term rating of AA, with a Stable Outlook, to Jacksonville Transportation Authority Senior Lien Local Option Gas Tax Refunding Revenue Bonds, Series 2024 and Senior Lien Local Option Gas Tax Refunding Revenue Bonds, Series 2025.

Key Credit Considerations

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

Credit Positives

• JTA’s share of Pledged Revenues has comfortably covered debt service, even throughout the pandemic. It is expected that this revenue stream will remain supportive of coverage based on a decline in debt service associated with the refunding, in combination with an expected flat to slight increase in revenues.
• The Bonds have a short average life, with a final maturity on August 31, 2036 (12 years). No additional parity debt is planned to fund the completion of JTA projects, although additional debt is authorized in accordance with the Trust Agreement.
• The population base underpinning the LOGT pledge is growing at a rate comparable to that of the state, and significantly faster than the nation. As population and jobs expand, it is expected that there will be incremental vehicular traffic to support the LOGT base.

Credit Challenges

• Pledged Revenues are vulnerable to shifts in consumption related to fuel price fluctuations, changing driving patterns, and increasingly fuel-efficient vehicles.
• Structural weaknesses in security provisions include the lack of a debt service reserve fund, and the termination of the Interlocal Agreement within 30 days of the final maturity of the Series 2024 and Series 2025 Bonds (although the LOGT itself has been extended to August 1, 2046). This structural shortcoming limits flexibility in the event of a shortfall or delay in deposit of Pledged Revenues

Rating Sensitivities

• Growth in Pledged Revenues that generates increased debt service coverage.
• Potential for debt service coverage declines to a level no longer consistent with the rating level, due to changes in consumption patterns.

To access rating and relevant documents, click here.

Methodologies

• Public Finance: U.S. Special Tax Revenue Bond 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.

Doc ID: 1005941

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