Fitch Rates City of Cedar Hills, Utah $6.1MM Utility Revenue and Rfdg Bonds 'A'.SAN FRANCISCO -- Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. assigns an initial 'A' rating to the $6.1 million City of Cedar Hills, Utah Cedar Hills is the town in Utah County, Utah, United States. The population was 3,094, at the 2000 census and by 2005 was estimated at 7,790. The city began growing rapidly during the 1990s. County, Utah, utility revenue and refunding bonds, series 2006. The bonds are scheduled to sell on March 7, through a negotiated sale led by Wells Fargo Public Finance. The firm of Lewis Young Robertson & Burningham, Inc. serves as the city's financial advisor. The Rating Outlook is Stable. This bond offering represents the city's first issuance of utility revenue bonds Utility revenue bond A municipal bond issued to finance the construction of public utility services. These bonds are repaid from the operating revenues the project produces after the utility is finished. secured by net revenues of the utility system. Bond proceeds will refinance a line of credit and two outstanding notes payable, totaling $6.03 million. In addition, the city will purchase four new pumps to enhance water pressure in parts of the pressurized pres·sur·ize tr.v. pres·sur·ized, pres·sur·iz·ing, pres·sur·iz·es 1. To maintain normal air pressure in (an enclosure, as an aircraft or submarine). 2. irrigation irrigation, in agriculture, artificial watering of the land. Although used chiefly in regions with annual rainfall of less than 20 in. (51 cm), it is also used in wetter areas to grow certain crops, e.g., rice. system. The 'A' rating reflects the city's stable financial operations, good coverage levels, limited capital improvement needs, and high wealth levels. Credit concerns include higher-than-average debt levels, limited service area economy, and declining yet adequate liquidity levels. The city's utility system serves a population of 8,445, providing culinary water, pressurized irrigation water, and sanitary sewer services. The culinary water system (which provides drinking water drinking water supply of water available to animals for drinking supplied via nipples, in troughs, dams, ponds and larger natural water sources; an insufficient supply leads to dehydration; it can be the source of infection, e.g. leptospirosis, salmonellosis, or of poisoning, e.g. ) is composed of a water well, two storage tanks, and water transmission mainlines. The secondary pressurized irrigation system draws water from four sources: a secondary-water deep well, irrigation flow, the Central Utah Water Conservancy District, and overflow from the city's culinary water system. Sewer facilities consist of 71 miles of sanitary sewer collection mainline. Debt service coverage projections show good coverage levels, ranging from a low of 1.8 times (x) in fiscal 2007 to a high of 2.3x in fiscal 2010. The additional bonds test Additional bonds test A test for ensuring that bond issuers can meet the debt service requirements of issuing any new additional bonds. additional bonds test is also good at 1.25x maximum annual debt service. The city anticipates borrowing $1.1 million, on parity with 2006, from a state agency to finance the construction of a second water well. Including this loan, debt service coverage is expected to remain solid at a range of 1.6x to 2.0x through fiscal 2010. Liquidity levels are still strong but have trended downward since fiscal 2003. Adjusting for an accounting error, days cash on hand were 452 in fiscal 2005, dropping from 637 in fiscal 2004 due to ongoing capital expenditure. The city's days in accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying is average at 39 days. Future capital needs appear to be limited and are expected to address ongoing maintenance of the utility system. The city has full and independent power to set rates. Of note is the city's rate structure for the pressurized irrigation system, whereby all residents must pay a base rate of $9.95 each month even if they are not currently hooked up and using the secondary water. This adds to the city's financial flexibility, which Fitch views favorably. Located in Utah County, Cedar Hills City is approximately 30 miles south of Salt Lake City and 10 miles north of Orem City. The city is primarily residential with most residents commuting to the employment centers of Salt Lake City and Orem/Provo. The city's economy is expected to benefit from plans for a commercial development on 20 acres in the city center over the next three years. Unemployment rates are low and wealth levels are above average. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. 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