The Rating Outlook is Stable.
The bonds are secured by a pledge and first lien on net revenues of the system.
KEY RATING DRIVERS
CONSERVATIVE FINANCIAL MANAGEMENT: Conservative management is evidenced by a stable operating history, historically strong debt service coverage and sound liquidity.
RATE FLEXIBILITY: Water and sewer rates remain well below 2% of median household income (MHI) despite annual pass-through of rate hikes and above-average per-customer water use. High wealth levels afford this flexibility given that the local MHI is 3x the national average.
LOW DEBT; LIMITED CAPITAL NEEDS: The system features low leverage with rapid amortization, and limited capital needs that are being funded on a pay-go basis.
RELIANCE ON WHOLESALE PROVIDER: The city is susceptible to operating cost pressure from
STABLE SERVICE AREA: The city's water and sewer system provides an essential service to a small but stable service area within the broad and diverse
MAINTENANCE OF STRONG FINANCIAL POSITION: The rating is sensitive to shifts in fundamental credit factors. Preservation of the system's solid financial profile and modest debt levels consistent with the high credit rating is a key consideration. The Stable Rating Outlook reflects Fitch's opinion that such changes are unlikely.
The city (GO bonds rated 'AAA' by Fitch) is located in the
STRONG FINANCIAL METRICS
Annual debt service (ADS) coverage levels in fiscal 2009-2013 have ranged between 1.3x to a high 3.8x net of pay-go spending and transfers out to the general fund for administrative overhead and franchise fees. The city annually budgets coverage levels at a minimum of 1.2x, taking into account transfers out to the general fund and
The city maintains rate flexibility as user charges are slightly below the average of seven other regional cities. Moreover, it is the city's policy to pass through rate increases of TRA and, as such, annual rate hikes have been implemented to maintain its strong financial metrics. The system's outstanding debt is low and future capital needs, which are planned to be funded on a pay-go basis, are limited. Fitch rates TRA's revenue bonds 'AA+.'
RELIANCE ON WHOLESALER
Treated water is provided by the
Additional water supply needs may be met through TRA capacity, or the city may purchase treated water from the city of
The city's wastewater is treated by
Additional information is available at 'www.fitchratings.com'.
In addition to the sources of information identified in Fitch's Tax-Supported Rating Criteria, this action was additionally informed by information from Creditscope,
--'Tax-Supported Rating Criteria' (
--'U.S. Local Government Tax-Supported Rating Criteria' (
Tax-Supported Rating Criteria
U.S. Local Government Tax-Supported Rating Criteria
Source: Fitch Ratings
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