Bangkok--30 Oct--Standard & Poor's
Standard & Poor's Ratings Services raised its rating and underlying rating (SPUR) to 'AA' from 'A+' on Ute Water Conservancy District, Colo.'s outstanding water revenue bonds and assigned its 'AA' rating to the district's $15.5 million water revenue refunding bonds, series 2009. The outlook is stable.
"The raised rating reflects the district's maintenance of strong debt service coverage averaging 2.2x in fiscals 2004-2008," said Standard & Poor's credit analyst Paul Dyson. "In addition, the district has maintained very strong liquidity levels, currently exceeding three years of operations, which we expect to remain strong given the district's limited capital needs and lack of additional bonding plans."
Financial operations have been strong, and the district has considerable rate flexibility given that its rates are currently low. For fiscal 2008, system revenues provided annual debt service coverage of 2.3x including tap fees and 1.3x excluding tap fees. Coverage has been relatively consistent since 2004 and has averaged approximately 2.2x, ranging from 1.8x to 2.7x . Given the economic downturn, development in the district has slowed -- connection fees fell 20% in fiscal 2008, and the district is projecting an additional 13% decline for fiscal 2009. Estimated fiscal 2009 coverage of maximum annual debt service is 2.1x, or 1.2x without connection fees. Cash levels have been very strong during fiscals 2004-2008, with unrestricted cash and investments at no less than $34 million. The district's liquidity in fiscal 2008 totaled $36.8 million, or more than four years' worth of operating expenditures. The district expects that cash will decline to $31.6 million, or 3.6 years of operations, in fiscal 2009, and to approximately $27 million, or a still very strong three-plus years of operations, in fiscal 2010. The district has an informal policy of maintaining at least $20 million in cash at all times. Delinquencies do not have a significant impact on the district's revenues, although foreclosures in the county have risen in 2009.
Bond proceeds will refund the district's series 2000 water revenue bonds for savings.
Located in Mesa County, the district has a fairly stable population of about 80,000 residents. The district serves a 240-square-mile area that includes portions of Grand Junction, as well as Fruita, Redlands, Clifton, and other nearby cities and areas recently annexed to the City of Grand Junction. The water system served 33,409 customers as of 2008. Residential customers make up 97% of accounts, 74% of water usage, and 72% of water sales revenues.
RELATED RESEARCH
USPF Criteria: "Standard & Poor's Revises Criteria For Rating Water, Sewer, And Drainage Utility Revenue Bonds," Sept. 15, 2008
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Media Contact:
Ana Sandoval, New York (1) 212-438-5095, [email protected]
Analyst Contacts:
Paul Dyson, San Francisco (1) 415-371-5079
Bryan A Moore, San Francisco (1) 415-371-5077