Bangkok--22 Mar--Standard & Poor's
Standard & Poor's Ratings Services assigned its 'AA-' long-term rating, with a stable outlook, to Montecito Water District, Calif.'s series 2010A refunding revenue certificates of participation (COPs).
"The rating reflects our opinion of the district's established Santa Barbara-area economic base with very strong median household effective buying income, maintenance of very strong liquidity levels, limited capital needs, and demonstrated willingness to adjust rates," said Standard & Poor's credit analyst Chris Morgan.
The COPs have an interest in net water system revenues, which represent participation in payments under a 2010 installment purchase agreement. Parity obligations include loans with the California Department of Water Resources (DWR), a 1993 joint participation agreement with the Cachuma Operations and Maintenance Board, a financing agreement with the City of Santa Barbara, and a 1998 installment purchase agreement.
We understand that the district will use bond proceeds to refund its series 1998 COPs.
Located just east of Santa Barbara, the district provides water service from a combination of imported and groundwater sources to a largely built-out coastal community of approximately 13,500 residents and an estimated 4,622 accounts for fiscal 2010. Largely residential in nature, the district's largest customers by service revenues are golf courses, a resort, and a private college, with the 10 largest customers making up what we consider to be a diverse 9% of service revenues. The median household EBI in the unincorporated community of Montecito, which we believe is largely representative of the district, is very strong in our view, at 246% of the U.S. level.
The stable outlook reflects our view that the district has shown a willingness to increase rates to correct a previous operating imbalance and our belief that the district's income profile provides substantial capacity to absorb additional rate increases. Given the district's history of fluctuating fixed-charge coverage and projections of what we consider to be adequate fixed-charge coverage in the coming years, we will closely monitor its ability to maintain a strong liquidity cushion against unforeseen increases in costs or disruptions in revenue patterns.
RELATED CRITERIA AND RESEARCH
USPF Criteria: Key Water And Sewer Utility Credit Ratio Ranges, Sept.15, 2008
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:
Chris Morgan, San Francisco (1) 415-371-5032
Ian Carroll, San Francisco (1) 415-371-5060
Key Contacts:
Americas Media Relations: (1) 212-438-6667
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[email protected]
Americas Customer Service: (1) 212-438-7280
[email protected]