Summary: Public Finance Authority, Wisconsin; Auxiliary - Stand Alone

S&P Global Ratings lowered its long-term bond rating to 'CCC-' from 'B-' on Public Finance Authority (PFA), Wis.' series 2019 student-housing revenue bonds, the proceeds of which were used to finance the construction of student housing on the campus of Nevada State College (NSC), a member of the Nevada System of Higher Education (NSHE). The outlook is negative. The three-notch downgrade reflects the project's insufficient revenues to fund debt service payments and a draw on the debt services reserve fund (DSRF) to fund the Nov. 1, 2021 debt service payment. The project continues to experience very weak occupancy levels (with an approximate current occupancy of 40%) which has led to corresponding lower rental revenue as a direct result of the

...85% occupancy that was originally projected for the first and second year of operations. While we understand that there continues to be considerable outreach to prospective students marketing the traditional campus experience and new facilities, we believe the leasing of the facilities in the near term will remain challenged. American Public Development (APD), American Campus Communities (ACC), and NSC meet on a regular basis regarding the development and management of the project, with good cooperation between the three. In addition to construction delays, the project's operating budget has also faced delays, given projected revenue short falls, construction delays, and other operational items. We understand that with a current occupancy rate around 40%, due to substantial cuts in operating costs, including insurance costs, the project is not quite at a break-even occupancy level, but close; however, this excludes debt service costs. Absent any direct financial support from an external...

Summary