Fitch Rates Clearfield City, Utah's $3.6MM Water Rev Bonds 'A+'.

SAN FRANCISCO -- Fitch Ratings has assigned an initial 'A+' rating to Clearfield City, Utah's $3.585 million water revenue bonds, series 2007. The bonds are scheduled to sell via negotiation by Wells Fargo Brokerage Services, LLC on May 8, 2007. The Rating Outlook is Stable.

The 'A+' rating on the city of Clearfield water system's water revenue bonds is based on the system's strong financial position with high debt service coverage levels and essential service provided to a stable population.

Credit concerns include the city's limited economic base. Water rates and debt levels are affordable and the system's capital improvement plan benefits from good management.

The system provides potable water service to city residents through a long-term contract with Weber Basin Water Conservancy District (WBWCD) and from five city-owned wells. Customer accounts for the water system total 6,366, with growth averaging about 3% annually over the last five fiscal years. WBWCD is a regional wholesale provider, and supplies the city with 75% of its water through a perpetual take-or-pay contract. WBWCD's revenue bonds are rated 'AA' by Fitch.

Financial performance has been good over the last five fiscal years with the system maintaining strong coverage levels and cash balances. Fiscal 2007 estimated unrestricted cash and investments equal 340 days of operating expenditures and transfers outs. With the issuance of the current offering, projections indicate solid debt service annual coverage of at least 3.4 times (x) through fiscal 2011.

Proceeds from these bonds will help finance various system capital improvements including installation of pressure-reducing valve stations, a booster pump station, and additional waterlines as part of the city's master plan for the water system. After the current transaction the city may issue further debt in fiscal 2010 for further system improvements if needed, but customer debt levels are expected to remain affordable. To fund the capital improvements the city enacted an average annual 3.8% increase in the monthly water charge for fiscals 2008 and 2009.

The city is primarily a residential community located adjacent to the Hill Air Force Base in Davis County and is approximately 28 miles north of Salt Lake City. Population growth is steady at 1% in 2006 over the previous year, or a modest 7% since 2000; the current population is estimated at 27,775. Historically, the city's unemployment rate has remained slightly above that of the county, state, and nation, falling to 3.8% in 2006. The city's tax base has grown a moderate 4.8% on average since 2001 with further residential development expected in the near future.

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