Fitch Affirms Manatee County, FL's Public Utilities Revenue Bonds at 'AA'.

NEW YORK -- In the course of routine surveillance, Fitch Ratings affirms Manatee County, Florida's (the county) approximately $162.9 million in public utilities revenue bonds at 'AA'. The Rating Outlook is Stable.

Security for the public utilities revenue bonds is provided by a pledge of combined net revenues of the water, sewer, solid waste, and stormwater systems. These revenues provide adequate debt service coverage, which along with the system's sizable cash balances, evidence satisfactory financial operations. Other factors supporting the 'AA' rating include competitive rates for water, sewer, and solid waste systems, low debt per customer, the wealthy and diversifying service area, and adequate treatment capacity for future needs. The county will need to continue to manage its limited water supply effectively going forward.

The Manatee County Utility Operations Department provides water, sewer, and solid waste services to incorporated and unincorporated areas of the county, as well as water to Sarasota County through a wholesale contract. Water, wastewater, and solid waste operations each provide about one-third of system revenues. There is currently no stormwater fee. The county's water supply is constrained by its consumptive use permit (CUP) with a moderate 18% remaining. Sarasota County's allocation of 10 mgd will be phased out over the next 20 years, which affords some additional capacity for the county. Additional water management measures include expanding the reclaimed water system. Treatment capacity for both water and wastewater remains strong. The solid waste system includes the Lena Road landfill, capacity of which is expected to extend for 35 years.

Financial operations have historically been sound with coverage that is adequate for the rating level. MADS coverage has remained consistent at about 1.5 times (x) - fiscal 2008 results show 1.57x MADS coverage. Projections anticipate similar coverage through fiscal 2011, at which time the county plans on undertaking a rate study in preparation for additional debt. No rate increases are budgeted through fiscal 2011. Liquidity levels have decreased over the last few years as the county has cash funded the majority of its capital projects. However, days cash on hand remains strong at close to a year.

Capital needs over the next few years are manageable as the system concentrates on water conservation, potable water upgrades and general maintenance. Debt plans over the next few years include up to $35 million fiscal 2011 which may be cash funded instead and $30 million in fiscal 2013 for a filtration upgrade on the water treatment plant.

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