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Florida And South Carolina Local Governments' Credit Quality Remains Sound Despite Damage From Hurricane Ian

Since Hurricane Ian made landfall as a Category 4 storm in Florida on Sept. 28 and later hit South Carolina as a Category 1 hurricane on Sept. 30, S&P Global Ratings has been evaluating its effect on rated municipalities in its path. In our experience, many local governments--even those in the direct line of the storm--often do not sustain damage that we consider detrimental to long-term credit quality. In such cases, we communicate with each issuer to ensure we understand the extent of long- and short-term damage.

We have already completed full reviews on the four Florida local governments and three related utilities most directly affected by the storm. For more details, see "Six Florida Local Governments And Utilities Feel The Effects Of Hurricane Ian, With One Outlook Change," published Oct. 28, 2022, on RatingsDirect. Since then, we analyzed 21 local governments (see tables), as they are special assessment districts in Lee County, Fla. that we thought may be vulnerable, rated barrier islands within proximity of the initial landfall area, or issuers in the storm's path that attract high market interest.

For these issuers, we have reviewed storm-related information and current fiscal conditions and have determined there is no credit impact at this time. In our assessment of an issuer following a major storm, our questions focus on the extent of the damage and the availability of insurance coverage or Federal Emergency Management Agency (FEMA) reimbursements, available liquidity to address needs and maintain operations, and management's ability to quickly address the damage. Local governments in Florida generally hold higher levels of liquidity and reserves in comparison with the national average to contend with weather event risks from year to year. In addition, most procure disaster recovery contracts to assist with filing appropriate claims for reimbursement of costs for damages, from insurance and FEMA. For more information on what we assess after a storm event and how it could affect credit quality, see "Hurricane Ian: What Comes Next For Government And Related Credits In The Storm’s Broad Path?," published Oct. 3, 2022.

Hurricane Ian's Impact

We view some city and county locations as particularly vulnerable to future storm risk, given their location on a barrier island or directly on the coast, such as Longboat Key, Fla. or Sullivan's Island, S.C. However, even the most vulnerable locations did not sustain significant damage nor were operations significantly disrupted. Reported public infrastructure damages for the issuers below ranged from none to $19 million, which will likely be covered by insurance or reimbursed by FEMA. For the majority of local governments, it is too early to estimate impact to the property tax base.

Based on our survey, Orange County Schools, Fla. and Georgetown County, S.C. reported the most damage. Orange County Schools experienced initial disruption and material damage primarily due to flooding at one of its elementary schools, which remains closed due to additional maintenance needs; students from this elementary school are attending classes at an alternate school. All district students will make up the missed days within the remainder of the school year. Although the county school facilities reported about $19 million in damage, this equates to only 4.4% of reserves, and we believe there is no effect on the organization's credit quality. In addition, damage to Georgetown County's public infrastructure, which includes state infrastructure, roadways, and beach access, is estimated to total $5.7 million, which will count toward a statewide threshold of about $9 million set by FEMA that South Carolina has for public assistance. We do not believe this will materially weaken the county's very strong financial profile. Damage estimates for county beaches will take longer to finalize and the U.S. Army Corps of Engineers is in the process of surveying the beaches. As of Oct. 3, 2022, most of the county's water and electric systems were fully restored and most debris cleared.

Tables 1 to 5 summarize the issuers we reviewed and contain an estimate of related storm damage to public infrastructure. All financial information reported is as of each respective obligor's fiscal 2021 audit.

Table 1

Obligor Rating/Outlook Assessed value ($'000s) Liquidity ($'000s) Liquidity (% debt service) Reserves ($'000s) Reserves (% expenditures) Estimated damages ($'000s)
Charleston, SC AAA/Stable 1,757,236 227,367 578.48 115,172 59.43 Minimal
Jacksonville, FL AA/Stable 66,872,806 1,391,154 840.59 395,955 33.40 Minimal
Longboat Key, FL AA+/Stable 6,106,888 35,852 562.50 11,200 70.70 <500
North Charleston, SC AA/Stable 848,023 82,455 304.41 51,790 45.77 Minimal
Sullivan's Island, SC AA/Stable 83,812 13,271 593.52 6,946 98.58 Minimal

Table 2

Obligor Rating/Outlook Assessed value ($'000s) Liquidity ($'000s) Liquidity (% debt service) Reserves ($'000s) Reserves (% expenditures) Estimated damages ($'000s)
Charleston County, SC AAA/Stable 4,875,778 727,355 758.30 109,818 45.55 Minimal
Georgetown County, SC AA-/Stable 575,951 99,209 1,140.46 13,082 43.49 5,700
Horry County, SC AA+/Stable 2,701,812 94,689 554.84 6,963 4.03 600

Table 3

School Districts
Obligor Rating/Outlook Assessed value ($'000s) Liquidity ($'000s) Liquidity (% debt service) Reserves ($'000s) Reserves (% expenditures) Estimated damages ($'000s)
Georgetown Cnty Sch Dist, SC A+/Stable 634,869 16,273 105 16,572 18.62 Minimal
Horry Cnty Sch Dist, SC AA/Stable 2,675,639 291,425 463 117,473 26.97 None
Orange Cnty Sch Brd, FL AA+/Stable 167,574,460 392,531 319 426,615 24.26 19,000

Table 4

Special Districts
Obligor Rating/Outlook Assessed Value ($'000s) Liquidity ($'000s) Liquidity (% debt service Reserves ($'000s) Reserves (% expenditures) Estimated damages ($'000s)
Lehigh Acres Fire Control and Rescue District A+/Stable 5,500,000 11,052 1,027 20,398 70.35 Minimal
South Florida Wtr Mgmt Dist AA+/Stable 1,138,372,030 385,138 1,269 47,982 40.92 Minimal

Table 5

Special Assessment Districts
Obligor Rating/Outlook No. of parcels Top 10 taxpayer concentration (%) Top 1 taxpayer concentration (%) Development stage Overall value-to-lien (x) Maximum loss to maturity (%) Estimated damages ($'000s)
Arborwood Community Development District, FL AA-/Stable 3,422 7.9 4.7 Fully built-out with most properties sold to end users 23.32 32.1 Minimal
Colonial Country Club Comnty Dev Dist, FL A-/Stable 1,779 1.1 0.2 Fully built-out with all properties sold to end users 28.79 2.2 Minimal
Habitat Cmnty Dev Dist, FL A-/Stable 1,891 1.7 0.1 Fully built-out with all properties sold to end users 66.33 3.2 130
Herons Glen Recre Dist, FL A-/Stable 1,300 2.1 1.2 Fully built-out with all properties sold to end users 8.62 5.7 Minimal
Moody River Estates Community Development District, FL A-/Stable 830 4.8 2.9 Mature development with most parcels built-out and some developer concentration or fully built-out with significant ownership by non-end users. 21.85 20.1 Minimal
Parklands Lee Community Development District, FL A-/Stable 340 8.0 0.8 Fully built-out with all properties sold to end users 44.89 10.0 None
Stoneybrook Community Development District, FL AA-/Stable 1,119 1.8 0.3 Fully built-out with most properties sold to end users 16.69 217.0 None
Villagewalk of Bonita Springs, FL A-/Stable 744 2.3 0.7 Fully built-out with most properties sold to end users 41.87 3.2 None

This report does not constitute a rating action.

Primary Credit Analysts:Jennifer K Garza (Mann), Dallas + 1 (214) 871 1422;
Lauren Freire, New York + 1 (212) 438 7854;
Victor M Medeiros, Boston + 1 (617) 530 8305;
Krystal Tena, New York + 1 (212) 438-1628;
Tyler Fitman, Boston (1) 617-530-8021;
Kaiti Vartholomaios, New York + 1(212) 438 0866;
Christian Richards, Washington D.C. + 1 (617) 530 8325;
Felix Winnekens, New York + 1 (212) 438 0313;
Anthony Polanco, Manchester + 1 (617) 530 8234;
Secondary Contacts:Charlene P Butterfield, New York + 1 (212) 438 2741;
Jane H Ridley, Centennial + 1 (303) 721 4487;

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