By LISA MACNEIL
The Board of County Commissioners (BOCC) learned at the regular meeting on September 8, 2020 that the county’s Water and Sewer Revenue Bonds have been upgraded to ‘AA+’ from ‘AA’. Fitch Ratings, Inc., also assessed a ‘Standalone Credit Profile’ (SCP) of the County’s Water and Sewer system at ‘aa’, and issued an ‘Outlook’ of Stable.
Clerk of Court and Comptroller Doug Chorvat told the board, “Any time you get an increase in a rating, it’s a definite positive … a year ago we were downgraded in another revenue.” The increase in ratings could potentially attract investors, resulting in increased funding for new projects. Current projects have been considered and used as part of the basis for the ratings.
Commissioner John Allocco commented that bond ratings discussions are not a particularly interesting topic during meetings, but that these increases are positive for the county.
Finance Director Amy Gillis credited Utilities Director Gordon Onderdonk’s leadership with the ratings increase. Commenting on future projects, Gillis stated that issuing bonds instead of using cash for future projects could save the county money over the long run.
Onderdonk recognized his staff and complimented them on their pride and ability to identify easier and more efficient ways of tackling projects. He described the department’s Regionalization Plan, which involves the removal of small neighborhood water treatment plants and building new public supply wells with modern infrastructure and technology.
In a review of the County’s Water & Sewer (W&S), Fitch Ratings, Inc., issued:
• An upgrade of the W&S revenue bonds to ‘AA+’ from ‘AA’.
• A Standalone Credit Profile (SCP) of the system at ‘aa+’.
• An ‘Outlook’ of stable.
Highlights of the review include the following:
A. VERY STRONG REVENUE DEFENSIBILITY with very strong rate flexibility, Fitch Ratings, Inc., cites “rates are affordable for over 84% of the population” and “believes the continuity of ongoing rate increases is attainable, notwithstanding the current and likely prolonged period of economic stress.”
B. VERY LOW OPERATING RISK PROFILE highlighted by an “operating cost burden comfortably below Fitch Ratings Inc., $6,500 per million gallons (mg) of water and sewer flows related to the ‘aa’ sub-factor assessment.” This is in comparison to the County’s water and sewer operating cost burden of a low $3,521/mg in 2019. Very low capital spending was also cited as a positive factor.
C. VERY STRONG FINANCIAL PROFILE cited by very low debt in comparison to funds available for debt service. A lower rate in this important measurement is viewed as positive. The County’s ratio went from 4.2x in 2015 to a very low 2.5x in 2019. This means they have 2.5 times what they need to pay currently outstanding debt service. Fitch Ratings, Inc., expects cash levels to remain solid. Also, senior lien and total debt service coverage for 2019 was very good at 5.1x and 2.6x, respectively. Fitch Ratings, Inc., believes some future revenue declines may be experienced due to the coronavirus pandemic.